Alma Media Corporation Interim Report 25 April 2019 at 8:00 a.m. (EEST)
ALMA MEDIA’S INTERIM REPORT JANUARY–MARCH 2019: Adjusted operating profit improved in all business segments in Q1. Revenue declined, mainly due to divestments. The share of the digital business exceeded 50%.
Financial performance January–March 2019:
- Revenue MEUR 85.0 (92.2), down 7.8%.
- Adjusted operating profit MEUR 14.4 (12.2), 16.9 % (13.2%) of revenue, up 17.9%.
- Operating profit MEUR 14.4 (12.9), 16.9 % (14.0%) of revenue, up 11.7%.
- Earnings per share EUR 0.12 (0.11).
- Alma Markets: The growth of the recruitment business slowed down, the housing and car marketplaces business in Finland continued to grow.
- Alma Talent: Digital content revenue in Finland grew strongly.
- Alma Consumer: Cost savings improved profitability.
|Content revenue, print||23.0||26.7||-13.9||97.9|
|Content revenue, digital||4.6||4.3||6.2||16.9|
|Advertising revenue, print||11.0||13.9||-20.8||50.6|
|Advertising revenue, digital||33.4||32.2||3.5||132.7|
|Adjusted total expenses||70.8||80.1||-11.6||297.9|
|Adjusted operating profit||14.4||12.2||17.9||57.3|
|% of revenue||16.9||13.2||16.2|
|Operating profit (loss)||14.4||12.9||11.7||61.0|
|% of revenue||16.9||14.0||17.2|
|Profit for the period||11.3||10.4||7.8||47.9|
|Earnings per share, EUR (undiluted and basic)||0.12||0.11||9.3||0.51|
|Digital business revenue||43.1||41.9||2.9||170.3|
|Digital business, % of revenue||50.7||45.4||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 is predicted to 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:
In the first quarter of 2019, all of Alma Media’s business segments improved their profitability. The digital business’s share of our revenue exceeded 50 per cent during the review period. The increase in digital sales, last year’s cost reduction measures and the divestment of business operations with negative or low profitability boosted the Group’s adjusted operating profit to 16.9 per cent of revenue. Our revenue declined, mainly due to divestments but also weighted down by the print media market.
Alma Markets’ recruitment business reflected the generally slowing economic growth. The recruitment business continued to grow but more slowly, especially in the Czech Republic and Finland. The positive trend in the housing and car marketplaces business in Finland continued in January–March. The segment’s expenses were increased by the further development of existing online services, such as Etuovi, and investments in new products and markets.
The development of Alma Talent’s media business in Finland was positive during the review period. Digital content sales increased by 21 per cent; in Kauppalehti, it more than compensated for the decline in print media content revenue. Advertising sales targeted at B2B customers developed favourably in Finland. In Sweden, the decline of advertising and divested and discontinued operations impaired revenue but, thanks to efficiency improvements made, the unit’s profitability improved in January–March.
The majority of the decrease in Alma Consumer’s revenue is due to the divestment of newspapers in Northern Finland carried out during the comparison period. Starting from the second quarter, the divestment will no longer influence reporting. In January–March, factors that reduced revenue organically included the decline in print advertising and Iltalehti’s single-copy sales as well as lower external printing volumes. Similarly to Alma Talent, Alma Consumer continued to experience two-digit growth in digital content sales. Profitability was improved by cost savings achieved with last year’s restructuring related to segment integration and the decrease in external content purchases.
As subscription invoicing takes place at the beginning of the year, our cash flow strengthened, amounting to MEUR 30.3. The equity ratio stood at 46.1 per cent at the end of March and gearing was 33.1 per cent. The IFRS 16 standard on leases that was adopted at the beginning of the year has an impact on key figures. The adoption of the standard increased Alma Media’s first-quarter EBITDA by MEUR 1.9, and net debt by MEUR 52.0. It had no impact on operating profit.
Although growth forecasts for 2019 have generally been revised downwards and uncertainty has increased, Alma Media is in good position for coming quarters. The forecasts for Alma Media’s operating countries in Eastern Central Europe still predict GDP growth of 2.5–4 per cent and a decrease in unemployment. Good digital content sales development is an indication of readers’ increasing willingness to pay for digital content and of appropriately selected measures for strengthening the digital subscription operating model. Softness of the domestic advertising market and intensifying competition between domestic media operators and international platforms continue. However, we believe that we are in a better-than-average position when it comes to compensating for the decline in print media with increasing digital advertising. Our scalable and efficient digital business model makes it possible to improve profitability and our strong balance sheet allows investments in business growth.
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). In addition to the presentations held by President & CEO Kai Telanne and CFO Juha Nuutinen, participants will have an opportunity to discuss with other members of the company's management.
To participate in the conference in Alma House, kindly register beforehand by e-mail, firstname.lastname@example.org.
A live webcast, during which written questions may be presented, can be followed via https://almamedia.videosync.fi/2019-q1/register. 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–June 2019 on Wednesday, 17 July 2019 at approximately 8:00 EEST
- 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.