Alma Media Corporation Half-Year Report
20 July 2022 at 8.00 a.m.
ALMA MEDIA'S HALF-YEAR REPORT JANUARY-JUNE 2022: REVENUE AND OPERATING PROFIT
WERE INCREASED BY THE STRONG PERFORMANCE OF THE RECRUITMENT BUSINESS
Financial performance April-June 2022:
• Revenue MEUR 79.3 (71.6), up 10.7%.
• The share of revenue represented by digital business was 81.2% (77.6%).
• Adjusted operating profit MEUR 19.2 (16.6), up 15.7%.
• Operating profit MEUR 25.9 (13.0), up 99.0%.
• Alma Career: Strong demand for labour in all operating countries drove revenue
to a new record high.
• Alma Consumer: Revenue was increased by the positive performance of digital
media and reduced by the challenging situation in the automotive sector. Higher
costs, particularly due to a number of product development projects, had a
negative effect on operating profit.
• Alma Talent: Comparable revenue was on a par with the previous year. Operating
profit was weakened by investments in the data business and digital housing
transaction services, for example.
• Equity ratio 38.8% and gearing 93.7%.
• Earnings per share EUR 0.28 (0.12).
Financial performance January-June 2022:
• Revenue MEUR 155.5 (129.7), up 19.9%.
• The share of revenue represented by digital business was 80.5% (76.0%).
• Adjusted operating profit MEUR 38.9 (27.7), up 40.4%.
• Operating profit MEUR 45.7 (23.8), up 91.9%.
• Earnings per share EUR 0.48 (0.21).
2022 2021 Change 2022 2021 Change 2021
MEUR Q2 Q2 % Q1-Q2 Q1-Q2 % Q1-Q4
Revenue 79.3 71.6 10.7 155.5 19.9 275.4
129.7
Marketplaces 37.5 30.7 22.0 72.5 52.7 37.6 116.4
Media 28.2 26.8 5.3 54.5 49.6 9.7 101.9
- of which 60.7% 55.8% 60.4% 55.3% 56.9%
digital
Service revenue 13.6 14.1 -3.4 28.6 27.3 4.4 57.1
- of which 75.1% 69.3% 71.0% 67.1% 65.7%
digital
Digital business 64.4 55.6 15.9 125.3 98.6 27.0 212.1
revenue
Digital 81.2 77.6 80.5 76.0 77.0
business, % of
revenue
Adjusted total 60.2 55.0 9.3 116.9 103.0 13.5 215.6
expenses
Adjusted EBITDA 23.5 20.8 12.7 47.5 35.4 34.0 77.8
EBITDA 30.2 17.2 75.0 54.3 31.5 72.1 73.5
Adjusted 19.2 16.6 15.7 38.9 27.7 40.4 61.1
operating profit
% of revenue 24.3 23.2 25.0 21.4 22.2
Operating profit 25.9 13.0 99.0 45.7 23.8 91.9 56.8
(loss)
% of revenue 32.7 18.2 29.4 18.4 20.6
Profit for the 27.5 12.6 119.1 47.6 22.9 107.6 56.3
period before
tax
Profit for the 23.4 9.7 142.2 39.4 17.8 121.6 44.3
period
The operating environment in 2022 and the impacts of the crisis in Ukraine
The economic growth outlook in Europe was strong at the beginning of the year,
but Russia's offensive war against Ukraine made the economic outlook
substantially more negative at the end of February. The European economy has
been adversely affected by sanctions, supply chain disruptions and problems
associated with the availability of raw materials, among other things. The
prices of energy, raw materials and food have increased very quickly, and market
interest rates have gone up sharply at the same time. Combined, these
developments have had a negative impact on household purchasing power,
consumption and economic growth. However, at the same time, pandemic-related
restrictions have been eased in Europe, which has a significant positive impact
on activity in the service industries. The national economies of Finland and
Alma Media's other operating countries are still expected to grow this year, but
growth has clearly slowed down. The European Central Bank (ECB) estimates that
economic growth in the eurozone will average 2.8% this year. The ECB expects
inflation to remain high this year - at 6.8% on average - and subsequently
decline gradually from 2023 onwards. According to a flash estimate from Eurostat
for June, inflation in the eurozone is currently the highest in Estonia, where
annual inflation is 22 per cent. While economic development in 2022 involves
uncertainty, the general economic situation in our operating countries is
nevertheless moderate.
Outlook for 2022 (unchanged, updated on 8 July 2022)
Alma Media expects its full-year revenue and adjusted operating profit from
continuing operations in 2022 to increase significantly from the 2021 level. In
2021, the full-year revenue of the Group's continuing operations was MEUR 275.4
and the adjusted operating profit was MEUR 61.1.
Market situation in the main markets
According to Kantar TNS, the advertising volume in the first half of 2022
increased by 4.3% compared to the corresponding period in 2021. Advertising
sales declined by 4.6% in newspapers and by 8.5% in magazines. Online
advertising increased 7.4%. In June, the advertising volume declined 8.3% year
-on-year. Advertising of job vacancies and retail advertising decreased both by
9.0%, in contrast, classified advertising grew by 12.1% year-on-year in June.
In terms of volume, the total market for afternoon papers declined by 5.2% (
-4.2%) in the second quarter of 2022.
According to the Finnish Information Centre of Automobile Sector, the
transaction volume for used passenger cars in Finland declined by 10.6% year-on
-year in June, to 47,124 vehicles. The number of new passenger cars registered
in June 2022 was 7,396, which is 25.6% lower than in the previous year. The
order backlogs for new cars have reached record-high levels, but component
shortages and production bottlenecks limit the automotive sector's ability to
meet demand.
According to the Federation of Real Estate Agency in Finland, the sales of used
apartments in Finland in June 2022 represented a continuation of the trend that
began in February, with the housing transaction volume having returned close to
the long-term average after the unusually busy period that began from the
pandemic. Compared to the corresponding period last year, the volume of
transactions for used residential properties declined by 10.6% in the first half
of 2022, with the total number of transactions being 33,119 - still 6.9% over
the 5-year average. In Q2, the volumes declined 12.1% in a year. A total of
2,773 used apartments were sold in June, which is 3.7% higher than the five-year
average. The transaction volume for terraced houses (1,455 units) was 0.6%
higher, and the transaction volume for detached houses (1,416 units) 5.5% lower,
than the five-year average. Compared to the high transaction volumes in 2021,
the changes were -10.2% for apartments, -13.5% for terraced houses and -20.0%
for detached houses.
Trade in new apartments decreased by 40.7% in the first half compared to the
comparative period. There were 505 new dwellings sold in June, just over half of
last year's trade volumes.
In addition to Finland, Alma Media's main markets are the Czech Republic and
Slovakia in Eastern Central Europe. The European Commission published its latest
GDP forecasts on 14 July 2022. According to the forecast, Finnish GDP growth
(3.5% in 2021) will slow down to 1.8% this year, the Czech GDP will grow by 2.3%
and Slovakia's GDP will grow by 1.9%. The ECB predicts that the unemployment
rate this year will be 7.2% in Finland, 2.6% in the Czech Republic and 6.7% in
Slovakia.
CEO's review: Business growth in a changing operating environment
Alma Media's business performance in the second quarter was strong in spite of
the economic impacts of Russia's war of aggression. Revenue increased by 10.7%
to MEUR 79.3 and adjusted operating profit grew by 15.7% to MEUR 19.2. At the
beginning of July, we updated our guidance to state that we expect our full-year
revenue and adjusted operating profit from continuing operations to increase
significantly from the 2021 level.
The Alma Career segment had another record-breaking quarter. The continued
strong demand for recruitment services increased revenue by 42.2% to MEUR 28.4.
Adjusted operating profit grew by 52.8% to MEUR 11.8, representing 41.5% of
revenue. The Career United project, which seeks to deepen internal cooperation,
progressed as planned. We adopted a new organisational structure based on
geographic regions and established a joint product organisation. The demand for
recruitment services remained strong in all of our operating countries, and the
positive development of added-value services related to recruitment - including
system solutions, employer image advertising and the Seduo training platform -
continued. The continued high level of activity in the recruitment market is
driven by intense competition for labour. The low unemployment rate in our key
operating countries also boosts demand for our added-value services. Customer
invoicing has remained strong, and we expect to see continued growth during the
rest of the year. However, we expect business growth to slow down towards the
end of the year due to the strong revenue levels in the comparison periods.
In the Alma Consumer segment, costs increased by 6.6%, which reflects our
investments in business development. The higher costs were attributable to
investments in product development, especially in marketplaces and comparison
services. Revenue increased by 2.1% to MEUR 27.1, with the rate of organic
growth being 4.0%. Adjusted operating profit was MEUR 6.6, representing 24.4% of
revenue. The share of revenue represented by digital business rose to 82.5%, and
digital media advertising continued to develop favourably. Revenue from media
and media-related services increased by 8.6%. Russia's attack on Ukraine
increased the demand for news and media consumption among the public, which had
a positive impact on Iltalehti. The demand for the paid Iltalehti Plus service
also developed favourably throughout the quarter. The synergies between the
Nettix business and other Finnish marketplaces and media are becoming
increasingly visible. In the housing business area, revenue increased by 13.1%
in the second quarter. At the same time, global challenges in the automotive
industry - including supply chain disruptions and component shortages - hampered
the segment's business growth.
We expect that consumer uncertainty may be reflected particularly in housing and
automotive marketplaces and related advertising in the second half of the year.
The Alma Talent segment's comparable revenue was on a par with the previous
year. Revenue declined by 4.4% to MEUR 24.1 due to the divestment of the Baltic
telemarketing business. The segment's strong digital transformation continued,
with the share of digital business rising to 60.3% of revenue. Adjusted
operating profit declined by 15.2% to MEUR 4.3, representing 17.9% of revenue.
Profitability was weakened by investments in future growth in areas such as the
data business and digital housing transactions. In Alma Talent Media and Alma
Talent Services, revenue was on a par with the previous year. Talent Media's
content revenue grew by 4.2%, as the 13.6% increase in digital content revenue
exceeded the 9% decline in print media revenue. Other positive developments
included the growth of Talent Services' continuous services related to digital
company information and law-related services, for example. The war in Ukraine
and its economic impacts tempered the growth of the transaction volume for
housing and other properties as well as new IPOs.
Our financial position has been strengthened as planned thanks to our excellent
profit performance and strong cash flow. Our gearing at the end of Q2 stood at
93.7%, compared to 160.0% one year earlier, following our largest-ever
investments. Our equity ratio increased from 29.4% to 38.8% over the same
period. Russia's war of aggression against Ukraine has had a significant
negative effect on economic growth, including in Alma Media's operating
countries. It reduces economic growth and keeps inflation high. Alma Media has
no business activities or assets in Ukraine or Russia, hence only the indirect
impact of the war affect us. We have supported refugees through aid
organisations and offered free advertising space to the organisations. We have
also supported Ukrainians in finding work by developing Workania.eu, a shared
application for the Alma Career countries that helps Ukrainian refugees find
work faster. The service now has thousands of jobs available to Ukrainians. It
is also a demonstration of our ability to take quick cooperative action between
our operating countries.
The volatile business environment in the recent years underscores the importance
of agility, strategic flexibility and resilience for a company. Future growth
requires not only continuous development of operations but also the courage to
pursue new initiatives and investments. Alma Medians have shown the ability to
quickly adapt to difficult circumstances and maintain excellent business
performance even in weak economic conditions.
Kai Telanne
President and CEO
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 live webcast
A combined analyst, investor and media conference and webcast will be held in
English by President & CEO Kai Telanne and CFO Juha Nuutinen today at
11.00-12.00.
The conference will be held in the Alma House (address: Alvar Aallon katu 3 C,
Helsinki). To participate in the conference in Alma House, we kindly ask you to
register beforehand by e-mail, kutsut@almamedia.fi.
The live webcast can be followed via https://almamedia.videosync.fi/results-q2
-2022/register. Questions can be asked through the webcast chat function.
An on-demand version of the webcast and the presentation material will be
available on the company's website today www.almamedia.fi/en/investors/reports
-and-presentations/presentations.
Alma Media's financial calendar 2022
• Interim Report for January-September 2022 on Thursday, 20 October 2022, 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 a digital service business and media company with a strong
capacity for renewal. We are building sustainable growth from media to services,
providing content and services that benefit users in their everyday lives, work
and leisure time. In Finland, our best-known brands include Kauppalehti,
Talouselämä, Iltalehti, 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, an online marketplace for commercial
properties and direct marketing services.
Alma Media operates in 11 countries in Europe and employs approximately 1,500
professionals. Alma Media's revenue from continuing operations was EUR 275.4
million in 2021 of which the share of digital business was 76.9%. Alma Media's
share is listed on NASDAQ Helsinki. Read more at www.almamedia.fi/en/.