Alma Media’s Half-Year Report January—June 2019: Adjusted operating profit improved and the favourable development of digital content sales continued

Alma Media Corporation               Half-Year Report                   17 July 2019 at 8:00 a.m. (EEST) 

ALMA MEDIA’S HALF-YEAR REPORT JANUARY—JUNE 2019: 

Adjusted operating profit improved and the favourable development of digital content sales continued  

Financial performance April–June 2019: 

  •  Revenue MEUR 88.0 (88.9), down 1.0%. 
  •  Adjusted operating profit MEUR 14.9 (12.9), 16.9% (14.5%) of revenue, up 15.5%. 
  •  Operating profit MEUR 14.5 (17.4), 16.5% (19.6%) of revenue, down 16.4%. 
  •  Earnings per share EUR 0.12 (0.15). 
  •  Alma Markets: Profitability improved in the housing and automotive businesses in Finland and in international recruitment business.
  •  Alma Talent: Advertising declined in Finland and Sweden. Digital content revenue grew by 15%. 
  •  Alma Consumer: Digital revenue grew by 10%, cost savings improved profitability. 

Financial performance January–June 2019: 

  •  Revenue MEUR 173.0 (181.1), down 4.5%. 
  •  Adjusted operating profit MEUR 29.3 (25.1), 16.9% (13.9%) of revenue, up 16.7%. 
  •  Operating profit MEUR 28.9 (30.3), 16.7% (16.7%) of revenue, down 4.4%. 
  •  Earnings per share EUR 0.24 (0.26). 
KEY FIGURES  2019  2018  Change  2019  2018  Change  2018 
MEUR  Q2  Q2  %  Q1–Q2  Q1–Q2  %  Q1–Q4 
Revenue  88.0  88.9  -1.0  173.0  181.1  -4.5  354.6 
Content revenue  27.5  27.7  -0.7  55.1  58.7  -6.2  114.8 
Content revenue, print  22.9  23.6  -3.2  45.9  50.3  -8.9  97.9 
Content revenue, digital  4.7  4.1  13.8  9.2  8.4  9.9  16.9 
Advertising revenue  47.7  47.2  0.9  92.2  93.9  -1.8  185.7 
Advertising revenue, print  11.6  12.8  -9.4  22.7  26.8  -15.3  50.6 
Advertising revenue, digital  35.5  33.6  5.6  68.9  65.8  4.6  132.7 
Service revenue  12.8  14.0  -8.3  25.7  28.4  -9.6  54.1 
Adjusted total expenses  73.2  76.2  -3.9  144.0  156.3  -7.8  297.9 
Adjusted EBITDA  20.5  16.9  21.4  40.6  33.3  22.0  72.9 
EBITDA   20.1  21.4  -5.8  40.2  38.4  4.6  76.6 
Adjusted operating profit  14.9  12.9  15.5  29.3  25.1  16.7  57.3 
% of revenue  16.9  14.5  16.9  13.9  16.2 
Operating profit (loss)  14.5  17.4  -16.4  28.9  30.3  -4.4  61.0 
% of revenue  16.5  19.6  16.7  16.7  17.2 
Profit for the period  11.3  13.8  -18.2  22.5  24.2  -7.0  47.9 
Earnings per share, EUR (undiluted and basic)  0.12  0.15  -20.8  0.24  0.26  -8.4  0.51 
Digital business revenue  45.5  43.3  5.1  88.6  85.2  4.0  170.3 
Digital business, % of revenue  51.7  48.7     51.2  47.0     48.0 

Operating environment in 2019 

Finland and Alma Media’s significant operating countries in Eastern Central Europe, such as the Czech Republic and Slovakia, are expected to see economic growth, but the rate of growth will slow down in 2019. Uncertainty about the economic development in Germany has increased and, due to its indirect effects, demand for recruitment advertising has declined in certain sectors in the Czech Republic and Slovakia.  

The structural transformation of the media will continue; online advertising and content sales will grow, while the demand for print media will decline. The profitability of print media will be reduced by higher distribution and delivery costs as well as volume-linked costs. Data, analytics, machine learning and automation will become increasingly important, which calls for increasing technology investments. The areas of digital advertising that are expected to see the fastest growth are search engine, social media, mobile and video advertising as well as content marketing.  

Outlook for 2019 (unchanged) 

In 2019, Alma Media expects its full-year revenue to be at the previous year’s level and its adjusted operating profit to increase compared to 2018. The full-year revenue for 2018 was MEUR 354.6 and the adjusted operating profit was MEUR 57.3. 

Kai Telanne, President and CEO:  

Our digital businesses continued to see profitable growth in the second quarter of 2019. Excluding the effect of divested and discontinued operations, Alma Media’s revenue was on a par with the comparison period. Adjusted operating profit increased by 15.5 per cent in April–June to MEUR 14.9, while the operating profit margin was 16.9 per cent. 

The profitability of the Alma Markets segment continued to develop favourably; the operating profit margin was 38.2 per cent. Revenue from the recruitment business grew but, due to the general uncertainty regarding the economic outlook, the rate of growth was slower than before, particularly in the Czech Republic, Finland and the Baltic countries. In Finland, the positive development seen during the early part of the year in the housing and automotive marketplace and systems business continued: these businesses saw organic growth of 10 per cent during the reporting period. Investments in marketing and added-value products were reflected in the favourable development of customer volumes.  

In the Alma Talent segment, the development of digital content revenue was strong in the Finnish media business during the review period: digital content revenue from Finnish financial and professional media grew by 24 per cent, exceeding the decline of print products. The segment’s revenue was weighed down by declining advertising as well as divested and discontinued operations.  

The progress of our digital transformation and its positive impact on our profitability was also evident in the Alma Consumer business in April–June. Growth was achieved during the reporting period in the digital content revenue of regional media as well as the digital advertising revenue of all of the segment’s media, particularly with respect to content marketing and mobile media advertising revenue. The number of visitors to the Iltalehti online service increased and the rate of decline in Iltalehti’s single-copy sales slowed down during the review period. Profitability was also affected by cost savings achieved through last year’s restructuring measures related to segment integration and the decrease in external content purchases.  

The increasingly digital business environment, declining volume of delivered printed products and rising unit costs have created a need for structural changes in our delivery business. In June, we signed an agreement on outsourcing the early morning delivery of the newspapers published by Alma Media Kustannus to Posti in Pirkanmaa and Satakunta, effective from the beginning of next year. We expect to achieve annual cost savings of MEUR 5–6 as a result of the outsourcing move. Going forward, the improved efficiency of delivery operations enables us to secure and extend the life cycle of subscribed printed newspapers as far into the future as possible. 

At the beginning of July, the value added tax applicable to digital newspapers, magazines and books as well as the single-copy sales of print newspapers and magazines was reduced from 24 per cent to 10 per cent in Finland. We applied the tax cut to the subscription prices of our digital publications to support the development of the demand for digital media.

More information:
Kai Telanne, President and CEO, telephone +358 (0)10 665 3500
Juha Nuutinen, CFO, telephone +358 (0)10 665 3873 

News conference and live webcast:

An analyst and media conference in English will be held on the same day at 11.00–12.00 EEST in the Alma House (address: Alvar Aallon katu 3 C, Helsinki). The report will be presented by President & CEO Kai Telanne and CFO Juha Nuutinen.

To participate in the conference in Alma House, kindly register beforehand by e-mail, kutsut@almamedia.fi.

A live webcast, during which written questions may be presented, can be followed via https://almamedia.videosync.fi/2019-q2-tulosinfo. An on-demand version of the webcast will be available on the company's website later on the same day www.almamedia.fi/en/investors/reports-and-presentations/presentations.

The presentation material will be available on www.almamedia.fi/en/investors/reports-and-presentations/presentations at approximately 11.00 EEST.

Alma Media’s financial calendar 2019 

- Interim report for January–September 2019 on Wednesday, 23 October 2019 at approximately 8:00 EEST

ALMA MEDIA CORPORATION
Board of Directors

Distribution: NASDAQ Helsinki, main media, www.almamedia.com

Alma Media in brief

Alma Media is a media company focusing on the service business and journalistic content. The company’s best-known brands are Kauppalehti, Talouselämä, Affärsvärlden, Iltalehti, Aamulehti, Etuovi.com and Monster. Alma Media builds sustainable growth for its customers by utilising the opportunities of digitalisation, including information services, system and expert services and advertising solutions. Alma Media’s operations have expanded from Finland to the Nordic countries, the Baltics and Central Europe. Alma Media employs approximately 1,900 professionals (excluding delivery employees), of which approximately 30% work outside Finland. Alma Media’s revenue in 2018 was EUR 354.6 million. Alma Media’s share is listed on NASDAQ Helsinki. Read more at www.almamedia.com.

  • Date: 17.7.2019, 08:00
  • News type: Stock exchange release

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