Alma Media’s Interim Report January–June 2017: Good development of profitability in the second quarter driven by the recruitment business

Alma Media Corporation               Interim Report                      21 July 2017 at 9:00 a.m. (EEST) 

Alma Media’s Interim Report January–June 2017: 

GOOD DEVELOPMENT OF PROFITABILITY IN THE SECOND QUARTER DRIVEN BY THE RECRUITMENT BUSINESS 

Financial performance April–June 2017: 

• Revenue MEUR 93.7 (92.0), up 1.9%. 
• Adjusted operating profit MEUR 13.2 (9.9), or 14.1% (10.8%) of revenue, up 33.8%. 
• Operating profit MEUR 15.0 (9.1), or 16.0% (9.9%) of revenue, up 64.9%. 
• Earnings per share EUR 0.13 (0.07). 
• Alma Markets: Strong and profitable growth in the Czech Republic lifted the segment’s profit to a new record. 
• Alma Talent: Profitability was on a par with the previous year. 
• Alma News & Life: The share of digital business grew to exceed 50% of revenue. 
• Alma Regions: Profitability was weighed down by the decline of print media advertising. 

Financial performance January–June 2017: 

• Revenue MEUR 184.2 (178.7), up 3.1%. 
• Adjusted operating profit MEUR 25.8 (15.4), or 14.0% (8.6%) of revenue, up 67.6%. 
• Operating profit MEUR 26.4 (11.6), or 14.3% (6.5%) of revenue, up 127.7%. 
• Earnings per share EUR 0.23 (0.08). 

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

Outlook for 2017 (revised on 13 July 2017) 

On 13 July 2017, Alma Media revised its guidance and outlook for 2017. Contrary to its previous guidance, the company expects its adjusted operating profit to increase clearly from the 2016 level. The company expects its revenue to remain unchanged from the previous year. In its previous guidance, issued on 28 April 2017, the company expected its revenue to remain unchanged and its adjusted operating profit to increase from the 2016 level. 

The revised outlook and expected improvement in operating profit are the result of the continued strong sales in the Alma Markets business segment, especially in the international recruitment business. Thanks to the restructuring and efficiency improvement measures, the profitability of the Group’s Finnish operations has also improved. 

Outlook for 2017: 

The Finnish economy is expected to grow by 1–3% in 2017. Alma Media’s significant operating countries in Eastern Central Europe, such as the Czech Republic and Slovakia, are expected to see economic growth of 2–4%.  Macroeconomic development affects both consumer demand and advertising volume. The structural transformation of advertising will continue in 2017; online advertising will grow, while print media advertising will decline. 

In 2017, Alma Media expects its full-year revenue to remain at the previous year’s level and its adjusted operating profit to clearly increase from the 2016 level. The full-year revenue for 2016 was MEUR 353.2, and the adjusted operating profit was MEUR 35.2. 

Kai Telanne, President and CEO: 

Alma Media achieved a strong financial result in the second quarter. The Group’s adjusted operating profit grew by 34 per cent to MEUR 13.2. Profitability was improved by the continued excellent development of sales in the Alma Markets segment as well as cost savings generated by previously implemented restructuring measures in Alma Talent, Alma Regions and shared operations. Alma Media’s revenue grew by 2 per cent in April–June and amounted to MEUR 93.7. 

The economic climate in Finland is the brightest it has been for several years and consumer confidence in economic development is the highest it has been since its measurement began. Nevertheless, the advertising market mostly developed in the opposite direction in the first half of the year. According to Kantar TNS, media advertising volume declined by 7.1 per cent in April–June. One of the bright spots in the subdued advertising market has been online advertising, which grew by 1.3 per cent over the same period. Alma Media’s growth in digital advertising sales has outpaced the market.  

In the Alma Markets segment, the adjusted operating profit grew by 45 per cent to reach the record-high level of MEUR 7.3. Our business in the Czech Republic was particularly successful. The growth of our marketplaces in Finland was attributable to active marketing efforts and online service development as well as the favourable economic cycle. The segment’s result was also improved by lower depreciation. 

Alma Talent’s adjusted operating profit remained almost on a par with the comparison period, at MEUR 3.3, thanks to cost savings achieved in the segment. Revenue was reduced by discontinued operations in the service business as well as the decline of print media subscription revenue and book sales. The new entity created by the integration of Talentum has a comprehensive reach among decision-makers, investors, entrepreneurs and other professionals in Finland and Sweden and it provides opportunities for the development of new multi-channel services.  

The digital transformation of Alma News & Life has progressed rapidly and digital revenue, which increased by 30 per cent year-on-year in the second quarter, now accounts for more than 50 per cent of the segment’s total revenue. Adjusted operating profit grew by 32 per cent to MEUR 2.4. The strong profit performance was particularly attributable to programmatic ad buying and mobile advertising. The single copy sales of afternoon papers continued to decline.  

The second quarter was a challenging one for Alma Regions. The segment’s advertising revenue declined in spite of advertising related to the municipal elections in April. The retail sector, in particular, has reduced its spending on print media advertising. Content revenue, on the other hand, grew thanks to the good sales of online content. Service revenue was increased by growth in the external revenue of printing operations. The segment’s adjusted operating profit declined by 11 per cent to MEUR 2.0. 

Alma Media’s strong cash flow improved the Group’s financial position further. The equity ratio stood at 48.7 per cent at the end of June, while gearing was 31.0 per cent. The strong balance sheet provides us with a solid foundation for accelerating our growth and building an even more competitive media and service company.  

It is unfortunate that the meeting of the EU’s finance ministers in June did not yet reach a unanimous decision on lowering the value added tax rate of digital publications to match that of print publications. The Finnish government has confirmed it is prepared to make the corresponding decision in its autumn budget session, provided that permission from the EU is obtained before that time. The change, which could potentially enter into force at the beginning of 2018, would be a step towards appropriate taxation that would support the development of Finnish media companies, which are important for democracy, as well as the creation of multi-channel media consumption experiences for customers. The government’s supplementary budget decision on a narrowly targeted news subsidy, on the other hand, is problematic. In practice, the subsidy would only be directed at one media outlet. 

For more information, please contact:
Kai Telanne, President and CEO, telephone +358 10 665 3500
Juha Nuutinen, CFO, telephone +358 10 665 3873 

News conference and audio webcast:

A conference for Finnish media, investors and analysts 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-June 2017 will begin at 13.00 EEST and will be held in English. You can participate in the conference by calling +44 (0)330 336 9105 (confirmation code: 6051348) or follow it at http://www.almamedia.fi/en/investors/reports-and-presentations/presentations.

Alma Media’s financial calendar 2017

Alma Media will publish financial reports in 2017 as follows: 

– Interim report for January–September 2017 on Friday, 27 October at approximately 9:00 EEST

ALMA MEDIA CORPORATION

Board of Directors

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

Alma Media in brief

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 digitality, 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 2,300 professionals (excluding delivery personnel), of whom approximately 30% work outside Finland. Alma Media’s revenue in 2016 was EUR 353.2 million. Alma Media’s share is listed on NASDAQ Helsinki. Read more at www.almamedia.com.