CEO's Review

Kai Telanne, President and CEO:

14 February 2020

Alma Media had its fifth consecutive year of improved results in 2019. We achieved the best result in Alma Media’s history through our successful digital strategy, improved operational efficiency, the divestment of loss-making or marginally profitable businesses and effective cost management: our adjusted operating profit, taking both continuing and discontinued operations into account, increased by 7.5 per cent to MEUR 61.6. Earnings per share were on a par with the previous year at EUR 0.51. The earnings per share in the comparison year were affected by a capital gain recognised on the divestment of the Group’s business operations in Lapland (MEUR 4.5) in 2018.  

Our revenue compared to the previous year was reduced primarily by divestments but, in the latter part of the year, also by a decline in advertising revenue in Finland. The double-digit growth of digital content revenue continued in October–December, compensating for the decline in print content revenue. 

The Alma Markets segment reached MEUR 100 in revenue in 2019 and its profitability was record high. The segment’s revenue in October–December was on a par with the previous year. In the latter part of the year, the revenue of the recruitment business reflected the uncertainty in the world economy. The revenue of the recruitment business decreased by 1.9 per cent in October–December mainly due to the weak development of the Finnish recruitment business. In the Alma Markets segment, the housing and automotive marketplace and systems business continued to develop favourably in October–December, particularly on the strength of housing-related and automotive added-value services and tendering services. 

Alma Talent’s revenue and adjusted operating profit was weighed down in October–December by the decline of the cyclically sensitive recruitment advertising business as well as revenue from book sales, training services and direct marketing. Digital content revenue from financial and professional media in Finland continued to see strong growth (+28.4%) in October–December, compensating for the decline in content revenue from print media. The improvement of operational efficiency enabled by the transition from print to digital reduced expenses during the review period.

The revenue and adjusted operating profit of Alma Consumer, including the regional media and printing business, were reduced in October–December by the subdued advertising market in Finland. Print media advertising sales declined in regional media, particularly in recruitment advertising and supplement advertising. The decline in digital advertising was mainly attributable to the lower sales of desktop advertising. Content marketing grew. Alma Consumer continued to see double-digit growth (+24.4%) in digital content revenue in the final quarter of the year. Expenses were reduced by cost savings achieved through the restructuring measures implemented in 2018 as well as a decrease in external content purchasing. 

In 2019, we achieved two of our three long-term financial targets, return on investment and dividend payout ratio. The levelling off of economic growth was reflected in slower digital business growth of 3.7 per cent. Alma Media’s objective is to exceed market growth in the digital business, which calls for acquisitions in addition to organic growth. 

Our balance sheet, which has grown stronger during the past few years, and our good cash flow enable investments in growth and a good dividend payout capacity. Alma Media’s Board of Directors proposes a dividend for the financial year 2019 of EUR 0.40 (0.35) per share. 

On 11 February 2020, we announced that Alma Media will sell its regional news media business and printing operations to Sanoma Media Finland. This transaction sharpens our strategy and enables us to shift our focus even more clearly to the development of digital media and international business. The capital invested in print media will decrease. Our key growth areas will be digital marketplaces, the national multi-channel consumer media and service business in Finland as well as financial and professional media and services targeted at businesses. Taking the transaction into account, the share of digital business of the revenue of continuing operations will increase to approximately 70 per cent and the operating profit margin will increase to 20 per cent in 2019. The completion of the transaction is subject to the approval of the Finnish Competition and Consumer Authority and the transaction is expected to be finalized during the year 2020.
In the past quarter, the growth in digital content sales exceeded the decline in print media content sales for the first time at the Group level.