CEO’s review: Strong growth in an exceptional operating environment
(22 April 2022)
Russia’s attack on Ukraine shocked Europe. However, the economic impacts of the war on Alma Media’s operations have been minor thus far, and the company’s businesses achieved strong development in the first quarter of the year. Revenue grew by 31.1% to MEUR 76.2. Adjusted operating profit grew at a record rate of 77.4%, reaching MEUR 19.6.
The Alma Career segment had an excellent quarter. The continued strong demand for recruitment services increased revenue by 65.0% to MEUR 26.7. Adjusted operating profit grew by 140.5% to MEUR 12.3, representing 46.0% of revenue. The demand for recruitment services increased in all of our operating countries, and the positive development of added-value services related to recruitment – such as system solutions and employer branding related – continued. While COVID-19 infection numbers remained high due to the Omicron variant, the public authorities moved to quickly lift restrictions in all of our operating countries. The brisk activity in the recruitment market is believed to stem from the strong recovery of labour demand from the COVID-19 crisis, which increases the need for recruitment advertising and accelerates competition for labour. As our customer invoicing was again at a strong level, we expect growth to continue in the second quarter. The potential negative impacts of the crisis in Ukraine on the segment’s business operations are not expected to materialise until the second half of the year at the earliest.
Strong growth was seen in all businesses in the Alma Consumer segment. Revenue grew by 41.5% to MEUR 24.8. Organic revenue growth was 11.1%. Adjusted operating profit grew by 47.4% to MEUR 5.0, representing 20.4% of revenue. The share of revenue represented by digital business rose to 82.9%. Revenue from media and media-related services increased by 22.1%. Russia’s attack on Ukraine increased the consumption of news media, which had a positive impact on Iltalehti. The demand for the paid Iltalehti Plus service developed favourably throughout the quarter. The benefits of the integration of Nettix and synergies between our Finnish media and marketplaces are also becoming increasingly apparent. In the second quarter, the increase in consumer uncertainty caused by the war in Ukraine may be reflected particularly in housing and automotive marketplaces and related advertising.
The Alma Talent segment’s revenue increased by 3% to MEUR 25.2. The segment’s strong digital transformation continued, with the share of digital business rising to 56.4% of revenue. Adjusted operating profit grew by 5.2% to MEUR 5.5, representing 21.7% of revenue. Alma Talent Media’s revenue increased by 4.8% to MEUR 13.4, and Alma Talent Services’ revenue increased by 3.6% to MEUR 8.7.
Talent Media’s content revenue grew by 1.1%, as the increase in digital content revenue exceeded the decline in print media revenue. The war in Ukraine tempered the growth of the transaction volume for housing and other properties as well as new IPOs. At the same time, the war increased online traffic for the segment’s media. The digital housing transaction service continued to grow in popularity, and Talent’s positive performance was also attributable to digital business information and law services. Finland’s leading HR industry event, HRx, was organised very successfully at the end of March. The event brought a large number of HR professionals physically together to enjoy networking activities and discussions and to be inspired by leaders in the field.
Our financial position strengthened as planned in the first quarter thanks to our excellent profit performance and strong cash flow. Our gearing at the end of the quarter stood at 102.3%, compared to 160.0% at the end of the Q2 2021 after significant acquisitions that had an impact on our financial position. Our equity ratio increased from 29.4% to 33.0% over the same period.
The war in Ukraine will have an impact on economic growth also in Alma Media’s operating countries. While our company has no business activities or assets in Ukraine or Russia, we will not be unaffected by the indirect economic impacts of the war. While the estimates of economic development naturally involve uncertainty, it is likely that the war will weaken economic growth and simultaneously accelerate inflation in Alma Media’s operating countries during the remainder of the year.
Emotionally, we have been hit hard by the tragedy in Ukraine. We have supported refugees through aid organisations and offered free advertising space to the organisations. We have also supported Ukrainians in finding work by developing a job portal Workania.eu for Ukranians entering the Alma Career countries. Service helps Ukrainian refugees find work in their own language, and the service currently has over 7000 jobs available to Ukrainians.
The crisis in Ukraine and the still fluctuating epidemiological situation underscore the importance of agility, strategic flexibility and resilience for a company. To operate in volatile and uncertain conditions, we need to have a strategy that is clear, well-communicated and capable of being implemented. It is also important for us to have a strong operational capacity as well as adaptability, flexibility and a willingness to work towards shared goals. As the COVID-19 pandemic has shown, Alma Medians have the ability to quickly adapt to difficult circumstances and maintain excellent business performance even in weak economic environment. In spite of the geopolitical gloom, we look forward to the post-crisis period with optimism.
President and CEO
” Company’s businesses achieved strong development in the first quarter of the year. Revenue grew by 31.1% to MEUR 76.2″