Alma Media Corporation Half-Year Report 18 July 2024 at 8.00 a.m.
Alma Media's Half-Year Report January-June 2024: In Q2, revenue increased by 2.4%, supported by acquisitions and adjusted operating profit was on a par with the comparison period
Financial performance April-June 2024:
- Revenue MEUR 80.1 (78.2), up 2.4%.
- The share of digital business was 84.4% (82.6%) of revenue.
- Adjusted operating profit MEUR 19.4 (19.4), or 24.2% (24.8%) of revenue.
- Operating profit MEUR 19.2 (19.9), down 3.5%.
- Alma Career: Revenue in local currencies was on a par with the previous year.
- Alma Marketplaces: Revenue growth was supported by acquisitions, the rate of organic growth was 3.9%.
- Alma News Media: In spite of a decrease in advertising, adjusted operating profit was on a par with the previous year.
- Earnings per share EUR 0.18 (0.23). Earnings per share in the comparison period were improved by a change of MEUR 4.0 in the fair value of contingent consideration liabilities recognised in financial items.
Financial performance January-June 2024:
- Revenue MEUR 156.2 (153.5), up 1.8%.
- The share of digital business was 83.7% (82.2%) of revenue.
- Adjusted operating profit MEUR 35.5 (36.4), down 2.4%, 22.7% (23.7%) of revenue.
- Operating profit MEUR 34.2 (36.4), down 6.1%.
- Earnings per share EUR 0.31 (0.37).
Key figures
| 2024 | 2023 | Change | 2024 | 2023 | Change | 2023 | |
| MEUR | Q2 | Q2 | % | Q1-Q2 | Q1-Q2 | % | Q1-Q4 |
| Revenue | 80.1 | 78.2 | 2.4 | 156.2 | 153.5 | 1.8 | 304.9 |
| Classified | 31.5 | 31.6 | -0.5 | 61.7 | 62.3 | -1.1 | 122.4 |
| Advertising | 15.9 | 17.2 | -7.6 | 30.6 | 32.9 | -7.0 | 64.9 |
| Digital services | 14.4 | 11.0 | 30.9 | 27.4 | 21.4 | 27.8 | 43.9 |
| Content | 12.6 | 12.7 | -1.2 | 25.2 | 25.2 | -0.2 | 50.5 |
| Other | 5.8 | 5.7 | 2.4 | 11.5 | 11.6 | -1.1 | 23.2 |
| Digital business revenue | 67.6 | 64.6 | 4.7 | 130.7 | 126.2 | 3.6 | 251.2 |
| Digital business, % of revenue | 84.4 | 82.6 | 83.7 | 82.2 | 82.4 | ||
| Adjusted total expenses | 60.8 | 59.0 | 3.2 | 121.0 | 117.3 | 3.2 | 231.8 |
| Adjusted EBITDA | 23.6 | 23.8 | -0.7 | 43.9 | 45.1 | -2.7 | 91.0 |
| EBITDA | 23.4 | 24.3 | -3.6 | 42.5 | 45.1 | -5.6 | 90.6 |
| Adjusted operating profit | 19.4 | 19.4 | 0.0 | 35.5 | 36.4 | -2.4 | 73.6 |
| % of revenue | 24.2 | 24.8 | 22.7 | 23.7 | 24.1 | ||
| Operating profit/loss | 19.2 | 19.9 | -3.5 | 34.2 | 36.4 | -6.1 | 73.0 |
| % of revenue | 24.0 | 25.4 | 21.9 | 23.7 | 23.9 | ||
| Profit for the period before tax | 18.1 | 22.8 | -20.5 | 31.7 | 37.4 | -15.2 | 68.5 |
| Profit for the period | 14.6 | 18.7 | -22.0 | 25.4 | 30.4 | -16.3 | 56.4 |
CEO's review: 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
Operating environment
In its most recent economic forecast, the European Commission projected economic growth of 1.0% in the EU for 2024. The Commission further expects inflation to slow to 2.7%. For the Finnish economy, the Commission projects zero growth, inflation of 1.4% and an unemployment rate of 7.4% this year.
According to the report, after the widespread economic stagnation experienced last year, economic activity is expected to increase in the EU due to, among other things, the expansion of private consumption, as the continued rise in real wages and employment growth will sustain an increase in real disposable incomes. A strong propensity to save is partially holding back private consumption, and investment growth appears to be softening. Residential construction is expected to pick up only gradually. While credit conditions are expected to improve, the markets expect a slightly more gradual path of interest rate cuts compared to winter.
At the end of 2023, in the 20-64 age group in the EU, the activity rate was 80.1%, the employment rate was 75.5% and the unemployment rate was 6.0%.
In addition to Finland, Alma Media's main markets are the Czech Republic and Slovakia in Eastern Central Europe, and Croatia in Southern Europe. The Commission projects that, in 2024, the GDP growth rate will be 1.2% in the Czech Republic, 2.2% in Slovakia and 3.3% in Croatia. The Commission's unemployment rate projections are 2.8% for the Czech Republic, 5.4% for Slovakia and 5.8% for Croatia.
Outlook for 2024 (unchanged)
Alma Media expects its full-year revenue and adjusted operating profit of 2024 to remain at the 2023 level. The full-year revenue for 2023 was MEUR 304.9 and the adjusted operating profit was MEUR 73.6.
Background for the outlook
The outlook is based on an estimate that there will be no material changes to the prevailing situation in the company's main market areas. In the countries where the company operates, forecasts for national economies were adjusted downwards due to weak development in the early part of the year, which is also reflected in the development of the recruitment market.
In Finland, demand and employment are expected to weaken, and there is continued uncertainty around advertising.
Acquisitions will increase the company's revenue and operating profit. The diversification of the Group's business activities between multiple geographical markets and business areas, and purposeful cost control, stabilise the company's outlook even in challenging market conditions.
Market situation in the main markets in Finland
Market development in the automotive industry
According to statistics provided by the Finnish Information Centre of Automobile Sector, first registrations of new passenger cars in Finland decreased by 16.5% year-on-year in January-June. Electric vehicles accounted for 27% of first registrations and plug-in hybrids for 20%. In January-June, sales of used passenger cars by car dealerships increased by approximately 6% year-on-year.
Market development in housing
Across Finland in June, a total of 3,686 transactions for old dwellings (-13.6% year-on-year) and 151 sales of new dwellings (-9.6%), or a total of 3,837 housing transactions (-13.5%), were reported to the KVKL price monitoring service maintained by the Central Federation of Finnish Real Estate Agencies. The total number of transactions in June was 37.1% below the five-year average. In January-June, the transaction volume for old dwellings decreased by 5.4% year-on-year.
Market development in the media business
According to Kantar TNS, the total media advertising volume in January-June 2024 decreased by 3.2%. Among the media categories, advertising increased in radio, film and outdoor advertising. In other media categories, the volume of advertising decreased year-on-year.
In June, the sectors with the highest increases in media advertising were clothing and apparel, telecommunication services, food and financial services. The largest decreases were seen in oil and energy, motor vehicles, tourism and transport, and construction. Job advertising decreased by 41.7% in June.
In terms of volume, the market for afternoon papers declined by 11% in the second quarter.
More information:
Kai Telanne, President and CEO, telephone +358 (0)10 665 3500
Taru Lehtinen, CFO, telephone +358 (0)10 665 3609
Live webcast
Alma Media will publish its Half-Year Report for 1 January-30 June 2024 on Thursday, 18 July 2024 approximately at 8.00 EEST. An analyst and investor webcast will be held in English by President & CEO Kai Telanne and CFO Taru Lehtinen from 11:00 am until 12:00 pm.
The live webcast can be followed via https://almamedia.videosync.fi/q2-2024/register. Questions can be presented through the webcast chat function.
An on-demand version of the webcast and the presentation material will be available on the company's website on the same day www.almamedia.fi/en/investors/reports-and-presentations/presentations.
Alma Media's financial calendar 2024
- Interim Report for January-September 2024 on Friday, 18 October 2024 at approximately 8:00 EET
ALMA MEDIA CORPORATION
Board of Directors
Distribution: NASDAQ Helsinki, main media, www.almamedia.fi/en
Alma Media in brief
Alma Media is an international company of digital media, marketplaces and services with a strong capacity for renewal. We inspire human curiosity and choice by creating services that combine technology and content with a local heart. In Finland, our best-known brands include Kauppalehti, Talouselämä, Iltalehti, Jobly, Etuovi.com, Nettiauto and Nettimoto. Our recruitment services include prace.cz and jobs.cz in the Czech Republic, Profesia.sk in Slovakia and mojposao.net in Croatia.
In Finland, our business operations include leading housing and automotive marketplaces, financial and professional media, national consumer media and content and data services for businesses and professionals. Alma Media's international business in Eastern Central Europe, Sweden and the Baltic countries consists of recruitment services and an online marketplace for commercial properties.
Alma Media operates in 12 countries in Europe and employs approximately 1,700 professionals. Alma Media's revenue from continuing operations was EUR 305 million in 2023 of which the share of digital business was 82%. Alma Media's share is listed on NASDAQ Helsinki. Read more at www.almamedia.fi/en/.
