Review by the CEO Annual General Meeting of Alma Media Corporation 20 March 2014
Contents Alma Media in 2013 Strategy implementation Markets in 2013 Financials 2013 2014 and beyond 2 March 20, 2014
Alma Media in 2013 01. The weak general economic development had a negative effect on the economic development of the media business. In a weak market, ad spend decreased. The shift from traditional media to digital channels accelerated. 02. Digital media development projects were successful. International investments had good profitability. New printing facility in Tampere taken into use. 3 March 20, 2014
Alma Media in 2013 Strategy implementation
Key strategy elements Increase digital advertising and content revenue Growth from digital services Secure vitality of print newspaper business 5 20.3.2014
Key strategy elements 1/3 Secure vitality of print newspaper business Improve quality and efficiencies in regional media through editorial office collaboration New printing facility in use, external print jobs Distribution optimisation and reorganisation 6 20.3.2014
Renewal to improve newspaper competitiveness Major renewal projects at Aamulehti New mobile service and Premium subscription model at turn of the year 2013 2014 Tabloid format from April 1, 2014, at the same time renewed Aamulehti.fi expands online news offering and opens an extended news package for subscribers Lännen Media (Western media) starts 12 regional papers start editorial collaboration for new power and quality in nationwide news Pohjolan Sanomat starts to appear 5 days a week 7 March 20, 2014
Necessary replacement investment in printing competitiveness New printing facility in Tampere After ramp-up, the facility is well up to speed, with 5 million copies printed per week. In addition to Alma Media newspapers, the facility prints Hämeen Sanomat and several Talentum publications, among others. Payback time of the approx 70m investment is 10 years. Alma Media closes down its Rovaniemi printing facility on March 31, 2014. 8 March 20, 2014
Key strategy elements 2/3 Increase digital advertising and content revenue Increase digital content revenue through new subscription models Increase online and mobile advertising through expanding the offering Develop web television 9 20.3.2014
Continuous effort to increase domestic digital growth 2013 success highlights: Mobile apps for Kauppalehti, Iltalehti and Aamulehti Mobile apps for Telkku.com and Etuovi.com Kotikokki.net modernisations Launch of Fiidi.fi service Regional online content paywall experiments Audience-targeted advertising service Almascope 10 March 20, 2014
Key strategy elements 3/3 Growth from digital services Develop international recruitment services network Market leadership for domestic marketplaces Develop business information services 11 20.3.2014
International business growing NEWS LIFESTYLE BUSINESS CAREER Revenue breakdown 2013 0 % Other 14% BUSINESS LIFESTYLE CAREER CAREER Finland 86 % 13 15 18 36 41 2009 2010 2011 2012 2013 Revenue outside Finland, MEUR 12 March 20, 2014
International investment and partnerships for digital growth 2013: Alma Media and Monster Worldwide decided to intensify their recruitment collaboration in Eastern Central Europe. New countries on Alma Media s map: Poland and Hungary Monster becomes minority shareholder in Alma Career (manages all Alma Media recruitment portals) with a 15-% holding Alma Media services are market leaders in nearly all countries where the company operates. 13 March 20, 2014
Digital business growing 90 28,1 % 30% 80 70 24,3 % 25% 60 50 40 12,9 % 13,1 % 15,7 % 18,0 % 78 85 20% 15% 30 20 10 44 40 49 57 10% 5% MEUR 0 2008 2009 2010 2011 2012 2013 0% Verkkoliiketoiminnan Secure vitality of print liikevaihto newspaper business Osuus Share liikevaihdosta of total revenue 14 March 20, 2014
5 businesses on a digital journey ALMA DIVERSO ALMA MARKETPLACES 300 Group revenue 2013, EUR million KAUPPALEHTI GROUP ALMA REGIONAL MEDIA IL-MEDIA 15 March 20, 2014 Share of digital in business unit revenue
Sustainable Media corporate responsibility programme 2013 We launched the concept of brainprint in Finland and introduced constructive journalism into public discussion. Our long-term environmental work was recognised: Alma Media is the only media company among the best Nordic companies in the Carbon Disclosure Project initiative s Climate Disclosure Leadership index. Employee satisfaction survey results improved in areas such as managerial work, operating culture and general wellbeing at work. Active support for the Vastuullinen kesäduuni (Responsible Summer Job) campaign. 16 March 20, 2014
Nobody has a certain prediction for the future. Renewal requires plenty of experimenting.
Markets in 2013
Advertising volume reflects economic cycles 15% 10% 5% 0% -5% -10% -15% -20% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Annual GDP change Annual advertising volume change Sources: Statistics Finland (GDP change 2013 estimated), Finnish Advertising Council, TNS 19 March 20, 2014
Change in media advertising by type of media MEUR 800 700 600 500 400 300 Newspapers Magazines Printed catalogues Television Online Radio Cinema Out-of-home 200 100 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20 March 20, 2014
Advertising share of GDP at record low 1 0,9 0,8 0,7 0,6 % *estimate 21 March 20, 2014
Financials 2013
Revenue and operating profit 2009 2013 Revenue, MEUR IFRS 350-6,2% Operating profit, MEUR IFRS 50-27,8% 300 250 307,8 311,4 316,2 320,1 300,2 40 30 42,6 43,9 42,9 33,5 2,8 200 150 20 24,2 100 10 50 0-2,2-0,5-1,0 0 2009 2010 2011 2012 2013-10 -7,0 2009 2010 2011 2012 2013 Kertaluonteiset Non-recurring erät items
Interest-bearing debt Net debt Q2/2011-Q4/2013 120 100 80 101,4 103,5 104,1 97,6 MEUR 60 40 20 0 62,3-20 -40-32,3 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 24 March 20, 2014
Earnings per share and equity per share 0,50 0,40 0,22 0,20 1,4 1,2 1,08 1,17 0,30 0,20 0,38 1,0 0,8 0,37 0,46 0,10 0,23 0,6 0,00-0,03 0,4 0,70 0,70-0,10-0,16 0,2-0,20 2012 2013 0,0 2012 2013 Non-recurring items EPS wo non-recurring items Retained earnings Restricted equity
Distribution of profit 2006 2013 Dividends * and effective dividend yield 2006 2007 2008 2009 2010 2011 2012 2013 Dividend *, EUR 0.65 0.90 0.30 0.40 0.70 0.40 0.10 0.10 Effective dividend yield 7.7% 6.1% 5.3% 5.3% 8.5% 6.5% 2.2% 3.3% * dividend and capital repayment combined Proposal for distribution of 2013 profit 0.10 per share, effective dividend yield 3.3% (share price Dec 31, 2013, 2.99 per share) 1,0 0,9 0,8 0,7 Distribution of profit per share Profit per share 0,6 0,5 0,4 0,3 0,2 0,1 0,0 2007 2008 2009 2010 2011 2012 2013 26 March 20, 2014
2014 and beyond
Long-term financial targets Alma Media s financial targets Growth in digital business Return on investment ROI, % Dividend payout ratio* 2011 2012 2013 Target level 16.3% 36.8% 8.4% > 15% 26.1% 13.8% 10.1% > 15% 103% 45% 50%** > 50% * Including capital repayment to shareholders. ** Based of the Board of Directors proposal to the AGM.
Evolution may not be enough. Rapid changes in technology and consumer behaviour require reallocation of resources and focus on new products and services. We also need the courage to relinquish some things we have done before.
Strategy implementation focus in 2014 Multi-channel content Marketing solutions Digital services Resources and competensies We build new competencies, seek efficiencies and accelerate growth in digital services and media. 20.3.2014
We are building a round-the-clock media consumption experience based on extensive analysis of our customers preferences and media usage.
Multi-channel content Case moving image IL-TV is Finland s largest online TV In February 2014, 530,000 separate visitors, in 2nd week of March, 3.8 million video clicks Strong growth in advertising: ability to sell precise target groups to advertisers and improve measurability Versitile content offering for internet audiences 32 20.3.2014
Marketing solutions Case mobile advertising Smartphone ubiquity makes mobile the fastest-growing digital display advertising sector also with Alma Media. The market almost quadrupled to 10m in 2013, and the growth continues. Advertising solutions improve along with analytics and targeting possibilities. 33 20.3.2014
We need to create a multi-faceted service portfolio to disperse risk and increase success possibilities.
Digital services Case home services Etuovi.com is changing from a home sales marketplace into a wide range of home and living services. Service offering already includes interior design. Advertisers and consumers have adopted the extended service offering, diversifying the earnings of the marketplace. 35 20.3.2014
By the year 2020, 50% of Alma Media s revenue comes from digital.
Today s media business is not for the weak of heart. It is a constant balancing act between existing business and new growth that includes a substantial risk element. Creating sustainable growth requires excellent understanding of consumers rapidly changing behaviour patterns and continuous innovation without fear of failure, by learning from mistakes.
Thank you!