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CEO’s Review

CEO’s review 18 July 2024: Building future growth in a subdued operating environment

Alma Media’s business developed in line with our expectations in the second quarter. Revenue increased by 2.4% to MEUR 80.1. Revenue was supported by acquisitions, but the weakened exchange rate of the Czech koruna dampened revenue performance. Revenue from advertising decreased by 7.6% to MEUR 15.9.

Adjusted operating profit was on a par with the comparison period at MEUR 19.4, representing 24.2% of revenue. The share of total revenue represented by digital business rose to a record-high level of 84.4%. Profitability was weighed down by investments in service development, particularly in the Marketplaces and Alma Career segments, but strong cost control in Alma News Media had a positive impact on the bottom line. The long-awaited interest rate cuts by the European Central Bank began, and it is hoped that they will support consumers’ confidence in their own finances and their intentions to make purchases of durable consumer goods.

Investments in service development were accelerated

In the Alma Career segment, revenue decreased by 2.5% and amounted to MEUR 27.7. Adjusted operating profit decreased by 9.0% to MEUR 11.1 and was 40.2% of revenue. The effect of the weakened Czech koruna on revenue was approximately MEUR 0.8. In the second quarter, the development of invoicing at local currencies was -1.2% (Q1: -4.9%).

There were notable differences in the labour market cycle between Alma Career’s operating countries. Among the significant operating countries, the situation in the Czech Republic remained unchanged, with small employers engaging in recruitment while larger customers took a more cautious approach. The lively recruitment markets in Slovakia and Croatia continued to be driven by the high level of activity among jobseekers, intense competition for skilled labour and low unemployment. At the same time, the situation remained challenging in the Baltic countries and Finland.

In the Alma Marketplaces segment, revenue increased by 15.3% to MEUR 25.1 in the second quarter, supported by the acquisition of Netwheels. Adjusted operating profit increased by 9.7% to MEUR 7.1 and was 28.4% of revenue. The improvement in profitability compensated for the decline in profit performance seen in the first quarter. Revenue from the Mobility business area increased by 48.1% to MEUR 9.0 (6.1). Even when the effect of acquisitions is excluded, the rate of revenue growth was 9.9%. The negative impacts of the housing market have had a delayed effect on the revenue of housing-related services. Revenue from the Real Estate business area increased by 4.2%.

Due to acquisitions, expenses in the Marketplaces segment increased by almost 18%. In spite of the challenging market conditions, we continued to purposefully implement our development projects, particularly in digital services related to the automotive and housing verticals, as well as other key projects related to transactional commerce.

The acquisition of Netwheels in Q1 complements our automotive and mobility services for business customers. It contributes to the development of the marketplace and systems business by streamlining the purchase and sales processes of vehicles and by offering digital solutions to car retailers, importers, financing companies, application developers and other operators in the automotive sector.

In the Alma News Media segment, revenue decreased by 2.2% to MEUR 27.2 due to advertising declining by 4%, but adjusted operating profit for the second quarter remained on a par with the comparison period at MEUR 3.8. Active cost control measures led to expenses decreasing by 2.7% and adjusted operating profit rose to 14.1% (13.7%) of revenue.

The economic conditions remained challenging for Finnish media in spite of continued strong general interest in the news. The development of targeted and personalised content led the paid Iltalehti Plus service to increase its number of subscribers to over 52,400. The strong digital transformation continued, with the share of digital business rising to nearly 60% of revenue. In direct marketing, growth was achieved in terms of both revenue and operating profit.

Alma Media’s strong financial position and well- functioning business model

Our financial position is strong in spite of the Netwheels acquisition. Our net debt to EBITDA ratio was 1.9 and our equity ratio was 44.3%. Our digital business models are cost-efficient and scalable, and they enable us to further expand our role in our customers’ value chains in our key business areas.

We have leveraged cooperation and a unique competitive advantage to create an entity with growth promoting culture and strong expertise serving as the foundation also for future growth.

Kai Telanne
President and CEO

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We have leveraged cooperation and a unique competitive advantage to create an entity with growth promoting culture and strong expertise serving as the foundation also for future growth.