CEO's Review

 

Kai Telanne, President and CEO:

(Q3 Interim Report published on 27 October 2017)

The positive development of Alma Media’s business continued in the third quarter. Adjusted operating profit grew by 53 per cent to MEUR 14.0 in July–September. Profitability was improved by the excellent development of sales in the Alma Markets segment as well as cost savings generated by previously implemented restructuring measures in Alma Talent, Alma Regions and shared operations. Alma Media’s revenue grew by 6 per cent in July–September and amounted to MEUR 86.0.

The Finnish economy is growing, but its positive boost has not reached the advertising market. According to Kantar TNS, the volume of media advertising decreased by 2.2 per cent in July–September. This can be attributed to a trend that has continued for some time: a steep decline in newspaper advertising by the retail sector combined with the fact that advertiser customers in general are investing in their own media and marketing technology.

Alma Markets continued on a growth path. The positive economic trend continued in our Eastern Central Europe markets, which supported the strong revenue growth and improved profitability of our recruitment business, especially in the Czech Republic. Growth also continued in the Finnish marketplaces, and the development projects for new online services continued as planned. The segment’s result was also improved by lower depreciation.

In Alma Talent, profitability improved through cost savings and revenue increased. The growth is attributable to successes in digital advertising and content marketing, as well as the full merger of Mediuutiset into Alma Talent in July. Alma Talent’s media aim to increasingly integrate paid digital content and quality journalism. The renewed Talouselämä and Kauppalehti Optio were introduced to the market in September. Arvopaperi was launched at the beginning of the year to provide even better services to online customers. Renewal of other Talent’s media also continued. 

Alma News & Life has further strengthened its foothold in programmatic buying and mobile advertising, such as mobile-optimised Rich Media implementations. Revenue was also increased by the growth in Rantapallo’s sales. The continuing decline of single-copy sales, however, decreased the segment’s adjusted operating profit. Costs were increased by investments in the new reservation system for the Matkapörssi service, for example. 

The decisions previously made in Alma Regions to reorganise the Lapland newspapers and Alma Manu’s business operations as well as reducing costs are producing results. Business is picking up in the north. The demand for content has increased and the external revenue of printing and delivery operations is growing. Even so, the current cost structure is heavy, as the volume of newspaper advertising will inevitably decline despite the growth of the national economy.

Alma Media has enjoyed ten consecutive quarters of profitable growth and our financial position has continued to improve. The equity ratio stood at 50.7 per cent at the end of September, while gearing was 21.7 per cent. Thanks to its financial performance, Alma is in a good position to accelerate sustainable growth both by developing the existing business and by seeking new growth areas. 

In September, the Finnish Government approved a subsidy for commercial television news and current affairs programmes. Alma Media’s opinion is that the vitality of commercial media and the pluralism of news cannot be built on government subsidies. Sustainable business can only be created when companies have the ability to renew themselves amidst changes in their operating environment, instead of relying on public funding. Equal operating conditions must be provided for all players without subsidies that distort competition.

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Alma Media has enjoyed ten consecutive quarters of profitable growth. Thanks to its financial performance, Alma is in a good position to accelerate sustainable growth both by developing the existing business and by seeking new growth areas.