CEO's Review

Kai Telanne, President and CEO:

(Q4 interim report published on 10 February 2017)

Alma Media’s business developed well in 2016. Full-year revenue grew by 21 per cent to MEUR 353 and adjusted operating profit increased by 50 per cent to MEUR 35. Earnings per share rose to EUR 0.20 in spite of restructuring costs, impairment and an increase in the number of shares. The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.16 per share be paid.

The growth in revenue was attributable to the strong organic development of Alma Markets and Alma News & Life, as well as acquisitions. Growth was also supported by the media advertising market in Finland, which showed signs of recovery in the fourth quarter. The improved profitability is particularly attributable to the Alma Markets and Alma News & Life segments, which both achieved organic sales growth.

The Alma Markets segment’s revenue and profitability improved in each quarter thanks to excellent development efforts and work with customers, as well as the favourable operating environment in Eastern Central Europe. The revenue and operating profit of the marketplace businesses also increased substantially in Finland. The segment’s full-year adjusted operating profit grew by nearly 40 per cent year-on-year, to MEUR 19.

In the Alma News & Life segment, Iltalehti’s digital business saw strong development. The factors contributing to the growth included programmatic ad buying, content marketing and mobile advertising. The adjusted operating profit grew to MEUR 7 on the strength of good digital sales and cost savings in print media.

For Alma Talent, the year was a time of building a new entity. The integration of Talentum’s businesses went according to plan and the estimated cost synergies will be achieved in full. Comparable revenue decreased by three per cent. The decline was particularly attributable to the service business. The integration process has made Alma Talent a unique media and service provider in Finland and Sweden, with the aim of introducing multimedia products and services to the market that offer superior usability and richer content.

In Alma Regions, the decline in revenue from publishing operations slowed in late 2016. The segment’s adjusted operating profit remained on a par with the previous year thanks to cost savings. Digital media advertising sales grew faster than the overall market by a substantial margin, but the growth was not yet sufficient to compensate for the decline in print media advertising sales.

The Group’s financial position improved further due to strong cash flow from operating activities. At the end of December, the equity ratio was 46 per cent and the gearing ratio was 41 per cent. Interest-bearing net debt declined by MEUR 19.1. The strong financial foundation provides operating space for future investments and the acceleration of growth by leveraging the opportunities presented by digitisation.

The Finnish government’s favourable view on the European Commission’s proposal to reduce value added taxes on digital publications and books is a positive signal for our industry. The potential lowering of the Finnish digital VAT rate from the current level of 24 per cent to 10 per cent in 2018 would help Finnish media companies maintain their competitiveness while also increasing the demand and use of digital services and content.

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The growth in revenue was attributable to the strong organic development of Alma Markets and Alma News & Life, as well as acquisitions. Growth was also supported by the media advertising market in Finland, which showed signs of recovery in the fourth quarter.