Alma Media’s Interim Report January–September 2017: Strong profitability growth in the third quarter

Alma Media Corporation               Interim Report                      27 October 2017 at 9:00 a.m. (EEST)

Alma Media’s Interim Report January–September 2017:

STRONG PROFITABILITY GROWTH IN THE THIRD QUARTER

Financial performance July–September 2017: 

• Revenue MEUR 86.0 (80.9), up 6.3%.
• Adjusted operating profit MEUR 14.0 (9.1), or 16.2% (11.2%) of revenue, up 52.7%.
• Operating profit MEUR 14.3 (8.9), or 16.6% (11.0%) of revenue, up 60.2%.
• Earnings per share were EUR 0.12 (0.07).
• Alma Markets: Strong and profitable growth continued with the support of the market.
• Alma Talent: Revenue was increased by successful digital advertising and, in particular, content marketing.
• Alma News & Life: Positive development in digital advertising compensated for the decline in content revenue.
• Alma Regions: Profitability improved in the printing and distribution business and in the publishing business in Lapland.

Financial performance January–September 2017: 

• Revenue MEUR 270.2 (259.6), up 4.1%.
• Adjusted operating profit MEUR 39.8 (24.5), or 14.7% (9.4%) of revenue, up 62.3%.
• Operating profit MEUR 40.7 (20.5), or 15.1% (7.9%) of revenue, up 98.4%.
• Earnings per share were EUR 0.35 (0.15).

KEY FIGURES	2017	2016	Change	2017	2016	Change	2016
MEUR	Q3	Q3	%	Q1–Q3	Q1–Q3	%	Q1–Q4
Revenue	86.0	80.9	6.3	270.2	259.6	4.1	353.2
Content revenue	29.9	30.1	-0.4	93.4	95.1	-1.8	128.3
Content revenue, print	25.8	26.4	-1.9	81.1	84.3	-3.8	113.5
Content revenue, digital	4.1	3.7	10.6	12.3	10.8	14.0	14.8
Advertising revenue *)	42.7	38.4	11.0	134.5	124.1	8.4	169.7
Advertising revenue, print	13.5	14.8	-8.7	46.2	50.6	-8.7	68.5
Advertising revenue, digital	28.8	23.7	21.8	87.2	73.6	18.5	101.3
Service revenue *)	13.3	12.4	7.9	42.3	40.4	4.7	55.2
Adjusted total expenses	72.2	72.0	0.3	230.7	235.6	-2.1	318.9
Adjusted EBITDA	17.9	13.6	31.3	51.7	38.0	35.9	53.3
EBITDA	18.2	13.4	35.9	52.6	33.9	55.0	47.9
Adjusted operating profit	14.0	9.1	52.7	39.8	24.5	62.3	35.2
% of revenue	16.2	11.2		14.7	9.4		10.0
Operating profit/loss	14.3	8.9	60.2	40.7	20.5	98.4	26.8
% of revenue	16.6	11.0		15.1	7.9		7.6
Profit for the period	11.2	6.5	71.2	32.3	15.0	115.9	19.9
Earnings per share, EUR (undiluted and basic)	0.12	0.07	80.0	0.35	0.15	139.4	0.20
Digital business revenue	37.9	31.8	19.3	114.2	97.1	17.6	133.5
Digital business, % of revenue	44.1	39.3		42.2	37.4		37.8

*) Comparison data has been adjusted between advertising revenue and service revenue

Outlook for 2017 (unchanged):

The Finnish economy is expected to grow by 1–3% in 2017. Alma Media’s significant operating countries in Eastern Central Europe, such as the Czech Republic and Slovakia, are expected to see economic growth of 2–4%. Macroeconomic development affects both consumer demand and advertising volume. The structural transformation of advertising will continue in 2017; online advertising will grow, while print media advertising will decline. 

In 2017, Alma Media expects its full-year revenue to remain at the previous year’s level and its adjusted operating profit to clearly increase from the 2016 level. The full-year revenue for 2016 was MEUR 353.2, and the adjusted operating profit was MEUR 35.2.

Kai Telanne, President and CEO:

The positive development of Alma Media’s business continued in the third quarter. Adjusted operating profit grew by 53 per cent to MEUR 14.0 in July–September. Profitability was improved by the excellent development of sales in the Alma Markets segment as well as cost savings generated by previously implemented restructuring measures in Alma Talent, Alma Regions and shared operations. Alma Media’s revenue grew by 6 per cent in July–September and amounted to MEUR 86.0.

The Finnish economy is growing, but its positive boost has not reached the advertising market. According to Kantar TNS, the volume of media advertising decreased by 2.2 per cent in July–September. This can be attributed to a trend that has continued for some time: a steep decline in newspaper advertising by the retail sector combined with the fact that advertiser customers in general are investing in their own media and marketing technology.

Alma Markets continued on a growth path. The positive economic trend continued in our Eastern Central Europe markets, which supported the strong revenue growth and improved profitability of our recruitment business, especially in the Czech Republic. Growth also continued in the Finnish marketplaces, and the development projects for new online services continued as planned. The segment’s result was also improved by lower depreciation. 

In Alma Talent, profitability improved through cost savings and revenue increased. The growth is attributable to successes in digital advertising and content marketing, as well as the full merger of Mediuutiset into Alma Talent in July. Alma Talent’s media aim to increasingly integrate paid digital content and quality journalism. The renewed Talouselämä and Kauppalehti Optio were introduced to the market in September. Arvopaperi was launched at the beginning of the year to provide even better services to online customers. Renewal of other Talent’s media also continued.  

Alma News & Life has further strengthened its foothold in programmatic buying and mobile advertising, such as mobile-optimised Rich Media implementations. Revenue was also increased by the growth in Rantapallo’s sales. The continuing decline of single-copy sales, however, decreased the segment’s adjusted operating profit. Costs were increased by investments in the new reservation system for the Matkapörssi service, for example.

The decisions previously made in Alma Regions to reorganise the Lapland newspapers and Alma Manu’s business operations as well as reducing costs are producing results. Business is picking up in the north. The demand for content has increased and the external revenue of printing and delivery operations is growing. Even so, the current cost structure is heavy, as the volume of newspaper advertising will inevitably decline despite the growth of the national economy.

Alma Media has enjoyed ten consecutive quarters of profitable growth and our financial position has continued to improve. The equity ratio stood at 50.7 per cent at the end of September, while gearing was 21.7 per cent. Thanks to its financial performance, Alma is in a good position to accelerate sustainable growth both by developing the existing business and by seeking new growth areas.

In September, the Finnish Government approved a subsidy for commercial television news and current affairs programmes. Alma Media’s opinion is that the vitality of commercial media and the pluralism of news cannot be built on government subsidies. Sustainable business can only be created when companies have the ability to renew themselves amidst changes in their operating environment, instead of relying on public funding. Equal operating conditions must be provided for all players without subsidies that distort competition.

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

News conference and audio webcast:

A conference for Finnish media, investors and analysts 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. Please note that the conference will be held in Finnish. The presentation material in English will be available on www.almamedia.fi/en/investors/reports-and-presentations/presentations at 11.00 EEST.

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

A conference call and audio webcast concerning the financial result of January-September 2017 will begin at 13.00 EEST and will be held in English. You can participate in the conference by calling +44 (0)330 336 9411 (confirmation code: 5910287) or follow it at http://www.almamedia.fi/en/investors/reports-and-presentations/presentations.

Alma Media’s financial calendar 2018

Alma Media Corporation will publish its financial reports in 2018 as follows:

• Financial Statement Bulletin for financial year 2017 on Wednesday, 14 February 2018 approximately at 8:30 EET.
• Interim report for January–March 2018 on Wednesday, 25 April 2018, approximately at 8:30 EEST
• Interim report for January–June 2018 on Wednesday, 18 July 2018, approximately at 8:30 EEST
• Interim report for January–September 2018 on Thursday, 25 October 2018, approximately at 8:30 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 digitality, 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 2,300 professionals (excluding delivery personnel), of whom approximately 30% work outside Finland. Alma Media’s revenue in 2016 was EUR 353.2 million. Alma Media’s share is listed on NASDAQ Helsinki. Read more at www.almamedia.com.

Share article