Alma Media’s Interim Report January–March 2018: Revenue and adjusted operating profit at the previous year’s level in the first quarter

Alma Media Corporation               Interim Report                      25 April 2018 at 8:00 a.m. (EEST)

Alma Media’s Interim Report January–March 2018:

REVENUE AND ADJUSTED OPERATING PROFIT AT THE PREVIOUS YEAR’S LEVEL IN THE FIRST QUARTER

Financial performance January–March 2018: 

  • Revenue MEUR 92.2 (90.5), up 1.8 %.
  • Adjusted operating profit MEUR 12.2 (12.6), or 13.2 %  (13.9 %) of revenue, down 3.0 %.
  • Operating profit MEUR 12.9 (11.4), or 14.0 %  (12.6 %) of revenue, up 13.2 %.
  • Earnings per share EUR 0.11 (0.09).
  • Alma Markets: The result improved despite investments in new business areas  
  • Alma Talent: The result was weighed down by declining advertising revenue and the segment’s Swedish business 
  • Alma News & Life: Digital advertising remained at a record-high level 
  • Alma Regions: Profitability was reduced by lower advertising revenue 
KEY FIGURES  2018  2017  Change  2017 
MEUR  Q1  Q1  %  Q1–Q4 
Revenue  92.2 90.5 1.8 367.3
Content revenue  31.0 32.1 -3.4 125.8
Content revenue, print  26.7 28.0 -4.7 109.3
Content, digital  4.3 4.1 5.5 16.5
Advertising revenue*)  46.3 44.3 4.6 185.8
Advertising revenue, print  13.9 15.7 -11.3 62.8
Sales of advertising, digital  31.9 28.0 13.6 120.5
Service revenue*)  14.8 14.2 4.8 55.7
Adjusted total expenses  80.1 78.0 2.6 320.8
Adjusted EBITDA  16.4 16.6 -1.1 67.4
EBITDA   17.1 15.4 11.1 66.9
Adjusted operating profit  12.2 12.6 -3.0 51.1
% of revenue  13.2 13.9 13.9
Operating profit/loss  12.9 11.4 13.2 46.6
% of revenue  14.0 12.6 12.7
Profit for the period  10.4 8.9 17.4 36.7
Earnings per share, EUR (undiluted and basic)  0.11 0.09 16.0 0.39
Digital business revenue  41.7 37.1 12.2 156.6
Digital business, % of revenue  45.2 41.0 42.6


*) Comparison data has been adjusted between advertising revenue and service revenue 

Operating environment in 2018 

The Finnish economy is expected to experience strong growth in 2018. Alma Media’s significant operating countries in Eastern Central Europe, such as the Czech Republic and Slovakia, are expected to see economic growth of 3–4%. The structural transformation of the media will continue in 2018; online content sales will grow, while the demand for print media will decline. 

Outlook for 2018 (Unchanged) 

In 2018, Alma Media expects its full-year revenue to remain at the previous year’s level and its adjusted operating profit to increase from the 2017 level. The full-year revenue for 2017 was MEUR 367.3, and the adjusted operating profit was MEUR 51.1.

Kai Telanne, President and CEO: 

The strong growth of the Finnish economy continued during the reporting period, and consumer confidence was high. The positive general economic development in the first quarter did not, however, result in a turn to growth in the domestic advertising market. According to Kantar TNS, media advertising volume declined by 2.3 per cent in the first quarter, with newspaper advertising decreasing by 11.0 per cent. Online advertising saw continued growth at a rate of 6.9 per cent. 

The fact that the market developed in two different directions was also reflected in Alma Media’s business in the first quarter of 2018. The revenue and profitability of Alma Media’s businesses the furthest in digital transformation continued to see growth during the review period, but the result of print media businesses declined due to the weaker advertising market. Alma Media’s revenue grew by 1.8 per cent to reach MEUR 92.2, while the Group’s adjusted operating profit decreased by 3.0 per cent to MEUR 12.2.  

In the Alma Markets segment, growth was again driven by the favourable international operating environment, strong market position and successful sales work in Eastern Central Europe and domestic marketplaces. The segment’s expenses were increased by the expansion of the Czech subsidiary LMC’s business into Poland as well as investments in sales, marketing and the renewal of online services, such as the Etuovi mobile service.  

The development of Alma Talent’s operations in Finland was affected by a significant decrease in advertising revenue compared to the exceptionally strong reference period of January–March 2017. The decrease was due to a decline in advertising spending of a few key industries in decision-maker and financial media. The segment’s financial performance in Sweden was also influenced by declining advertising revenue in trade media. In the Finnish media business, digital content revenue and digital subscriptions increased in line with expectations, which compensated for the decline in print media content revenue.

In Alma News & Life, the digital transformation is continuing swiftly, with digital business now representing 55 per cent of the segment’s revenue. January–March was the segment’s tenth consecutive quarter of increasing advertising revenue. The growth of the segment’s advertising revenue outpaced the market and growth was achieved across all channels. The change in consumers’ media consumption habits was reflected in strong growth in video advertising, among other things. As expected, the single-copy sales of print media continued to decline. Costs were increased by the development of online services as well as investments in sales and marketing.

In the Alma Regions segment, advertising revenue decreased as advertising spending in the retail sector continued to decline. Content revenue from digital customers has seen positive development, which is evidence of the successful shaping of content and services to create a digital era customer experience. Our decision to sell Lapin Kansa’s media and distribution business to Kaleva is in the best interests of all of the parties concerned, and it offers improved opportunities for the further development of the newspaper business in Northern Finland.  

Our plan, announced in March, to combine the Alma News & Life and Alma Regions business segments into Alma Consumer, a new unit with a strong focus on consumer media, will facilitate closer cooperation within Alma Media and, above all, improve our customer insight and capacity to serve Finnish media consumers and advertisers. We will continue to accelerate the digital transformation of our content, services and advertising at all levels: nationally, regionally and locally.  

Alma Media is in a strong financial position with good cash flow. The equity ratio stood at 47.8 per cent at the end of March, while gearing fell to 25.4 per cent. The strong balance sheet provides a strong foundation for investments and Alma Media’s growth.  

Consumer trust in our content and services is absolutely essential for Alma Media’s operations. One of our key priorities is to ensure transparency and fairness in the way we process customer information. We have taken steps to prepare for the General Data Protection Regulation (GDPR) to become applicable at the end of May. These steps include, among other things, allocating resources to and revising our data management and handling processes as well as arranging training for our employees and advertisers.

More information:
Kai Telanne, President and CEO, telephone +358 (0)10 665 3500
Juha Nuutinen, CFO, telephone +358 (0)10 665 3873

News conference and audio webcast:

An analyst and media conference will be held on the same day at 11.00–12.00 EEST in the Alma House (address: Alvar Aallon katu 3 C, Helsinki). In addition to the presentations held by President & CEO Kai Telanne and CFO Juha Nuutinen, participants will have an opportunity to discuss with other members of the company's management. Please note that the conference will be held in Finnish. The presentation material in English will be available on www.almamedia.fi/en/investors/reports-and-presentations/presentations at 11.00 EEST.

To participate in the conference, kindly register beforehand by e-mail, kutsut@almamedia.fi.

A conference call and audio webcast concerning the financial result of January–March 2018 will begin at 13.00 EEST and will be held in English. You can participate in the conference by calling +44 (0)330 336 9104 (confirmation code: 396561) or follow it at http://www.almamedia.fi/en/investors/reports-and-presentations/presentations.

Alma Media’s financial calendar 2018 

Alma Media will publish financial reports in 2018 as follows:

- Interim report for January–June 2018 on Wednesday, 18 July 2018 at approximately 8:00 EEST

- Interim report for January–September October 2018 on Thursday, 25 October 2018 at approximately 8:00 EEST 

ALMA MEDIA CORPORATION 

Board of Directors  

Distribution: NASDAQ Helsinki, main media, www.almamedia.com

Alma Media is a media company focusing on the service business and journalistic content. The company’s best-known brands are Kauppalehti, Talouselämä, Affärsvärlden, Iltalehti, Aamulehti, Etuovi.com and Monster. Alma Media builds sustainable growth for its customers by utilising the opportunities of digitalisation, including information services, system and expert services and advertising solutions. Alma Media’s operations have expanded from Finland to the Nordic countries, the Baltics and Central Europe. Alma Media employs approximately 2,250 professionals (excluding delivery employees), of which approximately 30% work outside Finland. Alma Media’s revenue in 2017 was EUR 367.3 million. Alma Media’s share is listed on NASDAQ Helsinki. Read more at www.almamedia.com.