CEO's Review

Kai Telanne, President and CEO:

(published 17 July 2019)

Our digital businesses continued to see profitable growth in the second quarter of 2019. Excluding the effect of divested and discontinued operations, Alma Media’s revenue was on a par with the comparison period. Adjusted operating profit increased by 15.5 per cent in April–June to MEUR 14.9, while the operating profit margin was 16.9 per cent.

The profitability of the Alma Markets segment continued to develop favourably; the operating profit margin was 38.2 per cent. Revenue from the recruitment business grew but, due to the general uncertainty regarding the economic outlook, the rate of growth was slower than before, particularly in the Czech Republic, Finland and the Baltic countries. In Finland, the positive development seen during the early part of the year in the housing and automotive marketplace and systems business continued: these businesses saw organic growth of 10 per cent during the reporting period. Investments in marketing and added-value products were reflected in the favourable development of customer volumes. 

In the Alma Talent segment, the development of digital content revenue was strong in the Finnish media business during the review period: digital content revenue from Finnish financial and professional media grew by 24 per cent, exceeding the decline of print products. The segment’s revenue was weighed down by declining advertising as well as divested and discontinued operations. 

The progress of our digital transformation and its positive impact on our profitability was also evident in the Alma Consumer business in April–June. Growth was achieved during the reporting period in the digital content revenue of regional media as well as the digital advertising revenue of all of the segment’s media, particularly with respect to content marketing and mobile media advertising revenue. The number of visitors to the Iltalehti online service increased and the rate of decline in Iltalehti’s single-copy sales slowed down during the review period. Profitability was also affected by cost savings achieved through last year’s restructuring measures related to segment integration and the decrease in external content purchases. 

The increasingly digital business environment, declining volume of delivered printed products and rising unit costs have created a need for structural changes in our delivery business. In June, we signed an agreement on outsourcing the early morning delivery of the newspapers published by Alma Media Kustannus to Posti in Pirkanmaa and Satakunta, effective from the beginning of next year. We expect to achieve annual cost savings of MEUR 5–6 as a result of the outsourcing move. Going forward, the improved efficiency of delivery operations enables us to secure and extend the life cycle of subscribed printed newspapers as far into the future as possible.

At the beginning of July, the value added tax applicable to digital newspapers, magazines and books as well as single-copy sales of print newspapers and magazines was reduced from 24 per cent to 10 per cent in Finland. We applied the tax cut to the subscription prices of our digital publications to support the development of the demand for digital media.
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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.