CEO's Review

Kai Telanne, President and CEO:

22 October 2020

The COVID-19 epidemic impacted Alma Media’s businesses in the third quarter less than we expected. The slowing down of the epidemic and the lifting of the restrictions imposed by the authorities led to a gradual economic recovery, which was reflected in the slower decline of our revenue. 

In the highly exceptional operating environment, our operating margin of 24.5% for the review period exceeded our expectations. It was attributable to the cost savings we have achieved (MEUR 3.1), the recovery of the sales of digital advertising and recruitment services and, in particular, the strong growth of digital subscription-based revenue (29.5%). 

The demand for recruitment services in our operating countries in Eastern Central Europe showed signs of normalising as the restrictions imposed by the authorities on business activities were not as strict as they were in the spring. The revenue performance of the recruitment business will be weighed down until the first half of 2021 by the steep decline in customer invoicing in the second quarter and the delayed recognition of revenue. In the housing and automotive marketplaces business, revenue was higher than in the comparison period thanks to the strong growth of competitive tendering services and rental housing advertising. The cost savings achieved during the review period were not as high as in the spring as we increased our marketing, employee and product development costs upwards to ensure our long-term competitiveness.

Alma Talent is undergoing a structural transformation aimed at moving away from unprofitable businesses with limited digital growth potential. The sharper focus on digital business in all of the segment’s business areas was reflected during the review period in a slight increase in revenue as well as improved profitability. The share of digital business exceeded the milestone of 50%. Demand for high-quality media content continued, which was seen in strong growth in digital subscriptions. Amongst Alma Talent’s services, growth was achieved particularly in telemarketing and B2B marketplaces. The steep decline seen in media advertising in the previous quarter levelled off and sales recovered in September, returning close to the comparison period’s level when the effect of the event business is eliminated.

For Alma Consumer, the past quarter was a defensive victory, with a recovery seen particularly in automotive and retail advertising during the review period, and profitability was supported by cost savings. Digital services developed favourably except for the digital service related to tourism. However, content revenue declined as the COVID-19 restrictions affected the travel sector and subsequently the number of outlets where single copies of print publications are sold. After the outbreak COVID-19 of last spring, Iltalehti’s audience growth has stayed at a higher level than previously and reader engagement is stronger than before. Number of visitors grew by about 15% year-on-year during the review period.

During the past few weeks, the incidence of COVID-19 has increased significantly in our various operating countries. The escalation of the second wave of the epidemic increases economic uncertainty and our business outlook for the final quarter remains weak. Nevertheless, I am confident that our highly committed employees, competitiveness and strong balance sheet further provide us with a stable foundation and adequate resources to tackle a potentially very challenging operating environment. 

The impacts of the COVID-19 epidemic on our business segments and the measures we have taken to mitigate the impacts are described in more detail on pages 3–4 of this Interim Report.

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The COVID-19 epidemic impacted Alma Media’s businesses in the third quarter less than we expected. The slowing down of the epidemic and the lifting of the restrictions imposed by the authorities led to a gradual economic recovery, which was reflected in the slower decline of our revenue.