CEO's Review

Kai Telanne, President and CEO:

(published 25 April 2019)

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.
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.