Alma Media's financial result Q3 2014

41
Alma Media Q3 2014 Kai Telanne, President and CEO Juha Nuutinen, CFO 24 October 2014

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Alma Media Q3 2014 financial result

Transcript of Alma Media's financial result Q3 2014

Page 1: Alma Media's financial result Q3 2014

Alma Media Q3 2014Kai Telanne, President and CEOJuha Nuutinen, CFO24 October 2014

Page 2: Alma Media's financial result Q3 2014

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Agenda

Highlights

Market development

Financial development

Strategy and outlook

Q & A

Page 3: Alma Media's financial result Q3 2014

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Q3/2014 highlights• There was a slight decline in group revenue during Q3. The decline in revenue was

attributable to the Group’s operations in Finland. The growth of internationaloperations balanced out the decline in Alma Media’s Finnish units.

• Excluding the impact of divested business operations, the revenue of Alma Media’s unitsoutside Finland grew by 17.4%, particularly due to the strong development ofrecruitment services.

• Alma Media’s digital advertising sales exceeded print advertising sales for the first time.

• In the Financial Media and Business Services segment, the share of digital business hasincreased this year to reach 43.1% of revenue. Digital advertising sales grew, althoughthe rate of growth was not as high as earlier in the year. In the Regional Media segment,print media circulations decreased, while the additional sales brought about by the newprinting facility offset the decline.

• Alma 360, IL-Media and Alma Manu Oy reformed their organisations to improve theircompetitiveness and to be better able to respond to customer needs.

• Alma Media expects its full-year revenue 2014 to remain at the 2013 level. Theoperating profit excluding non-recurring items for 2014 is expected to be lower than in2013. The full-year revenue 2013 was MEUR 300.2 and operating profit excluding non-recurring items was MEUR 24.2.

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Revenue Q3/2014

• Revenue for the quarter decreased by 1.8% toMEUR 70.5.

• Online business revenue increased by 9.4%.

• Digital products and services accounted for31.4% (28.2%) of Group revenue in the thirdquarter.

• Content revenue decreased by 3.9%.• Content revenue from digital channels does not

completely cover the decline in print contentrevenue.

• Advertising revenue decreased by 1.7%. Digitaladvertising sales exceeded print advertisingsales.

• Digital advertising sales increased by 9.4%.

• Advertising sales for print media decreased by10.7%.

Revenue, MEURIFRS

71.7 70.5

0

10

20

30

40

50

60

70

80

Q3 13 Q3 14

-4.6% -1.8%

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Operating profit Q3/2014

• Operating profit excluding non-recurringitems decreased by 9.9% to MEUR 7.0.

• Operating profit was MEUR 6.5, or 9.2% ofrevenue.

• The operating profit includes net non-recurring items of MEUR -0.5.

• Total expenses excluding non-recurringitems decreased by 1.0% year-on-year toMEUR 63.5.

EBIT, MEURIFRS

7.87.0

0.0

-0.5-1

0

1

2

3

4

5

6

7

8

9

Q3 13 Q3 14

Non-recurring items

-12.6%-9.9%

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Growth in digital businessM

EUR

Segment’s share of theGroup’s digital revenue

44 4049

57

7884

7012,9 % 13,1 %

15,7 %18,0 %

24,3 %

28,1 %

31,8 %

0%

5%

10%

15%

20%

25%

30%

35%

2008 2009 2010 2011 2012 2013 YTDQ314

0

10

20

30

40

50

60

70

80

90

Revenue from digital business Share of total revenue

4.1 %12.2 %

23.9 %59.9 %

Regional Media National Consumer Media

Financial Media and Business Services Digital Consumer Services

Page 7: Alma Media's financial result Q3 2014

Market development in Finland

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Change in advertising 9/2013 – 9/2014

Change %YTD 9/14 vs. 9/13

News-papers -8.9

Magazines-15.7

TV -3.1

Radio +9.8

Internet +15.8

Total -3.2

Source: TNS Media Intelligence

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Advertising sales total, chg % Newspaper advertising, chg % Internet advertising, chg %

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Growth in digital advertising

YTD change from previous year, %

Source: TNS Media Intelligence

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 2014

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Advertising volume in printed newspapers*continued to weakenYTD change from previous year, %

Source: TNS Media Intelligence* Newspapers, local and free issue papers

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 2014

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Advertising declined across almost all industries

Advertising by branch Q1-Q3 / 2014Total market, change from Q1-Q3 2013

Advertising in Q1-Q3 14 MEUR

Retail 158

Food & beverages 69

Motor vehicles 68

Houses and premises 34

Tourism and traffic 33

Entertainment 32

Recruiting 23

Telecommunications 15

Other 280

Total 711

Source: TNS Media Intelligence

Total -3.2%

-0.5 %

-14.3 %

-11.4 %

-5.4 %

1.3 %

-3.0 %

-6.4 %

2.1 %

-6.4 %

Other

Tele

Recru

Entert

Tourism

Houses

Motor v.

Food & bev.

Retail

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Growth in tourism and food & beveragesadvertising

Advertising change by branchTotal market, change from previous year

Source: TNS Media Intelligence

Total -1.3% Total -2.2% Total -3.7%

P7 2014 vs 2013 P8 2014 vs 2013 P9 2014 vs 2013

-0.1 %

1.2 %

-30.9 %

7.5 %

1.3 %

20.6 %

6.9 %

-2.6 %

-10.8 %

Other

Tele

Recru

Entert

Houses

Tourism

Motor v.

Food & bev.

Retail

1.1 %

-18.9 %

4.0 %

-4.8 %

-0.6 %

27.6 %

-16.6 %

-6.8 %

-3.9 %

Other

Tele

Recru

Entert

Houses

Tourism

Motor v.

Food & bev.

Retail

-6.0 %

4.2 %

-15.4 %

-3.0 %

-15.2 %

1.2 %

-4.1 %

16.8 %

-4.8 %

Other

Tele

Recru

Entert

Houses

Tourism

Motor v.

Food & bev.

Retail

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Financial reviewJuha Nuutinen, CFO

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Long-term financial targets

* Includes capital repayment to shareholders.

Alma Media’sfinancialtargets

2011 2012 2013 2014YTD

2014Q3

Targetlevel

Digitalbusinessgrowth

16.3% 36.8% 8.4% 11.2% 9.4% > 15%

Return onInvestment(ROI), %

26.1% 13.8% 10.0% 9.5% 12.0% > 15%

Dividendpayout ratio*

103% 45% 50% n/a n/a > 50%

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Operating profit decreased in the third quarter

Revenue, MEUR Operating profit, MEUR

71.777.3

72.7 75.770.5

0

10

20

30

40

50

60

70

80

90

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

7.8

6.4

2.5

6.37.0

0.0

-2.0

0.7

-0.2 -0.5

-4

-2

0

2

4

6

8

10

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

Non-recurring items

-1.8%-0.9%

+37.3%-9.9%

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Content revenue, MEUR Advertising revenue, MEUR

Content revenue decreased, digital advertising salesexceeded print advertising sales

-1.6

-1.1

-2.0

-1.8

-1.6

-1.4

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

-4.1%

-3.9%

-2.0

-0.6

-4.0

-3.0

-2.0

-1.0

0.0

1.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

+1.9%

-1.7%

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Digital Consumer Services Q3/2014

• Revenue grew by 10.1% to MEUR 13.5.• Revenue from operations in Finland decreased

by 0.8%.

• The devaluation of the Czech koruna inNovember 2013 decreased the euro revenue byMEUR 0.3.

• Revenue was increased by MEUR 0.4 by newrecruitment service companies in Hungary, theCzech Republic and Poland.

• Recruitment service revenue increased by13.7% and accounted for 66.1% of thesegment’s revenue.

• Total expenses excl. non-recurring itemsincreased by 7.6% to MEUR 10.9.

• Expenses were increased by new recruitmentservice companies in Hungary, the CzechRepublic and Poland.

• Operating profit excl. non-recurring itemsincreased by 17.7% to MEUR 2.6.

Excluding non-recurring items

Revenue and operating profit,MEUR & %

12.3

14.013.5

2.2 2.5 2.6

18.2 %

18.1 % 19.4 %

0%

5%

10%

15%

20%

25%

30%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

-12.4%

+17.7%

+4.9%+10.1%

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Excluding non-recurring items

Revenue and operating profit,MEUR & %

Financial Media and Business Services Q3/2014• Revenue declined by 6.8% to MEUR 12.2.

• Digital business accounted for 43.1% of revenue.

• The divestment of the BNS business had aneffect of MEUR 1.0 on the decrease in revenue.

• Content revenue decreased by 3.9%.• Kauppalehti’s digital content revenue increased

by 21.3%, partially covering the decline incontent revenue for print media.

• Advertising sales were unchanged from theprevious year at MEUR 3.6.

• Online advertising sales increased by 13.6%.

• Total expenses excl. non-recurring itemsdecreased by 7.7% due to the divestment of theBNS business.

• The non-recurring expenses of MEUR 0.5recorded during the period were related to thereorganisation of Alma 360’s operations.

• Operating profit excl. non-recurring items wason a par with the comparison period, 2.2 MEUR.

13.1 13.112.2

2.21.3

2.2

16.9 %

10.1 %

17.6 %

0%

5%

10%

15%

20%

25%

30%

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

17.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

-23.1%-2.6%

-9.1% -6.8%

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National Consumer Media Q3/2014

• Revenue declined by 6.0% to MEUR 11.5.• Online business accounted for 23.3% of the

segment’s revenue.

• Content revenue decreased by 3.4% due to adecline in Iltalehti’s circulation.

• Advertising sales decreased by 10.1%.• Online advertising sales increased slower than

at the beginning of the year; by 2.7% to MEUR2.6.

• Advertising sales for print media decreased by29.2%.

• Total expenses increased to MEUR 10.7.• The increase in total expenses was

attributable to online content production costsand investments in sales and marketing.

• Operating profit was MEUR 0.8, or 6.6% ofrevenue.

• No non-recurring income or expenses werereported in the review period.

Excluding non-recurring items

Revenue and operating profit,MEUR & %

12.212.7

11.5

1.8 1.7

0.8

15.1 %13.1 %

6.6 %

0%

5%

10%

15%

20%

25%

30%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

+82.0% -58.7%

+3.2% -6.0%

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Excluding non-recurring items

Revenue and operating profit,MEUR

Regional Media Q3/2014

• Revenue totalled MEUR 34.6.• Digital business accounted for 2.6% of revenue.

• Content revenue decreased by 4.1% due todeclining circulations.

• Advertising sales decreased by 7.9%.• Digital advertising sales increased by 19.5%.

• Advertising sales for print media decreased by8.7%.

• Service revenue increased by 46.8% due to anincrease in Alma Manu’s external printingservice revenue.

• Total expenses amounted to MEUR 32.0 (32.4).• Total expenses were reduced by the efficiency

improvement measures for newspapers as wellas printing operations.

• Operating profit was MEUR 2.6, or 7.7% ofrevenue.

• No non-recurring expenses were reportedduring the review period.

35.137.2

34.6

2.7 3.0 2.6

7.8 % 8.0 % 7.7 %

0%

5%

10%

15%

20%

25%

30%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

+130.5%

-3.6%

+0.0% -1.5%

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Cash flow from operating activities

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

MEU

R

1.3

0.63.3

16,7

1.3

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Cash flow and capital expenditure

IFRS

3.3

0.6

2.2

-0.1

-1

0

1

1

2

2

3

3

4

Q3 13 Q3 14

MEU

R

From operating activities

Before financing activities

-1.1

-0.7

0.0 0.0

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

Q3 13 Q3 14

MEU

R

Gross investments

Proceeds from sales of assets

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Interest-bearing liabilities

Net debt Q1/2012–Q3/2014 Net debt distribution

Q3/2014

Financial leasing 70.7

Financial loans 9.0

Commercialpapers

11.0

Cash and cashequivalents

-10.5

Total 80.3

46.1

104.197.6

82.1 79.7 80.3

0

20

40

60

80

100

120

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

MEU

R

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IFRS

Equity ratio, % Gearing, %

Key indicators

35.4

40.0

0

5

10

15

20

25

30

35

40

45

Q3 13 Q3 14

111.9

80.4

0

20

40

60

80

100

120

Q3 13 Q3 14

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Earnings per share and equity per share

0.070.06

0.00 -0.01

-0.02

-0.01

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

Q3 2013 Q3 2014Non-recurring itemsEPS wo non-recurring items

0.07

0.06

0.70 0.70

0.50 0.42

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Q3 2013 Q3 2014Retained earningsRestricted equity

1.201.12

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Balance sheet

MEUR Q3 2014 Q3 2013

Intangibles and goodwill 111.5 115.6

Tangibles 81.8 87.7

Associated companies 24.7 30.5

Inventory 1.2 0.7

Receivables 37.9 37.4

Cash 10.5 9.8

Assets 267.5 281.8

Equity 99.8 93.0

Reserves-obligatory 3.7 3.9

Pension liabilities 2.9 2.8

Ib debt 90.7 113.9

Non-Ib debt 52.4 49.1

Advances received 17.9 19.1

Equity and liabilities 267.5 281.8

Page 27: Alma Media's financial result Q3 2014

Strategy and outlookKai Telanne

Page 28: Alma Media's financial result Q3 2014

The focal points of the implementation ofthe strategy in 2014

We will build new capacities, seek efficiency andaccelerate growth in digital services and

media.

Multi-channelcontent

Marketingsolutions Digital services Resources and

expertise

28

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Multi-channel content Multi-channelcontent

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IL-Media’s new lifestyle editorial staffcreates content for various channels

• The goal is to build one uniformeditorial staff to produce contentrelated to cars, health and travel toonline and mobile services, printmedia and IL-TV.

• Digital Ilona was launched inAugust.

• A joint desk of print and onlinelifestyle reporters to come.

• Closer cooperation with sales.

24.10.201430

Multi-channelcontent

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A digital afternoon edition for Aamulehti

• Aamulehti’s online content will beexpanded with a paid digital afternoonedition.

• The new Aamulehti Ilta will be launchedin January 2015 at the latest. Thedesign versions of the afternoon editionwere subjected to reader tests duringthe summer.

• The digital afternoon edition is anaddition to the paid Premium servicewhich was launched in January 2014.

• The structure of the Premium site willbe clarified. The same paid servicelogic will also be transferred intomobile services.

• Where applicable, Aamulehti Ilta isavailable for all regional newspapers ofAluemedia.

24.10.201431

Multi-channelcontent

Page 32: Alma Media's financial result Q3 2014

Marketing solutions Marketingsolutions

Page 33: Alma Media's financial result Q3 2014

• Some 60 customerships and budgetswill be transferred under theresponsibility of the new joint salesteam.

• The goal is to offer an even widerrange of media solutions to thecustomers, moving from pure mediasales and campaign-based thinkingtowards working continuouslytogether.

• This is a pilot project that will lastuntil the end of 2015. Furtheraction will be decided on after thepilot project.• Customer responses have been

very positive so far.

24.10.201433

Alma Media Solutions started in AugustAdvertising

and marketingsolutions

Page 34: Alma Media's financial result Q3 2014

Media companies started cooperation inorder to improve the measuring of mediaconsumption

• The project, which is scheduled torun for a few years, will createcommon rules and terminology formeasurement, and promote thedevelopment of new media planningtools.

• We are not aiming at ending thecurrent measurement systems in themedia sector; the new model isdeveloped in parallel with theexisting systems.

• At first, the change project is led byFinland’s biggest media companies:Alma Media, Sanoma Media Finland,Yleisradio and MTV. A team of expertswill be hired to execute the project.

24.10.201434

Advertisingand marketing

solutions

Page 35: Alma Media's financial result Q3 2014

Digital servicesDigital services

Page 36: Alma Media's financial result Q3 2014

Alma Mediapartners obtained a share ofthe Urakkamaailma.fi service

• Alma Mediapartners Oy bought 15 per centof the share capital of RemonttibulevardiOy which produces the Urakkamaailma.fionline service in the beginning of August.

• The service helps property managers andconsumers arrange competitive bidding forrenovations and contractors to find newcontracts.

• Almost 2,000 contractors participate in theservice. The number of requests for tendermade through Urakkamaailma.fi has beenincreasing.

24.10.201436

Digital services

Page 37: Alma Media's financial result Q3 2014

Resources and expertise

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Lännen Media started operations inOctober

• The joint project of 12 newspapersofficially started its operations on 1October 2014.

• The Finnish news desk of Lännen Mediawas the first one to start. Online stories,theme pages, weekend and supplementmaterials and the foreign desk will begintheir work at the end of this year.

• The first stories created by the jointeditorial staff will be published in print on7 October.

• Employees of Lännen Media gathered at athree-day training event in Tampere at thebeginning of October.

• The project provides employment for 40people in different offices.

24.10.201438

Resources andexpertise

Page 39: Alma Media's financial result Q3 2014

Alma Manu was granted a licence forpostal operations

• In September, Alma Manu was granted alicence by the government for postaloperations, applicable to letter deliveriesmainly in Pirkanmaa and Satakunta.

• The licence is valid for 10 years. Thelicence authorises Alma Manu Oy toprovide postal services to contractcustomers in the geographic area coveredby the licence, such as addressed mail.

• Alma Media will begin preparations tolaunch postal distribution operations, butthe company is still seeking a change tothe terms of the licence.

• Manu is studying the expansion ofdistribution to parcel and shopping bagservices, amongst other things.

24.10.201439

Resources andexpertise

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Outlook

Economic growth in Europe, and inparticular Finland, is expected to remainweak also in 2014. In this market situation,Alma Media’s growth in digital servicerevenue does not yet fully offset thedecline in the sales of print media.

Alma Media expects its full-year revenue2014 to remain at the 2013 level. Theoperating profit excluding non-recurringitems for 2014 is expected to be lower thanin 2013. The full-year revenue 2013 wasMEUR 300.2 and operating profit excludingnon-recurring items was MEUR 24.2.

24 October 2014

Page 41: Alma Media's financial result Q3 2014

Thank you! Questions?Upcoming events in the investor calendar:- Capital Markets Day 27 November 2014- Q4 result 13 February 2015