CEO’s Review

CEO’s review 18 October 2024: Profitability improved in a subdued operating environment

Alma Media’s business developed favourably in the third quarter. Revenue increased by 2.4% to MEUR 75.2. Revenue was supported by acquisitions, but the weakened exchange rate of the Czech koruna dampened revenue performance. Domestic advertising sales decreased by 2.7%.

Adjusted operating profit improved by 6.7% to MEUR 21.9, reaching a record-breaking 29.1% of revenue. The share of total revenue represented by digital business also rose to a record high level of 86.2%. We continued to invest in the development of our services, particularly in the Career and Marketplaces segments.

There are also some positive signs in the market. Inflation is decreasing and the ECB started to lower its key interest rate, which will help strengthen consumer confidence in their finances and promote households’ opportunities to make purchases of durable consumer goods, such as homes and cars.

We accelerated our investments in product development

In the Alma Career segment, revenue decreased by 4.1% and amounted to MEUR 26.3. Adjusted operating profit decreased by 5.5% to MEUR 11.3 and was 43.2% of revenue. In local currencies, revenue decreased by 1.6% and adjusted operating profit by 2.6%. In the third quarter, the development of invoicing in local currencies was on a par with the comparison period (the development of invoicing in local currencies was -4.9% in Q1 and -1.2% in Q2). The development costs associated with the segment’s common platform had a negative effect on profitability.

There were again significant differences in the labour market cycle between the segment’s operating countries. Among the significant operating countries, the situation in the Czech Republic remained unchanged, with small and medium-sized employers engaging in recruitment while the largest customer companies maintained a more cautious approach. The lively recruitment markets in Slovakia continued to be driven by the high level of activity among job-seekers, intense competition for skilled labour and low unemployment. The situation in the Baltic countries and Finland remained challenging.

In the Alma Marketplaces segment, revenue increased by 16.6% to MEUR 24.5 in the third quarter, supported by the acquisition of Netwheels. Adjusted operating profit increased by 15.5% to MEUR 8.6 and was 35.3% of revenue. Organic revenue growth was 5.5%.

Revenue from the Mobility business area increased by 48.4% to MEUR 8.7 (5.9). Excluding the effect of acquisitions and divestments, revenue increased by 8.9%. There were initial signals of a recovery in the housing market. Revenue in the Real Estate business area increased by 10.7%, driven by the growth of digital services and business premises marketplaces.

Due to acquisitions, expenses in the Marketplaces segment increased by 17.4%. In spite of the weak market conditions, we continued to implement our development projects, particularly in digital services related to the automotive and housing verticals, focusing on the development of transactional business.

The integration of Netwheels into the segment’s business has progressed well. The acquisition complements the automotive and mobility services offered to our corporate customers, streamlines vehicle purchase and sales processes, and supports the development of the marketplace and systems business.

The Alma News Media segment’s revenue decreased by 2.2% to MEUR 24.5 due to a 2.4% decline in advertising, but active cost management meant that the segment’s adjusted operating profit improved to 16.4% (13.8%) of revenue, which represents strong accomplishment in the media business even by international comparison.

Alma News Media announced change negotiations to ensure its long-term competitiveness. The aim of the negotiations is to carry out a strategic assessment of Kauppalehti Optio, Fakta and Mediuutiset, and reorganise the work in parts of the editorial departments.

The economic conditions remain challenging for Finnish media in spite of high general interest in the news. The number of subscribers to the Iltalehti Plus service increased by 18% to 55,580. The share of digital business of revenue increased and was above 60%.

The world is changing with artificial intelligence, and so are we

The three cornerstones of our strategy are transformation, growth and scalability. We make the necessary investments in competence and technology in order to produce solutions that leverage AI and improve processes in our customers’ value chains, and to respond to the changing needs of our customers and partners.

We already make extensive use of AI in our own operations. The Group currently has over 50 projects under way with the aim of taking advantage of AI. These projects will improve productivity and efficiency in our existing processes, complement our existing services with AI-driven components, and ultimately introduce completely new AI-based business concepts to the market. We have a high level of preparedness, capabilities and motivation for continuous renewal.

Kai Telanne
President and CEO

“We have a high level of preparedness, capabilities and motivation for continuous renewal.“