CEO's Review

Kai Telanne, President and CEO:

17 July 2020

Alma Media’s operating environment changed quickly during the early part of the year as the coronavirus epidemic spread globally and the authorities imposed restrictions on movement and business activity to reduce the spread of the disease and uncertainty increased to a significant degree. Alma Media’s revenue declined by 18.2 per cent in April–June to MEUR 52.5. Relative profitability remained on par with the comparison period with the operating profit margin at 18.7 per cent. The cost savings achieved in the second quarter exceeded the previously issued estimate and totalled MEUR 8.4. 

The impact of the coronavirus pandemic was the hardest on the recruitment business. Revenue declined between 16 and 60 per cent depending on the country. The rate of decline was less sharp than expected in the Czech Republic, for example, where stability was brought by sales to small and medium-sized enterprises developing better than anticipated. The demand for recruitment services is now recovering to some extent, but the outlook remains unclear and a significant year-on-year decline in customer invoicing in April–June will have a negative impact on the development of revenue in the second half of 2020. The coronavirus epidemic also had an adverse effect on the housing and automotive marketplace business during the review period, although these businesses began to recover midway through the quarter. Thanks to significant cost savings of MEUR 3.9, particularly in marketing and employee expenses, the segment’s profitability remained at a good level (operating profit margin 36.3 per cent). 

Alma Talent’s advertising revenue declined significantly, but the business was stabilized by other businesses, such as information services, book publishing, digital business premises services and direct marketing. The coronavirus crisis led to record-high growth in the demand for high-quality media content, with digital content revenue increasing by 46 per cent. The sale of Alma Talent AB to New Technology Media Group in June represents the continuation of the consistent process of exiting the traditional media business in Sweden and shifting the strategic focus more clearly to digital business and services. Thanks to cost savings of MEUR 1.9, the segment’s relative profitability was on par with the comparison period (operating profit margin 12.4 per cent).

In the Alma Consumer segment, advertising related to the automotive trade and travel declined particularly substantially. Advertising in general recovered slightly in June, but Alma Consumer’s advertising revenue has not rebounded to a significant degree as the market situation remains very challenging. The rate of decline in Iltalehti’s single-copy sales decreased slightly as a number of retail locations reopened and restrictions on movement were lifted. Among the segment’s digital services, the loan comparison service Etua.fi developed well during the review period. The visitor volumes of Iltalehti’s online service showed good growth in April–June, although growth levelled off after the epidemic subsided. The segment’s cost savings totalled approximately MEUR 1.3. 

The exceptional circumstances continue and estimating the demand for media content and services remains challenging. To ensure our long-term success and profitability, we are preparing for the future by developing various scenarios and planning adjustment measures for each scenario. Thanks to our strong financial position, we are also very well prepared to take advantage of future growth opportunities. The past spring has reinforced our view that the digital strategy we have chosen and our expansion from media to digital services will continue to be the right path for us going forward.

The impacts of the coronavirus 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 the Half-Year Report.

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Thanks to our strong financial position, we are also very well prepared to take advantage of future growth opportunities. The past spring has reinforced our view that the digital strategy we have chosen and our expansion from media to digital services will continue to be the right path for us going forward.