CEO's Review

Kai Telanne, President and CEO:

(Q1 interim report published on 28 April 2017)

Alma Media’s revenue and profitability developed well in the first quarter of 2017. Revenue grew, mostly organically, by 4.4 per cent and amounted to MEUR 90.5. The sources of this growth included the positive performance of Alma Markets’ digital business and the online advertising of our media in Finland as well as municipal election advertising and the fact that there were more working days and publication dates than in the comparison period. The significant improvement in profitability was mainly attributable to the efficiency improvement measures implemented in several businesses last year. The Group’s adjusted operating profit for January–March rose by 128 per cent to MEUR 12.6.

The development of the Finnish economy improved in the first months of the year, but the signs of growth are not yet reflected in advertising investments. According to Kantar TNS, media advertising volume declined by 4.7 per cent in the first quarter. Online advertising, however, rose by 7.4 per cent. Alma Media’s digital advertising sales outgrew the market due to effective advertising solutions and new mobile services.

In the Alma Markets segment, revenue growth and strong operating profit performance were supported by the favourable operating environment for the recruitment business in Eastern Central Europe as well as the increased activity in the housing and automotive markets in Finland. The segment’s result was also improved by lower depreciation.

In the Alma Talent segment, revenue was unchanged from the previous year and the result improved thanks to restructuring measures related to the integration of Talentum in the Finnish and Swedish media businesses as well as the cost savings achieved in Information Services. Alma Talent’s broad‐based media portfolio has been well received by advertisers: the segment’s advertising sales saw positive development, particularly in online advertising and content marketing. Alma Talent’s first digital solutions in line with the development projects outlined in the new strategy were launched in the first quarter.

The structural change and digital transformation of the media industry were most clearly evident in the Alma News & Life segment: digital advertising sales grew substantially, particularly in mobile advertising and programmatic buying, but the single‐copy sales of print media continued to decline. Investments in the service business increased costs.

The Alma Regions segment’s revenue was increased by the external sales of printing services as well as higher content revenue. The segment’s advertising revenue declined in spite of election advertising during the review period. Profitability was improved by the lighter cost structure implemented in the previous year. The sustained decline in demand in the Kemi‐Tornio region and unprofitable operations led to the decision to merge Pohjolan Sanomat with Lapin Kansa. The decision to discontinue the centenarian brand was difficult but unavoidable. Our aim is to build a single strong regional media brand in the Lapland region, both in print and as a vital, developing digital media service.

Thanks to a strong position in selected markets paired with stable operating cash flow and financial position, the conditions are excellent for building Alma Media’s future. We are continuously looking for new sources of business growth, mainly in the area of digital services in Finland and elsewhere in Europe.

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Thanks to a strong position in selected markets paired with stable operating cash flow and financial position, the conditions are excellent for building Alma Media’s future.