CEO's Review

Kai Telanne, President and CEO:

(published 25 October 2018)

Alma Media’s profitability continued to develop favourably in the third quarter. The adjusted operating profit for July–September was MEUR 15.1 and the operating profit margin was 18.5 per cent. Alma Markets, which specialises in digital marketplaces and the recruitment business, continued its strong profit performance. Relative profitability was also improved by the divestment of businesses with negative or low profitability. Alma Media’s revenue in July–September declined, as expected, due to divestments. Revenue decreased by 5.1 per cent and amounted to MEUR 81.6.

While the Finnish economy is estimated to be at the peak of its current boom period, the domestic media advertising decreased by 0.6 per cent in July–September according to Kantar TNS. The reason behind the low level of advertising investment is the ongoing shift from traditional newspaper advertising to digital advertising, advertisers investing in their own media and marketing technologies, and intensifying competition between domestic media agencies and international platforms. 

Alma Markets continued to grow in the third quarter while maintaining an excellent level of profitability (operating profit margin 39.3 per cent). Revenue growth in the recruitment business slowed down slightly compared to the first half of the year, but the demand for recruitment services in Eastern Central Europe remains at a good level due to strong economic growth. Marketing investments in a new mobile recruitment service in Poland continued during the period. In Finland, favourable economic development boosted the sales of online services related to housing and cars.  

Alma Talent’s adjusted operating profit for July–September was on a par with the comparison period, at MEUR 2.8. Alma Talent’s transformation strategy is focused on the renewal of media and pursuing growth in digital content revenue and digital subscriptions. The segment performed in line with targets in these areas during the review period, which helped compensate for the decline of print media. The measures aimed at reorganising operations in Sweden continued during the period. The focus of the segment’s operations has also been sharpened by divesting unprofitable and non-synergistic businesses. 

Alma Consumer’s revenue was reduced by the divestment of newspapers in Lapland. The development of profitability was affected by the lower single-copy sales of Iltalehti and the decreasing print media advertising revenue of regional and local media, although the rate of decline in print advertising revenue was slower than in the market in general. In the segment’s digital advertising, mobile and video advertising developed favourably and content marketing grew substantially year-on-year. The programmatic buying market has partially recovered of the entry into force of the GDPR, which affected its development in the previous quarter.  

In July, we sold an office and production property in Tampere. The sale did not have a significant effect on profit, but it frees up capital for the development of the core businesses. Our equity ratio stood at 56.0 per cent at the end of September, while gearing was 12.1 per cent.  

The decision of the EU Council to allow value added tax on digital publications to be lowered from 24 per cent to 10 per cent represents a positive outcome. We believe the decision will lead to increased demand and consumption of digital services and content in Finland. This, in turn, will help maintain the vitality of domestic media companies and improve their ability to perform their duty of maintaining the education and awareness of the public, which is an important role played by high-quality media.  

 

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The decision of the EU Council to allow value added tax on digital publications to be lowered from 24 per cent to 10 per cent represents a positive outcome. We believe the decision will lead to increased demand and consumption of digital services and content in Finland.