UPDATE 1-Russian internet firm Mail.Ru sees sales growth slowing

Tue Feb 26, 2013 8:17am EST

* Revenues seen up 25-28 pct this year vs 39 pct in 2012

* Core profit margin in low fifties vs 54.5 pct in 2012

* To pay $899 mln in special dividends

MOSCOW, Feb 26 (Reuters) - Russian internet group Mail.Ru joined rival Yandex in forecasting slower revenue growth this year, following a moderation in the online advertising market.

Russia become Europe's largest Internet market in 2011 after several years of rapid broadband development, and growth in many online businesses such as advertising has naturally moderated.

Mail.Ru, which operates popular Russian language social networking sites, as well as email and online games platforms, forecast revenues would rise 25-28 percent this year, down from 39 percent growth last year to 21.2 billion roubles ($698 million), which was just shy of its 40 percent forecast.

The weaker outlook comes after a slowdown in the display advertising market in the second half of last year, in part due to a ban on alcohol advertising.

Mail.Ru said it did not expect this to continue during 2013 and forecast a recovery in display growth rates through the year. It also expects strong growth from paid services such as virtual gifts in its social networks and multiplayer games.

The guidance is in line with market expectations of 26.2 percent revenue growth in 2013, according to a Thomson Reuters I/B/E/S consensus.

Yandex, Russia's top search engine which generates the bulk of revenues from advertising, last week forecast its top-line growth to slow to 28-32 percent in 2013 from 44 percent in 2012.

Yandex did not give profitability guidance after seeing a rise in marketing and product development costs outstrip earnings growth last year as it tried to defend its dominant position at home from top rival Google.

Mail.Ru forecast its margin on the basis of earnings before interest, taxation, depreciation and amortisation (EBITDA) to remain in a low fifties percentage - the same guidance as for last year when it delivered a margin of 54.5 percent.

Its 2012 net profit increased 37 percent to 8.5 billion roubles, while EBITDA was up 38 percent at 11.5 billion roubles.

Mail.Ru also announced a special dividend of $4.30 per share, worth a total of $899 million, following the sale of shares in Groupon, Zynga and Facebook.

Its London-listed shares were up 1 percent to $36.35 at 1305 GMT, taking them around 30 percent above the price at which it sold shares in an initial public offering in November 2010.