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2020-07-21

Alma Media Half-Year Report: correction to key figure of Shareholders' equity per share

Alma Media Corporation               Half-Year Report                  21 July 2020 at 11:15 a.m. (EEST)

Alma Media Half-Year Report: correction to key figure of Shareholders' equity per share

Alma Media corrects its Half-Year report published on 17 July 2020 at 8.00. In Key figures table on page 7, the correct figure for Shareholders' equity per share is 2.63 euros as at 30 June 2020. The figure published earlier was 1.86 euros. The corrected figure for Shareholders' equity per share and figures for comparison periods:

KEY FIGURES 2020 2019 Change 2019
Q1-Q2 Q1-Q2 % Q1-Q4
Shareholders' equity per share 2.63 1.83 43.7 2.09

Corrected January-June 2020 Half-Year report in its entirety is available as an attachment to this release.

 

Alma Media Corporation               Half-Year Report                   17 July 2020 at 8:00 a.m. (EEST)

ALMA MEDIA'S HALF-YEAR REPORT JANUARY-JUNE 2020:

The coronavirus epidemic significantly reduced revenue, cost savings slowed down the decline in adjusted operating profit. EPS improved by the capital gain from the sale of the regional news media business.

On 30 April 2020, Alma Media announced it had completed the sale of the regional news media business and printing operations to Sanoma Media Finland. The Group reports the divested business until the date of the transaction and the capital gain on the sale under discontinued operations. The divested business was previously reported under the Alma Consumer segment. The income statement figures presented in this Half-Year Report mostly represent only the Group's continuing operations. The cash flow figures include both continuing and discontinued operations.

Financial performance April-June 2020:

  • Revenue from continuing operations MEUR 52.5 (64.1), down 18.2%.
  • Adjusted operating profit from continuing operations MEUR 9.8 (11.9), down 17.6%.
  • Operating profit from continuing operations MEUR 7.0 (11.8), down 41.0%.
  • Earnings per share from continuing operations EUR 0.04 (0.09).
  • Earnings per share including discontinued operations EUR 0.76 (0.12).
  • The Group has a strong financial position and net cash totalled MEUR 57.4 at the end of June, while the gearing ratio was -23%.
  • Alma Markets: Significant cost savings dampened the decline in profit performance.
  • Alma Talent: The positive development of other businesses mitigated the impact of the sharp decline in advertising revenue.
  • Alma Consumer: Profitability was reduced by a significant decline in advertising.

Financial performance January-June 2020:

  • Revenue from continuing operations MEUR 114.3 (126.2), down 9.4%.
  • Adjusted operating profit from continuing operations MEUR 21.0 (23.4), down 10.3%.
  • Operating profit from continuing operations MEUR 19.2 (23.3), down 17.7%.
  • Earnings per share from continuing operations EUR 0.14 (0.19).
  • Earnings per share including discontinued operations EUR 0.97 (0.24).

KEY FIGURES 2020 2019 Change 2020 2019 Change 2019
MEUR Q2 Q2 % Q1-Q2 Q1-Q2 % Q1-Q4
Revenue 52.5 64.1 -18.2 114.3 126.2 -9.4 250.2
Content revenue 14.9 16.0 -6.6 30.7 31.8 -3.2 64.2
Content revenue, 10.7 12.8 -16.4 22.6 25.5 -11.4 50.9
print
Content revenue, 4.2 3.2 33.1 8.1 6.2 30.3 13.2
digital
Advertising revenue 27.0 38.6 -30.0 63.0 75.4 -16.4 148.5
Advertising revenue, 1.8 4.1 -57.1 5.4 8.2 -34.1 16.3
print
Advertising revenue, 25.3 34.5 -26.8 57.5 67.1 -14.3 132.2
digital
Service revenue 10.5 9.5 10.6 20.6 19.1 8.1 37.6
Adjusted total 42.9 52.2 -17.9 93.6 102.9 -9.0 201.1
expenses
Adjusted EBITDA 13.8 16.2 -14.6 29.2 32.1 -9.1 66.1
EBITDA  11.0 16.1 -31.8 27.3 32.0 -14.5 66.2
Adjusted operating 9.8 11.9 -17.6 21.0 23.4 -10.3 49.4
profit
% of revenue 18.7 18.6 18.4 18.6 19.8
Operating profit 7.0 11.8 -41.0 19.2 23.3 -17.7 49.5
(loss)
% of revenue 13.3 18.4 16.8 18.5 19.8
Profit for the period 4.2 9.3 -55.2 14.4 18.4 -22.0 40.5
Earnings per share, 0.04 0.09 -62.8 0.14 0.19 -25.1 0.41
EUR (basic and
diluted)
   
Digital business 35.4 43.0 -17.7 77.5 83.8 -7.5 166.7
revenue
Digital business, % 67.5 67.1   67.8 66.4   66.6
of revenue

Operating environment in 2020

The global coronavirus epidemic creates significant uncertainty for economic development in 2020. As a result, the national economies of Finland and Alma Media's other operating countries are expected to weaken substantially in 2020 compared to the previous year.

In the prevailing exceptional circumstances, the consumption of digital content and services has grown significantly in general. The coronavirus epidemic is expected to lead to permanent changes in consumer behaviour and to accelerate the demand for digital services. As a result, the structural transformation of the media sector is expected to continue and further intensify. Data, analytics, machine learning and automation will become increasingly important, which calls for increasing technology investments. The areas of digital advertising that are again expected to see the fastest growth are search engine, social media, mobile and video advertising as well as content marketing.

Outlook for 2020 (updated)

The uncertainty in Alma Media's operating environment is continuing and visibility remains weak. Alma Media expects its full-year revenue and adjusted operating profit from continuing operations in 2020 to decline significantly from the 2019 level. In 2019, the full-year revenue of the continuing operations was MEUR 250.2 and the adjusted operating profit was MEUR 49.4.

Market situation in the main markets and the impacts of the coronavirus epidemic on Alma Media's business

The COVID-19 crisis had a significant impact on advertising volume in the second quarter. According to Kantar TNS, the total advertising volume in Finland decreased by 38.2% (+4.8%) in April-June 2020, and the development of advertising in online media was also negative at 22.6% (+8.7%). Advertising in newspapers declined by 42.0%
(-3.2%) and magazine advertising declined by 30.0% (-1.7%). In terms of volume, the total market for afternoon papers in Finland declined by -21.9% (-4.9%) in the second quarter of 2020.

In addition to Finland, Alma Media's main markets are the Czech Republic and Slovakia in Eastern Central Europe. According to the European Commission's forecast, the restrictions introduced to reduce the spread of the coronavirus will result in a significant contraction in the GDP of these countries in 2020. The Commission published its latest GDP forecasts in July and its most recent unemployment forecasts in May 2020. The European Commission predicts that Finland's GDP will decline by 6.3 per cent in 2020 and the unemployment rate will be 8.3 per cent. For 2021, the Commission predicts that Finland's GDP will grow by 2.8 per cent and the unemployment rate will be 7.7 per cent. The Czech GDP is predicted to decline by 7.8 per cent this year and the unemployment rate is expected to rise to 5.0 per cent. The European Commission predicts a quick recovery in 2021: GDP growth of 4.5 per cent and an unemployment rate of 4.2 per cent. The European Commission forecasts that Slovakia's GDP will decline by 9.0 per cent in 2020 and the unemployment rate will be 8.8 per cent. In 2021, the European Commission expects Slovakia to see GDP growth of 7.4 per cent and an unemployment rate of 7.1 per cent.

Impacts of the epidemic and measures taken by business segment:

  • Alma Markets

Due to the coronavirus epidemic and economic uncertainty, customers significantly reduced their new recruitment and focused on carrying out only the most essential replacement recruitment. The online training business developed favourably during the coronavirus epidemic. The recruitment events organised by Alma Markets have been postponed until the autumn. During the period under review, the decline in Alma Markets' recruitment revenue ranged from 16 per cent to 60 per cent depending on the country. The revenue of the recruitment business decreased by 29 per cent (MEUR 5.6) in the second quarter. However, customer invoicing during the corresponding period declined more steeply, -44%, which will weaken the development of revenue from the recruitment business in the second half of the year, as invoicing turns into revenue over the 1-12 months following the invoicing month. The Czech koruna has depreciated by about 4 per cent since the start of 2020, which reduces the euro-denominated result of the segment's operations in the Czech Republic in spite of the fact that part of the future cash flows of the business have been hedged.

The epidemic also had a negative effect on the housing and automotive marketplaces business, but the start of the recovery has been faster than in the recruitment business. Competitive bidding services among housing-related services and rental advertising developed favourably during the coronavirus epidemic. In the housing and automotive marketplaces business, revenue decreased by 10% (MEUR 0.6) in the second quarter, but there were signs of recovery in June, with revenue from these businesses being on par with the comparison period.

In the second quarter, the Alma Markets segment's cost savings compared to the corresponding period last year were MEUR 3.9, exceeding the previous estimate. The adjustment measures included a significant contraction of marketing investments, temporary layoffs, fixed-term reductions in pay within the limits of the applicable legislation, employee reductions and a reduction in the purchasing of external services. The marketing of the mobile recruitment service in Poland was significantly scaled down, recruitment consulting activities in the Baltic countries were contracted and the Workania business in Hungary was discontinued.

The recruitment market has shown slight signs of recovery since May, but the economic outlook remains very uncertain. The recruitment business as a whole is not expected to return to the pre-crisis level in 2020. There are indications of a gradual recovery in the housing and automotive marketplace business, but the business is highly dependent on the general economic development.

  • Alma Talent

Advertising sales declined sharply due to the general uncertainty, with demand declining particularly in the automotive trade and recruitment advertising. At the same time, however, the coronavirus epidemic gave rise to growing demand for reliable and up-to-date information, which was reflected in significant growth in the audiences of Alma Talent's media brands, especially in financial media, along with a corresponding positive development in content sales for subscription media. In response to the coronavirus restrictions, Alma Talent's training activities were moved to digital channels for remote participation. Information services, book publishing, digital business premises services and telemarketing services brought stability to the segment's operations. Alma Talent's event business was contracted to a significant degree.

Alma Talent achieved MEUR 1.9 in cost savi...

Författare Alma Media

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