Alma Media’s Interim Report January–June 2018
Revenue declined due to divestments. Adjusted operating profit in Q2 was on par with the comparison period.
Alma Media Corporation Interim Report 18 July 2018 at 8:00 a.m. (EEST)
Alma Media’s Interim Report January–June 2018:
REVENUE DECLINED DUE TO DIVESTMENTS. ADJUSTED OPERATING PROFIT IN Q2 WAS ON PAR WITH THE COMPARISON PERIOD.
Financial performance April–June 2018:
- Revenue MEUR 88.9 (93.7), down 5.1 %.
- Adjusted operating profit MEUR 12.9 (13.2), or 14.5 % (14.1 %) of revenue, down 2.7 %.
- Operating profit MEUR 17.4 (15.0), or 19.6 % (16.0 %) of revenue, up 15.7 %.
- Earnings per share EUR 0.15 (0.13).
- Alma Markets: Profitable business growth continued.
- Alma Talent: Profitability improved in Finland, but weak business development in Sweden continued.
- Alma Consumer: The decline of print media sales reduced profitability.
Financial performance January–June 2018:
- Revenue MEUR 181.1 (184.2), down 1.7 %.
- Adjusted operating profit MEUR 25.1 (25.8), or 13.9 % (14.0 %) of revenue, down 2.8 %.
- Operating profit MEUR 30.3 (26.4) or 16.7 % (14.3 %) of revenue, up 14.6 %.
- Earnings per share EUR 0.26 (0.23).
| KEY FIGURES | 2018 | 2017 | Change | 2018 | 2017 | Change | 2017 |
| MEUR | Q2 | Q2 | % | Q1—Q2 | Q1—Q2 | % | Q1—Q4 |
| Revenue | 88.9 | 93.7 | -5.1 | 181.1 | 184.2 | -1.7 | 367.3 |
| Content revenue | 27.7 | 31.3 | -11.5 | 58.7 | 63.4 | -7.4 | 125.8 |
| Content revenue, print | 23.6 | 27.3 | -13.3 | 50.3 | 55.3 | -9.0 | 109.3 |
| Content revenue, digital | 4.1 | 4.1 | 0.6 | 8.4 | 8.2 | 3.0 | 16.5 |
| Advertising revenue *) | 46.8 | 48.4 | -3.4 | 93.1 | 92.7 | 0.4 | 185.8 |
| Advertising revenue, print | 12.8 | 17.0 | -24.4 | 26.8 | 32.7 | -18.1 | 62.8 |
| Advertising revenue, digital | 33.2 | 30.7 | 8.1 | 65.0 | 58.7 | 10.7 | 120.5 |
| Service revenue *) | 14.4 | 13.9 | 3.5 | 29.2 | 28.1 | 4.1 | 55.7 |
| Adjusted total expenses | 76.2 | 80.5 | -5.3 | 156.3 | 158.5 | -1.4 | 320.8 |
| Adjusted EBITDA | 16.9 | 17.2 | -1.9 | 33.3 | 33.8 | -1.5 | 67.4 |
| EBITDA | 21.4 | 19.0 | 12.5 | 38.4 | 34.4 | 11.9 | 66.9 |
| Adjusted operating profit | 12.9 | 13.2 | -2.7 | 25.1 | 25.8 | -2.8 | 51.1 |
| % of revenue | 14.5 | 14.1 | 13.9 | 14.0 | 13.9 | ||
| Operating profit (loss) | 17.4 | 15.0 | 15.7 | 30.3 | 26.4 | 14.6 | 46.6 |
| % of revenue | 19.6 | 16.0 | 16.7 | 14.3 | 12.7 | ||
| Net income for period | 13.8 | 12.2 | 12.9 | 24.2 | 21.1 | 14.8 | 36.7 |
| Earnings per share, EUR (undiluted and basic) | 0.15 | 0.13 | 11.0 | 0.26 | 0.23 | 13.1 | 0.39 |
| Digital business revenue | 43.2 | 39.4 | 9.6 | 84.8 | 76.6 | 10.8 | 156.6 |
| Digital business, % of revenue | 48.6 | 42.1 | 46.9 | 41.6 | 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.
Market situation in the main markets
According to Kantar TNS, the total advertising volume in Finland decreased by 2.5% (4.8%) in April–June 2018, while advertising in online media increased in Finland by 2.9% (1.7%) in the second quarter. Advertising in city papers and newspapers declined by 12.5% (10.6%) in Finland. Advertising in magazines in Finland decreased in April–June 2018 by 9.7% (8.7%). In terms of volume, the total market for afternoon papers in Finland declined by 14.8% (10.2%) in the second quarter of 2018.
According to Sveriges Mediebyråer, the total advertising volume in Sweden increased by 5.6% (3.6%) in April–June 2018. Advertising in online media grew by 5.4% (10.8%) in Sweden. Advertising in trade magazines in Sweden decreased by 19.8% (9.0%).
Alma Media’s main markets in Eastern Central Europe are the Czech Republic and Slovakia. According to the European Commission’s forecast, the Czech Republic’s GDP will grow by 3.4% in 2018. The Czech National Bank estimates that the GDP will grow by 3.9% in 2018. In Slovakia, GDP growth in 2018 will be 4.0% according to the European Commission and the National Bank of Slovakia.
Kai Telanne, President and CEO:
Alma Media’s adjusted operating profit for April–June 2018 was at the same good level as in the previous year. Revenue was reduced mostly by divestments. Our businesses developed at very different rates during the second quarter. Alma Markets was again the strongest driver of growth and profitability. The stable revenue development and improved profitability of Alma Talent’s operations in Finland was another positive aspect of the second quarter. However, we continue to face challenges in Sweden. The structural transformation of media was reflected in the Alma Consumer segment’s result as print media continued to decline.
The Finnish economy is booming, but the domestic advertising market continued to decline further and competition with international platform operators has increased. According to Kantar TNS, media advertising volume in Finland declined by 2.5 per cent in April–June.
The strong development of the Alma Markets segment’s operating result continued in the second quarter. The segment’s revenue grew by 18 per cent and the operating profit margin was 36 per cent. The excellent performance was attributable to international recruitment services and domestic marketplaces, both of which benefited from favourable market development. The segment’s expenses were increased by launch and marketing investments in a new mobile recruitment service in Poland, among other things. The development of the service’s user volume has stabilised at a good rate of growth and the service is in the process of moving from the trial phase to becoming a paid service for recruitment customers.
Alma Talent’s revenue was on par with the comparison period, but the segment’s adjusted operating profit improved by 15 per cent due to previously implemented restructuring measures in Finland and effective cost control. The segment’s Swedish business performed poorly and measures to remedy the situation are ongoing. Alma Talent’s key objective is to move rapidly towards digital media and service business models. Digital content sales, digital subscriptions and digital advertising sales all increased during the reporting period.
The revenue of the Alma Consumer segment, which was established in the spring, was reduced by factors including the divestment of the newspaper business in Lapland. The result was weighed down by the continued decline of advertising sales in print media, the falling single-copy sales of Iltalehti as well as the weaker-than-expected development of revenue from programmatic buying in digital advertising. The entry into force of the new General Data Protection Regulation (GDPR) created temporary uncertainty in the programmatic buying market in the spring.
In recent years, legislation has emerged as a significant driver of change in the media sector’s operating environment. The GDPR and the preparations for its entry into force were intensely reflected in the activities of all of Alma’s media products and services, including the documentation of data management and processing and the amendment of data processing agreements pertaining to the transfer or disclosure of personal data as well as impact assessments and employee training.
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 Half-year Financial Report for the January 1–June 30, 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: 072627) 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–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 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 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.