Alma Media Oyj · OMXHEX:ALMA
Alma Media Oyj — Investor Presentation (July 2015)
64 slides from Alma Media Oyj's investor presentation, July 2015
Slide 1: Alma Media - Adding Service into Media Business
ALMA MEDIA - ADDING SERVICE INTO MEDIA BUSINESS Alma Media Corporation Investor Relations information package July 2015 21.8.2015 1
Slide 2: Introduction to Alma Media
INTRODUCTION TO ALMA MEDIA Structure of business, geographies, ownership 21.8.2015 2
Slide 3: This is Alma Media
This is Alma Media 38,8 • A media and digital services group operating Content revenue, print in 10 European countries 104,6 Content revenue, digital 295 Revenue 2014 • 1,700 full-time employees working for some of Ad revenue, print 72,7 the leading media and services brands Ad revenue, digital MEUR
Slide 4: Alma Media as an investment
Alma Media as an investment Successful transformation from print based to service based media business 1 2 3 Digital strategy Strong brands Growth and value Alma Media has invested Leading media and Long-term financial in digital media and service brands across targets include ambitious services sin
Slide 5: Alma Media's reporting segments
1. DIGITAL STRATEGY Alma Media’s reporting segments Financial Media And DIGITAL CONSUMERS Business Services FINANCIAL MEDIA AND REVENUE 2014 18% SERVICES BUSINESS SERVICES 295 MEUR 19% National Consumer Digital 16% REVENUE 55.8 REVENUE 56.8 Media Consumer Services EBITDA 14.8 (26.7 %) EBITDA 7.1 (13
Slide 6: Sizeable and growing digital business
1. DIGITAL STRATEGY Sizeable and growing digital business Digital revenue and it’s share of total sales 100 40 80 30 60 20 40 10 20 0 0 MEUR 2010 2011 2012 2013 2014 % 21.8.2015 6
Slide 7: Top-of-mind brands across Europe
2. STRONG BRANDS Top-of-mind brands across Europe Wide media and service offering Alma Media’s strong brands offer both local and national media content in Finland, and various online services across in Finland and in Eastern Central Europe. Operations outside of Finland are focused on digital recru
Slide 8: Long-term financial targets
3. GROWTH AND VALUE Long-term financial targets Balancing investments, debt repayment and shareholder return Digital business growth pa. 15 % Alma Media’s long-term financial targets reflect the focus areas of the company’s strategy and business development. Long-term financial targets will be reach
Slide 9: Ownership structure
Ownership structure Shareholders by sector Largest shareholders (June 30th 2015) 1. Ilkka-Yhtymä Oyj 29.79 % 2. Mariatorp Oy 16.03 % 3. Kaleva Kustannus Oy 7.95 % 4. Varma Mutual Pension 7.06 % Insurance Company 5. C.V.Åkerlund foundation 4.53 % 6. Elo Pension Company 2.45 % 7 Herttaässä Oy Ab 2.16
Slide 10: Markets
MARKETS Revenue sources and the development of main markets 21.8.2015 10
Slide 11: Operations across Europe
Operations across Europe • Based in Finland, Alma Media has operations in 10 countries across Northern and Eastern Central Europe. • Operations outside Finland focused on career services. In Sweden Alma Media has an office space marketplace. Personnel 2014, % Revenue 2014, MEUR EBIT 2014, MEUR 20% 4
Slide 12: Main geographical markets
Main geographical markets Finland • Population 5.4 million • GDP growth rate 0-1 % (2015E) • About 97 % have access to internet • Alma: online and print media, digital services Estonia, Latvia and Lithuania • Population more than 7 million • GDP growth rate 2 to 3 % (2015E) • About 70 % have access
Slide 13: Markets: Development in Finland
MARKETS: DEVELOPMENT IN FINLAND 21.8.2015 13
Slide 14: Finnish media usage: print readership in decline
Finnish media usage: print readership in decline 1 400 400 1 200 350 Aamulehti 300 1 000 Turun Sanomat 250 800 Kaleva Helsingin 200 Sanomat 600 Keskisuomalainen Ilta-Sanomat 150 Satakunnan Kansa 1000 pieces 400 1000 pieces Iltalehti 100 Lapin Kansa 200 50 Kauppalehti Kainuun Sanomat 0 0 2004 2005 20
Slide 15: Finnish media usage: online readership keeps growing
Finnish media usage: online readership keeps growing Weekly browser visits to Alma Media’s online network 7 000 000 Alma Media RON 6 000 000 • A network of Alma Media’s main 5 000 000 media and service sites. 4 000 000 • Weekly reach 2.3 million users. 3 000 000 • Current market position in Finland
Slide 16: Finnish media usage: mobile usage growing fastest
Finnish media usage: mobile usage growing fastest Share of mobile visitors to Alma Media’s news sites and services 50,00% 60,00% 45,00% 55,00% 50,00% 40,00% 45,00% 35,00% 40,00% 30,00% 35,00% 25,00% 30,00% 20,00% 25,00% 20,00% 15,00% 15,00% 10,00% 10,00% 5,00% 5,00% 0,00% 0,00% 201312 201401 201402
Slide 17: Finland: Advertising spend by media
Finland: Advertising spend by media* 1999-2014 MEUR 800 Newspapers 700 Magazines 600 Printed directories 500 TV 400 300 Online 200 Radio 100 Movies 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Outdoor *Excluding Google, FB 21.8.2015 17
Slide 18: Finland: Advertising spend by media, %
Finland: Advertising spend by media, % 100 % 1% Outdoor 1% 1% 1% 1% 2% 3% 6% 90 % 8% 10% 17% 14% 15% 16% 16% 20% 19% 18% 17% 18% 18% 20% Movies 80 % 17% 23% 18% 18% 70 % 18% 20% 16% 17% 17% 20% 21% Radio 60 % 23% 15% 15% 15% 15% 14% 23% 14% 14% Online 50 % 12% 11% 11% 10% 9% 40 % 8% TV 30 % 57% 56%
Slide 19: Finland: advertising volumes follow GDP closely
Finland: advertising volumes follow GDP closely 15% 10% 5% 0% -5% -10% -15% -20% 1990 1997 1998 1991 1992 1993 1994 1995 1996 1999 2000 2007 2008 2001 2002 2003 2004 2005 2006 2009 2010 2011 2012 2013 2014 Annual GDP change Annual advertising volume change Sources: Statistics Finland, Finnish Advert
Slide 20: Finland: advertising / GDP
Finland: advertising / GDP 1 0,9 0,9 0,85 0,81 0,85 0,82 0,82 0,8 0,8 0,78 0,81 0,81 0,8 0,76 0,76 0,76 0,75 0,78 0,74 0,74 0,75 0,73 0,7 0,73 0,75 0,7 0,6 0,6 0,6 0,5 0,4 21.8.2015 20
Slide 21: Finland: advertising market in decline across almost all industries
Finland: advertising market in decline across almost all industries Total market, change from Q1-Q4 2013 Advertising in Q1-Q4 14 MEUR -4,3 % Retail Retail 228 -5,9 % Motor v. Motor vehicles 89 -0,4 % Food & bev. Food & beverages 88 -2,6 % Houses Houses and premises 45 -3,1 % Entert Entertainment 43
Slide 22: Change in advertising 6/2014 – 6/2015
Change in advertising 6/2014 – 6/2015 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% Advertising sales total, chg % Newspaper advertising, chg % Internet advertising, chg % Source: TNS Media Intelligence 21.8.2015 @AlmaMedia_IR 22
Slide 23: Online advertising grew, but less than in 2014
Online advertising grew, but less than in 2014 YTD change from previous year, % 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 Source: TNS Media Intelligence 21.8.2015 @AlmaMedia_IR 23
Slide 24: The decline in newspaper advertising became steeper in May–June 2015
The decline in newspaper* advertising became steeper in May–June 2015 YTD change from previous year, % 0% -2% -4% -6% -8% -10% -12% -14% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 Source: TNS Media Intelligence * Newspapers, local and free issue papers 21.8.2015 @AlmaMedia_IR 24
Slide 25: Advertising turned to a decline in Q2/2015 across all segments
Advertising turned to a decline in Q2/2015 across all segments Total market, change from previous year Q4 2014 vs 2013 Q1 2015 vs 2014 Q2 2015 vs 2014 Retail 0.8 % Retail 6.0 % Retail -1.4 % Food & bev. -10.0 % Food & bev. -0.5 % Food & bev. -12.9 % Motor v. -4.4 % Motor v. -10.9 % Motor v. -3.1 % H
Slide 26: Disruption in digital advertising
Disruption in digital advertising Advertising channels in Finland Q1 2015: 260 MEUR Online advertising channels in Finland, Q1 2015* TV 24 % Others 9% Online advertising Finnish Magazines 26 % 67.8 MEUR 6% online media Newspapers incl free sheets 34 % Source: IAB Finland *Display and classified adve
Slide 27: Market development in Eastern Central Europe
MARKET DEVELOPMENT IN EASTERN CENTRAL EUROPE 21.8.2015 27
Slide 28: GDP growth in career service countries supports market development
GDP growth in our career service countries support solid market development Career Market Alma GDP growth rate, % Alma Career services size Career’s market position market MEUR brands 2015e 2016e Baltic 9 CV Online 2.3 – 2.8 2.9 - 3.6 # 1 in all states Poland 40 Monster 3.3 3.4 #4 Czech 45 LMC 2.5 2
Slide 29: Alma Media's career operations in brief
Alma Media’s career operations in brief 15 % Monster Worldwide’s share of Alma Career Oy, the 11 400 company managing the Countries south from operations. Alma Media Finland to the Adriatic Sea. owns 85 %. personnel across Europe. 35 >30% MEUR of revenue. EBITDA 21.8.2015 29
Slide 30: Strategy
STRATEGY Alma Media’s response to the dynamically developing marketplace 21.8.2015 30
Slide 31: Mission, values and vision
MISSION For individual freedom and wellbeing. VALUES For individual’s Freedom and pluralism of journalism freedom and Team play Courage wellbeing. Pluralism of journalism Courage The most exciting provider VISIOMME VISION of information, The mostservices andprovider of exciting experiences. informat
Slide 32: Strategy 2015 - 2017
Strategy 2015 - 2017 Alma Media will accelerate growth in digital business through service innovations, media solutions offering and digital content sales. The company will also investigate and utilize possibilities to support organic growth by targeted acquisitions. 21.8.2015 32
Slide 33: Elements of strategy for growth and profitability
Elements of strategy for growth and profitability A. B. Support continued organic Four strategic Digital Consumer growth and strategic focus by Services targeted acquisitions & themes: divestments. Financial Media Service extensions and innovations. Multichannel content and Business Services C. Mark
Slide 34: A. Four strategic themes for all businesses
A. Four strategic themes for all businesses Multichannel content Digital content income, web tv, mobile media, content packages NATIONAL FINANCIAL MEDIA CONSUMER AND BUSINESS MEDIA SERVICES Marketing solutions Programmatic buying, targeting, premium packages, consultative sales Service business Mark
Slide 35: B. Supporting focus & growth in digital business
B. Supporting focus & growth in digital business After a phase of debt repayment CV Online during 2013-2014, Alma Media is Kotikokki.net E-Kontakti.fi Alkali (Baltics) again capable of targeted acquisitions into digital services. Gross Monster investment Tyrvään L.M.C. Profesia (Poland, into career
Slide 36: B. Supporting focus & growth in digital business
B. Supporting focus & growth in digital business NET DEBT / EBITDA (2009 – 2014) NET DEBT / EQUITY (GEARING), 2009 – 2014 NET DEBT Q2/2012 – Q4/2014 120 Alma Media had a strong investment period during 2011-2013 (approx. MEUR 150). 100 97,6 80 82,1 During 2013-2014 Alma Media has concentrated on int
Slide 37: C. Strengthen the market position of the digital mass media
C. Strengthen the market position of the digital mass media Some examples of Iltalehti.fi development • Utilising smart data in content development and advertising (targeting) solutions. • New premium advertising solutions to counter online advertising price erosion. • Building audience reach and en
Slide 38: D. Development of regional media
D. Development of regional media Structural reform of Lapland newspapers • We combined the editorial and other functions of two daily newspaper in Lapland • Personnel reduction 21 Structural changes support quality and efficiency persons out of 130 staff • New products (print , online Main operation
Slide 39: Old and new competition
Old and new competition Traditional competition Alma Media’s New and emerging business competition Free sheets; direct mail; regional TV & radio broadcasts Regional media News aggregators; social media Other tabloid publisher; broadcast TV online Tabloid media Social media; news aggregators Other pu
Slide 40: Financial dynamics
FINANCIAL DYNAMICS Revenue sources, costs, investments and financing 21.8.2015 40
Slide 41: Advertising is the main revenue source for Alma
Advertising is the main revenue source for Alma Content and service revenue growing in share Sales 2014 38,8 Content revenue, print 104,6 295 Content revenue, online Advertising revenue, print 72,7 Advertising revenue, online MEUR Service revenue 5,6 73,7 Total share of advertising revenue 49.5 % 21
Slide 42: Organic group sales development scenario
Organic group sales development scenario 295 MEUR Services Digital media Printed media Note: for illustrative purposes only 2014 2020 actual 21.8.2015 42
Slide 43: Cost structure
Cost structure Personnel costs represent largest cost element Costs 2014 120 Personnel 100 11 % Depreciation, amortization 5% 80 Materials and printing The development of main cost elements 2010-2014 275 7% 44 % Delivery 60 9% Content sourcing and other 40 MEUR services ICT 20 10 % Sales and marketi
Slide 44: Sensitivity analysis
Sensitivity analysis Factor Change (%) Impact on EBIT (MEUR) Media advertising +1 +1.5 Paper prices +1 -0.12 The impacts in euros of the changes referred in the table above Distribution costs +1 -0.3 are provided as gross values. The calculations are estimates and based on historical annual figures.
Slide 45: Balancing investments, dividend and debt repayment
Balancing investments, dividend and debt repayment 2013 2014 Net investments Repayment of loans Net investments Repayment of loans 2.3 MEUR 22.5 MEUR 8.4 MEUR 26.9 MEUR (0.03 €/share) (0.30 €/share) (0.11 €/share) (0.36 €/share) Cash flow Cash flow from operations from operations 24.4 MEUR 26.5 MEUR
Slide 46: Debt level decreasing as planned
Debt level decreasing as planned Interest-bearing debt, distribution and maturities Q2/2015 Financial leasing 67.5 Financial loans 7.5 Commercial papers 2.0 Cash and cash equivalents -13.6 120 Total 63.4 100 103.5 M€ 30,0 80 79.7 80.3 25,0 MEUR 71.1 67.8 60 63.4 20,0 40 15,0 10,0 20 5,0 0 0,0 Q4 12
Slide 47: Balance sheet
Balance sheet MEUR Q2 2015 Q2 2014 Intangibles and goodwill 112.0 112.7 Tangibles 73.0 83.2 Associated companies 25.3 24.9 Inventory 1.2 1.1 Receivables 33.7 33.8 Cash 13.6 13.6 Assets 258.7 269.3 Equity 102.2 95.1 Reserves-obligatory 0.5 3.9 Pension liabilities 2.7 2.9 Ib debt 77.0 93.3 Non-Ib debt
Slide 48: Performance & financial targets
Performance & financial targets Alma Media’s 2011 2012 2013 2014 Target level long-term financial targets Digital business growth 16.3% 36.8% 8.4% 11.9% > 15% Return on Investment (ROI), % 26.1% 13.8% 10.0% 9.7% > 15% Dividend payout ratio* 103% 45% 50% 63% > 50% *Including capital repayments 21.8.2
Slide 49: Financial performance
FINANCIAL PERFORMANCE Key figures Q2 2015 @AlmaMedia_IR 21.8.2015 49
Slide 50: Highlights
Highlights • The Finnish economy continued to be characterised by sustained weak development in the second quarter. Advertising volume declined by 3.3% year-on-year in Finland. The circulation volumes and single-copy sales of print media also declined. • Alma Media’s revenue in Q2 declined to MEUR 7
Slide 51: Revenue Q2/2015
Revenue Q2/2015 • Revenue for the second quarter decreased by 3.5% to Revenue, MEUR MEUR 73.0 IFRS -0.9% -3.5% • The effect of divested business operations on the decrease in revenue was MEUR 3.3. 80 70 9.4 • Online sales increased by 8.0% and amounted to MEUR 10.8 25,7. 60 • Digital products and se
Slide 52: Operating profit Q2 2015
Operating profit Q2 2015 • Operating profit excluding non-recurring items increased EBIT, MEUR by 8.0% to MEUR 6.8 IFRS +37.3% • Operating profit was MEUR 8.1, or 11.1% of revenue. 9.0 +8.0% • The operating profit includes net non-recurring items in the 8.0 amount of MEUR 1.3. 1.3 7.0 • Total expe
Slide 53: Investments in digital development to continue
Investments in digital development to continue – the significance of digital business to Alma Media’s income formation is increasing MEUR Segment’s share of the Group’s 100 40% digital revenue 90 34.1 % 32.0 % 35% 5.2 % 80 28.1 % 12.4 % 24.3 % 30% 70 25% 60 18.0 % 50 20% 15.7 % 95 12.9 % 84 59.2 % 2
Slide 54: Operating profit increased as expected in Q2
Operating profit increased as expected in Q2 Revenue, MEUR EBIT, MEUR -22.6% +8.0% -3.5% 90 -1.1% 9 80 8 1.3 7 70 75.7 76.6 7.0 71.9 73.0 6 6.8 70.5 6.3 60 5 5.6 50 4 40 3 0.8 2 30 1.9 1 20 0 -0.2 -0.5 -0.8 10 -1 0 -2 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Non-recurring items 21
Slide 55: Advertising sales, and print media content revenue in particular, declined
Advertising sales, and print media content revenue in particular, declined Content revenue, MEUR Advertising sales, MEUR 0.0 1.0 +0.2% -2.9% -0.5 0.7 -1.0 -1.2 0.0 -1.5 -2.0 -1.0 -1.2 -2.5 -2.9 -3.0 -5.1% -10.6% -3.5 -2.0 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 21.8.2015 @AlmaMed
Slide 56: Growth in foreign markets compensated for the decline in domestic revenue
Growth in foreign markets compensated for the decline in domestic revenue and profitability Revenue, MEUR Q2 15 Q2 14 Chg % Digital Consumer Services 15.3 14.0 9.4 % Financial Media and Business Services 14.0 13.1 7.2 % National Consumer Media 10.7 12.7 -15.8 % • The significance of foreign Regional
Slide 57: Digital Consumer Services Q2/2015
Digital Consumer Services Q2/2015: continued strong growth in foreign markets Revenue and operating profit, MEUR & % • Revenue grew by 9.4% to MEUR 15.3 Excluding non-recurring items • Revenue from operations in Finland decreased by 2.6% due to the weak market situation to MEUR 5.6 18.0 +6.7% +9.4%
Slide 58: Financial Media and Business Services Q2/2015
Financial Media and Business Services Q2/2015: growth boosted by JM Tieto • Revenue increased by 7.2% to MEUR 14.0 Revenue and operating profit, • Digital business accounted for 42.7% of revenue. MEUR & % Excluding non-recurring items • Content revenue increased by 0.9% and was MEUR 3.8 17.0 +0.3% +
Slide 59: National Consumer Media Q2/2015
National Consumer Media Q2/2015: result weighed down by the weak domestic advertising market Revenue and operating profit, MEUR & % • Revenue declined by 15.8% to MEUR 10.7. Excluding non-recurring items • Online business accounted for 29.8% of the segment’s revenue. 14.0 -13.9% -15.8% 30% • Conte
Slide 60: Regional Media Q2/2015
Regional Media Q2/2015: The decline of the result was tempered by adjustment measures and the external sales of printing services Revenue and operating profit, MEUR & % • Revenue was MEUR 34.0. Excluding non-recurring items • The divestment of business operations in Kainuu contributed to the decrea
Slide 61: Cash flow from operating activities and investments
Cash flow from operating activities and investments 3.0 16,7 20.0 2.5 2.5 15.0 2.0 1.5 10.0 -4.2 1.0 MEUR MEUR 5.0 0.5 0.7 4.4 3.0 0.0 0.0 -4.2 -0.5 -5.0 -1.1 -1.0 -10.0 -1.5 -1.7 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 -2.0 Cash flow from operating activities Q2 14 Q2 15 G
Slide 62: Interest-bearing liabilities
Interest-bearing liabilities Net debt Q4/2012–Q2/2015 Net debt distribution 120 Q2/2015 100 103.5 Financial leasing 67.5 80 Financial loans 7.5 79.7 80.3 MEUR 71.1 60 67.8 Commercial papers 2.0 63.4 40 Cash and cash -13.6 equivalents 20 Total 63.4 0 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4
Slide 63: Key indicators
Key indicators IFRS Equity ratio, % Gearing, % 45 90 40 42.7 80 83.8 38.4 35 70 30 60 62.1 25 50 20 40 15 30 10 20 5 10 0 0 Q2 14 Q2 15 Q2 14 Q2 15 21.8.2015 @AlmaMedia_IR 63
Slide 64: Earnings per share and equity per share
Earnings per share and equity per share 0.08 0.07 1.4 0.07 1.16 0.02 1.2 0.06 1.07 0.06 1.0 0.05 0.36 0.45 0.04 0.8 0.03 0.06 0.06 0.6 0.02 0.4 0.70 0.70 0.01 0.2 0.00 0.00 -0.01 0.0 2014 2015 2014 2015 Non-recurring items Retained earnings EPS wo non-recurring items Restricted equity 21.8.2015 @Alm