SIGNIFICANT IMPROVEMENT IN PROFITS DESPITE WEAK MARKET CONDITIONS
ALMA MEDIA CORPORATION STOCK EXCHANGE RELEASE 7 May 2003,9.00 SIGNIFICANT IMPROVEMENT IN PROFITS DESPITE WEAK MARKET CONDITIONS Consolidated net sales rose 2.8 %. The Group gained market share in newspaper, television and radio advertising. Expenses fell by altogether 4.6 MEUR. The operating profit was 6.1 MEUR (operating loss 3.4 MEUR) and profit before extraordinary items was 4.7 MEUR (loss 5.2 MEUR). Profitability improved substantially in the Broadcasting and Alpress divisions. Net sales for the full year will slightly exceed last years level. The full-year operating profit will improve significantly. - Alma Medias first quarter turned out as expected in terms of net sales growth, operating activities, and cost and balance sheet control. - Alma Media is focusing on its core operations; the cost structure and organization have been trimmed. - The corporation gained market share in media advertising by developing its products and bringing new customer-driven media solutions to market. Broadcasting raised its share of total viewing time and also its share of television and radio advertising. Similarly, Alpresss revenue from media advertising rose faster than the market average. - Factors improving the Groups result were the reduced operating licence fee, which took effect after Q1/2002, a fall in paper prices, and the sale of the sports channel Suomen Urheilutelevisio Oy shares in January. PRESIDENT AND CEO JUHO LIPSANEN: "Predicting trends in our business environment to the end of the year is a difficult task. Alma Media does not expect the media market in general to recover significantly this year. In these conditions we are giving highest priority to continuous improvements in our core operations and to cost efficiency," says CEO Juho Lipsanen. Greater cost efficiency, according to Lipsanen, will result from the companys reorganization around four (previously five) divisions at the start of the year, simplified administrative functions and a reduction in the number of business units. The acquisition of the Suomen Lehdentekijät -ryhmä Oy and the integration of Alma Medias interactive operations into a single entity will help the Group to develop new customer-driven products and services. These measures are aimed at increasing sales regardless of market conditions. "The reduction in the operating licence fee in the first two quarters of the year, coupled with a drop in paper prices, will raise the Groups profitability. To ensure this improvement continues to the end of the year, the company will need to take greater advantage of its internal synergies for further growth in sales. We must keep hold of this competitive advantage and ensure we can react rapidly to market changes by raising cost efficiency further through internal measures and constructive solutions," Lipsanen states. 2(11) ALMA MEDIAS INTERIM REPORT JANUARY - MARCH 2003 MARKET CONDITIONS Various economic research institutions have revised their forecasts for the Finnish economy downwards for the first months of the year. The latest forecasts suggest that GDP in Finland will grow only 1 - 2 % this year. Media advertising rose 4.9 % during the first quarter, according to Gallup Adex. Excluding the parliamentary elections in March, growth was 1.6 %. Newspaper advertising increased 4.6 %, television advertising 6.2 % and radio advertising 18.7 %. Advertising by business sector developed as follows: retail advertising rose 4.5 %, advertising in the retail food market increased 7.2 % and vehicle advertising was 6.1 % up. Recruitment advertising decreased 13.4 % and travel and tourism advertising was down 2.9 %. CHANGES IN GROUP STRUCTURE Alprint and part of the Alma Media Interactive division were integrated on 1 January 2003 into a new division called Media Services. The MTV3-branded services previously managed by Alma Media Interactive were moved to the Broadcasting division. Media Services now comprises Alprint (magazine printing), classified services, new business ventures, corporate R&D activities, and Alma Media Information Systems (the Groups information systems and NWS unit). The scope of the Broadcasting division was increased with the MTV3 branded operations, i.e. MTV3 Internet, MTV3 Teletext and MTV3 Connections. These have been grouped into a business unit within Broadcasting called MTV Interactive that also includes Alma Medias digital television activities and MTV3 Tele Oy. Alma Medias holding in the Suomen Lehdentekijät -ryhmä Oy rose from 25 % to 100 % at the turn of the year. This will raise Business Information Groups annual net sales by some 7 MEUR. In January Alma Medias holding in Suomen Urheilutelevisio Oy (Sports Channel) decreased from 50 % to 19.9 %. 3(11) ALMA MEDIA GROUP, KEY FIGURES (MEUR) 2003 2002 2002 1-3 1-3 1-12 Net sales 120.3 117.0 485.9 Operating profit/loss 6.1 -3.4 15.8 as % of net sales 5.1 -2.9 3.3 Impact of associated companies on operating profit -1.0 -2.4 -9.3 Profit/loss before extraordinary items 4.7 -5.2 8.8 Balance sheet total 411.2 456.4 403.6 Gross capital expenditure 4.7 2.8 14.9 as % of net sales 3.9 2.4 3.1 Equity ratio, % 42.0 36.0 41.3 Gearing, % 74.7 115.1 81.2 Net financial expenses 1.4 1.8 7.0 as % of net sales 1.2 1.5 1.4 Interest-bearing net debt 119.0 176.3 130.6 Interest-bearing liabilities 141.4 196.7 156.0 Interest-free liabilities 105.9 101.6 81.7 Average number of employees 3,744 3,837 3,901 Average number of employees calculated as full-time personnel 2,986 3,036 3,080 Cash flow from operating activities / share, EUR 1.22 0.69 2.95 Shareholders' equity / share, EUR 10.12 9.74 10.23 Earnings / share, EUR 0.15 -0.36 0.16 Market capitalization 275.3 336.6 299.1 THE FIRST QUARTER NET SALES AND OPERATING PROFIT/LOSS NET SALES BY DIVISION (MEUR) 2003 2002 2002 1-3 1-3 1-12 Alpress 50.0 49.1 201.3 Broadcasting 44.8 41.8 177.6 Media Services 17.9 17.8 73.9 Business Information Group 11.6 10.9 43.2 Parent company 3.3 3.4 13.6 Intragroup net sales -7.3 -6.0 -23.7 Total 120.3 117.0 485.9 OPERATING PROFIT/LOSS BY DIVISION 2003 2002 2002 (MEUR) 1-3 1-3 1-12 Alpress 6.8 5.5 27.2 Broadcasting 0.0 -8.1 -7.2 Media Services -0.8 -1.3 -2.2 Business Information Group 0.5 1.0 2.4 Parent company -0.4 -1.1 -3.8 Group entries 0.0 0.6 -0.6 Total 6.1 -3.4 15.8 The Groups net sales rose 2.8 %. The main reasons behind this growth were the positive development of advertising sales by the Broadcasting division, growth in Alpresss overall net sales and the addition of Suomen Lehdentekijät - ryhmä Oy to Business Information Group after the first quarter in 2002. 4(11) Alma Medias profitability improved substantially. Underlying the improvement in Broadcastings profitability was an increase in sales of advertising time coupled with lowered costs. Alpress, similarly, raised advertising revenues while simultaneously achieving a clear reduction in costs, the main reason for which was a drop in paper prices. BALANCE SHEET AND FINANCIAL POSITION The balance sheet totalled 411.2 MEUR at the end of March (403.6 MEUR on 31 December 2002). The equity ratio at the end of March was 42.0 % (41.3 % on 31 December 2002) and shareholders equity per share was 10.12 EUR (10.23 EUR on 31 December 2002). A dividend of 3.9 MEUR was paid in March on the financial year 2002. The Groups cash flow was strong in the first three months of the year due principally to the positive development in operations, the continuing moderate level of investment and the payment of annual newspaper subscriptions during the period. The strong cash flow allowed the company to reduce its interest-bearing loan capital by 14.6 MEUR. The Groups interest-bearing debt is denominated in euros and is therefore not hedged against currency fluctuations. The most significant foreign currency purchase contracts are hedged. CAPITAL EXPENDITURE Gross capital expenditure in the period totalled 4.7 MEUR (2.8 MEUR). Roughly half of this figure related to purchases of shares in subsidiaries and the remainder comprised normal repair and maintenance investments. PERSONNEL AND ADMINISTRATION Raimo Mäkilä was appointed President of the Media Services division on 1 January 2003. Erkki Kulmala was named President of Alprint Oy on 1 March 2003. Alma Medias Annual General Meeting on 6 March 2003 elected six persons to the Board of Directors including Lauri Helve as a new member. The Meeting appointed the firm of authorized public accountants KPMG Wideri Oy Ab and Mauri Palvi, APA as the companys auditors, as well as Eija Kauppi-Hakkarainen, APA and Michaela Teir, APA as the deputy auditors. Convening after the Meeting, the Board of Directors elected Bengt Braun as its Chairman and Kari Stadigh as its Deputy Chairman. THE ALMA MEDIA SHARE Altogether 22 376 (13 904) Series I shares and 351 484 (519 263) Series II shares, as well as 1 500 (2 600) A warrants, were traded on the Helsinki Exchanges during the reporting period. Alma Media Corporations market capitalization at the end of March amounted to 275 MEUR (337 MEUR). The Board of Directors has no current authorizations to raise the share capital. 5(11) Share performance January-March 2003 (EUR) Highest closing Lowest closing 31 March 2003 price price Series I 20.00 17.50 17.50 Series II 20.64 16.00 17.50 A warrants 2.50 1.70 2.50 As decided by the Annual General Meeting on 24 March 1999, the company offered bonds with warrants to personnel and Alma Media Corporations wholly owned subsidiary Marcenter Oy, disapplying shareholders pre-emptive subscription rights. The bond totalled 1 220 000 Finnish markka (0.2 MEUR) and the attached warrants may be exercised to subscribe for at most 610 000 Alma Media Corporation Series II shares. The average quoted price of the Series II share in October 1999 used to calculate the share subscription price was EUR 20.58. The conditions of the bond stipulate that one half of the shares may be subscribed on or after 28 May 2001 at a subscription price 12 % above the average quoted price in October 1999, i.e. for EUR 23.05 per share, and that half of the shares may be subscribed on or after 28 May 2003 at a subscription price 28 % above the aforementioned price, i.e. for EUR 26.34 per share. Dividends payable will be deducted from the subscription prices before subscription. The A warrants were transferred to the book-entry system on 28 May 2001 and trading in them began on 29 May 2001. Trading in A warrants has been minor and no warrants had been exercised to subscribe for shares by 31 March 2003. The price of the shares subscribable under A warrants is at the moment EUR 21.51. SUBSEQUENT EVENTS Teemu Kangas-Kärki was appointed CFO of Alma Media Corporation and a member of the Executive Committee from 1 June 2003. Ritva Sallinen, currently Senior Vice President, Finance and Administration, moves into line management as Director, Development and Finance in the Media Services division. Alma Media Corporation has applied to the Helsinki Exchanges for listing of its B warrants under the companys 1999 bond with warrants. The trading and share subscription period for the B warrants starts on 28 May 2003 and ends on 30 June 2006. Each B warrant may be exercised to subscribe for one Alma Media Series II share. The current strike price is EUR 24.80. There are altogether 305,000 B warrants. PROSPECTS TO THE YEAR END Alma Media does not expect any significant changes in market conditions during the remainder of the year. Consolidated net sales is expected to rise slightly and the operating profit to show a significant improvement on last year. All the divisions are expected to reach or exceed the levels of operating profit they recorded last year. Broadcastings operating profit will improve substantially. 6(11) ALPRESS Alpress is the Alma Media division responsible for newspaper publishing and printing. ALPRESSS KEY FIGURES (MEUR) Q103 Q102 2002 Net sales 50.0 49.1 201.3 Circulation sales 23.5 23.7 93.3 Media advertising sales 22.5 20.9 90.1 Printing sales 2.6 3.7 13.5 Other net sales 1.3 0.8 4.4 Operating profit 6.8 5.5 27.2 Operating profit / net sales, % 13.5 11.2 13.5 Gross capital expenditure 0.9 0.7 6.4 Personnel on average (workforce) 1,605 1,637 1,681 Full-time personnel on average 1,137 1,150 1,182 Media sales by Alpresss regional newspapers began to increase in the final quarter of 2002 and this positive trend continued. Election advertising for the parliamentary elections in March raised media advertising by about one million euros. Growth in advertising sales of Alpresss newspapers exceeded the market average, with media sales by Aamulehti, Satakunnan Kansa and Pohjolan Sanomat developing particularly well. Circulations of the afternoon newspapers continued to drop by over 6 % during the first quarter although the rate of decline slowed at the end of the period. Iltalehtis circulation development was in line with the market trend. Net sales from Iltalehtis media sales decreased only marginally despite the papers decision to cease adult entertainment advertising, which previously made a significant contribution to this figure. The divisions operating profit exceeded last years first- quarter level as a result of growth in media sales, the fall in paper prices and effective cost control. The main reason for the drop in personnel was the transfer of the distribution of the Uusi Rovaniemi newspaper to an external company, Kärkijakelu Oy. BROADCASTING The Broadcasting division is responsible for television and radio broadcasting in the Group. The division comprises MTV3 Channel, Subtv, Radio Nova and MTV-Interactive. The divisions profits also include the contribution (after amortization of goodwill) of Alma Medias 23,4 % ownership in the Swedish TV4 AB. MTV-Interactive was moved to the Broadcasting division at the start of 2003. This unit consists of MTV3 Teletext, MTV3s Internet and mobile operations, and the Groups digital television activities. MTV Oy sold the bulk of its holding in Oy Suomen Urheilutelevisio Ab at the start of the year. MTVs holding now stands at 19.9 % and this company is no longer consolidated as an associated company in Broadcastings accounts. 7(11) BROADCASTINGS KEY FIGURES (MEUR) Q103 Q102 2002 Broadcastings net sales 44.8 41.8 177.6 Broadcastings operating profit 0.0 -8.1 -7.2 Operating profit/net sales, % 0.0 -19.3 -4.1 Gross capital expenditure 2.1 1.7 5.5 Personnel on average (workforce) 515 526 527 MTV3s and Subtvs share of total viewing time, % 48.4 44.1 44.3 (prime-time, 10-44 year-olds) TV4 ABs net sales 59.1 59.1 248.3 TV4 ABs operating profit 0.7 -4.5 12.8 TV4 ABs impact on Broadcastings operating profit -0.6 -1.3 -1.1 Broadcastings net sales developed favourably. Television and radio advertising showed distinctly higher growth than total media advertising during the first quarter. Radio Novas net sales increased by as much as 34 %. The division is making a concerted effort to develop new electronic media products for sale. Broadcastings expenses developed as planned, falling 7 % on the same period last year. The main reason for the lower level of expenses was the halving of the operating licence fee from July 2002. Programming is a particular area of focus for MTV in 2003. Television viewing has increased by 4 minutes compared to the first quarter of 2002 while total viewing of MTVs channels has risen 6 minutes. Broadcastings operating profit and cash flow developed as planned during the first quarter. The result of operations, excluding associated companies, improved by 7 MEUR and became positive despite continuing to be burdened by investments totalling roughly 3 MEUR in the new Subtv cable channel and digital television. MEDIA SERVICES The Media Services division consists of four business units: Alprint (magazine printing), Classified Services, Alma Media Information Systems, and New Businesses. MTV3 Interactive was moved to the Broadcasting division from 1 January 2003. The other parts of Alma Media Interactive were united to the new division Media Services. 8(11) MEDIA SERVICES KEY FIGURES (MEUR) Q103 Q102 2002 Net sales 17.9 17.8 73.9 Alprints net sales 14.1 14.7 61.5 -Alprints exports to Russia 2.8 3.3 14.7 -Alprints other exports 5.1 5.2 22.3 -Alprints domestic sales 6.2 6.2 24.5 Net sales of Classified Services 2.0 1.8 7.1 Net sales of Information Systems 1.6 1.3 5.5 Net sale of New Businesses 0.4 0.4 2.0 Media Services operating loss -0.8 -1.3 -2.2 Alprints operating loss -0.6 -1.0 -1.2 Operating loss/net sales, % -4.5 -7.2 -2.9 Gross capital expenditure 0.4 0.3 1.8 Personnel on average (workforce) 456 474 478 Alprints sales income decreased owing to intensified competition. More efficient cost control improved the result of operations, which nonetheless remained a loss. Classified property (Etuovi.com, Asuntopörssi and Dime) and vehicle (Autotalli.com) services continued to grow strongly as expected. The recruitment advertising market was still weak and this was reflected in Joblines result. Sales by New Businesses was slow but the outlook to the end of the year is brighter. BUSINESS INFORMATION GROUP Business Information Group (BIG) is the Alma Media division specializing in the production and distribution of business and financial information. BIG is also responsible for co- operation with Talentum Oyj, which is 32.8 % owned by Alma Media. BIGS KEY FIGURES (MEUR) Q103 Q102 2002 Net sales 11.6 10.9 43.2 Circulation sales 3.5 3.6 13.9 Advertising sales 4.7 5.3 21.6 Other sales 3.4 2.0 7.8 Operating profit 0.5 1.0 2.4 Operating profit/net sales, % 4.3 9.2 5.6 Gross capital expenditure 2.7 0.2 0.9 Personnel on average (workforce) 380 356 356 Talentum Oyjs net sales 28.7 29.5 114.6 Talentum Oyjs operating profit 1.2 0.4 -0.3 Talentum Oyjs impact on BIGs operating profit after goodwill -0.4 -0.4 -4.7 depreciation Suomen Lehdentekijät -ryhmä Oy became part of Business Information Group at the beginning of 2003, which explains the clear increase in BIGs net sales compared to last year. The Lehdentekijät group, with over 30 employees, generates annual net sales of around 7 MEUR. The structure of the Kauppalehti business daily was revised at the beginning of the year by reserving the front page for news. This change will reduce advertising income in the short term but surveys indicate that the new style has been welcomed by readers. 9(11) Market conditions are difficult for Business Information Group. Advertising revenues declined in line with trends across the market with clear decreases evident in banking and finance and in production goods, both of which are important sectors for Kauppalehti. The war in Iraq that broke out at the end of the reporting period reduced B-to-B advertising. CONSOLIDATED INCOME STATEMENT 2003 2002 2002 (MEUR) 1-3 1-3 1-12 NET SALES 120.3 117.0 485.9 Share of associated companies' -1.0 -2.4 -9.3 results Other operating income 0.7 0.5 8.8 Operating expenses -113.9 -118.5 -469.6 OPERATING PROFIT/LOSS 6.1 -3.4 15.8 Financial income and expenses -1.4 -1.8 -7.0 PROFIT/LOSS BEFORE EXTRAORDINARY 4.7 -5.2 8.8 ITEMS Extraordinary income 0.0 0.0 0.0 Extraordinary expenses 0.0 -0.2 -0.1 PROFIT/LOSS BEFORE TAXES AND 4.7 -5.4 8.7 MINORITY INTEREST Taxes *) -2.1 -0.2 -5.6 Minority interest -0.3 -0.2 -0.7 PROFIT/LOSS FOR THE PERIOD 2.3 -5.8 2.4 *) Taxes include taxes corresponding to the result for the period. CONSOLIDATED BALANCE SHEET 2003 2002 2002 (MEUR) 31.03. 31.03. 31.12. ASSETS FIXED ASSETS Intangible assets 19.5 20.2 19.7 Goodwill on consolidation 17.8 18.3 17.0 Tangible assets 99.5 125.6 102.7 Investments 145.0 165.7 147.2 CURRENT ASSETS Inventories 56.3 52.5 51.8 Receivables 50.7 53.7 39.8 Cash and bank 22.4 20.4 25.4 411.2 456.4 403.6 CONSOLIDATED BALANCE SHEET 2003 2002 2002 (MEUR) 31.03. 31.03. 31.12. SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS'S EQUITY 159.2 153.2 160.8 MINORITY INTEREST 1.6 2.3 1.5 PROVISIONS 3.1 2.6 3.6 LIABILITIES Long-term 113.7 134.0 118.7 Short-term 133.6 164.3 119.0 411.2 456.4 403.6 10(11) CONSOLIDATED CASH FLOW STATEMENT 2003 2002 2002 (MEUR) 1-3 1-3 1-12 Operating activities Operating profit 6.1 -3.4 15.8 Adjustments to operating profit 7.0 8.6 39.2 Change in working capital 8.0 5.2 -4.9 Financial items and taxes -2.0 0.4 -3.7 Cash flow from operating activities 19.1 10.8 46.4 Cash flow from investing activities -3.6 -2.5 7.4 Cash flow before financing 15.5 8.3 53.8 activities Cash flow from financing activities -18.5 -7.1 -47.6 Change in cash funds (increase + / decrease -) -3.0 1.2 6.2 Cash funds at start of period 25.4 19.2 19.2 Cash funds at end of period 22.4 20.4 25.4 CAPITAL EXPENDITURE (MEUR) 2003 2002 2002 1-3 1-3 1-12 Gross capital expenditure on fixed 4.7 2.8 14.9 assets GROUP CONTINGENT LIABILITIES (MEUR) 2003 2002 2002 31.03. 31.03. 31.12. For own commitments Pledges 0.8 0.7 0.8 Mortgages on land and buildings 7.3 7.6 7.3 Chattel mortgages 5.6 5.6 5.6 Other own commitments Leasing commitments 1.7 1.3 2.4 Other commitments 1.3 1.6 1.4 Total 16.7 16.8 17.5 Maturity of Group's leasing payments (MEUR) During following 12 months 0.9 0.8 0.8 Later 0.7 0.5 1.6 Most of the Group's companies operated in leased premises. The rental agreements vary in duration from 6 months to 19 years. Annual rental payments current total approx.7.75 MEUR. Some of these business premises have been sublet and contribute approx. 1.38 MEUR in annual rental income. 11(11) PER SHARE DATA (EUR) 2003 2002 2002 1-3 1-3 1-12 Earnings per share 0.15 -0.36 0.16 Shareholders' equity per share 10.12 9.74 10.23 Net sales and operating profit by quarter (MEUR) I/2002 II/2002 III/2002 IV/2002 2002 Net sales 117.0 128.3 110.7 129.9 485.9 Operating profit -3.4 10.3 -0.1 9.0 15.8 I/2003 Net sales 120.3 Operating profit 6.1 The figures in this interim report are unaudited. Alma Media publishes its six-month interim report on 14 August 2003. ALMA MEDIA CORPORATION Ahti Martikainen Vice President, Communications and IR Further information: Juho Lipsanen, President and CEO, tel. +358 (0)9 507 8715, Ritva Sallinen, Senior Vice President, Finance and Administration, tel. +358 (0)9 507 8708, Ahti Martikainen, Vice President, Communications and IR, tel. +358 (0)9 507 8514 www.almamedia.fi Distribution: Helsinki Exchanges, principal media
- Date: 7.5.2003, 08:00
- News type: Stock exchange release
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