Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Digital business share increased to 84.4%, indicating a successful shift towards digitalization.
- Healthy balance sheet with a leverage ratio of 1.9 and an equity ratio of 44.3%.
- Alma Marketplaces segment showed a 15.3% increase in net sales and a 10% rise in adjusted operating profit.
- Strong performance in the News Media segment with digital content sales up by more than 13%.
- Successful integration and performance of Netwheels, contributing positively to the Marketplaces segment.
Negative Points
- Print business declined by around 10%, impacting overall revenue.
- Revenue growth target of 5% not met, with only a 1.8% increase in the first half of 2024.
- Increased operating expenses related to product development affected profit margins.
- Advertising market in Finland remains weak, with a 3.6% decline in Q2.
- Recruitment advertising market in Finland saw a significant drop, impacting the Alma Career segment.
Q & A Highlights
Q: Could you comment on how the market developed in Q2 month by month? Were there any differences or trends between these months?
A: Yes, there were differences, particularly in advertising. April and May were pretty good, but June was really bad. This fluctuation indicates some uncertainty on the customer side, with consumer confidence being low and companies being cautious about advertising.
Q: How do you look at the second half of the year? Do you expect to cut costs further?
A: We have a contingency plan in place, and we will continue with cost cuts during the latter part of the year.
Q: You kept your full-year guidance for 2024 unchanged. Can you give any color on the upside or downside risks to the guidance?
A: Upside risks are related to market development, while downside risks are more within our control. We don't expect the market to worsen, so the rest is in our hands.
Q: How do the price increases made in different Marketplaces segments, for instance, in Real Estate or Mobility this year compare to last year? Are there big differences in the trend between segments?
A: We have made continuous price increases due to inflation and product development. However, in the current low-demand and high-competition environment, significant price increases are challenging.
Q: Could you elaborate on the drivers behind the growth in the real estate vertical?
A: The growth is driven by market-related factors, such as high demand and supply in commercial real estate in Sweden, and our own product development and pricing capabilities.
Q: Should we read the Career KPI regarding invoicing that the revenue trend should flatten out going forward?
A: The revenue trend has already flattened out, and we expect the market to develop favorably in the coming quarters.
Q: Which brands are driving the growth in digital content sales in News Media?
A: The high demand for news, driven by global events, and our product development are the main drivers. We have also combined news organizations to better utilize resources for product development.
Q: How does your pricing in classifieds compare to your peers?
A: In markets where we are the leader, we have higher prices. In other markets, we are on par with the competition. Better market share generally translates to better pricing power.
Q: Netwheels is contributing nicely to your numbers. Has Netwheels performed better than your initial expectations or in line?
A: Netwheels has performed at least in line with our expectations. The integration has been smooth, and the service fits well into our portfolio.
Q: How do you view your market share in Finland for real estate sales and rental, and also for mobility?
A: In mobility, we are the clear market leader. In real estate, we are on par with the competition in housing but are the market leader in commercial premises in Finland and Sweden.
Q: Are you considering any new ESG initiatives for the next quarters?
A: We are focused on achieving the targets of our current ESG program and are not planning any new initiatives outside of it.
Q: Can you quantify the burden on profits/profitability from your current investment programs? What kind of earnings improvement could we look for in 2025 when these costs decline?
A: It's too early to estimate exact figures. However, we expect revenues to start increasing by the end of this year as current product development investments finalize.
Q: Is there a chance that mergers and acquisition transactions will be considered in Q3?
A: There is always a possibility. We continuously investigate new opportunities but do not disclose plans in advance.
Q: How do you view the upcoming price increases for next year? Can we see growth from pricing in the future?
A: Yes, we can and we will.
Q: Could you elaborate on any new digital or other innovations that could speed up growth in the next few quarters?
A: We have over 70 AI initiatives across all segments, including process improvements, product development, and new business innovations. Some AI-assisted innovations are already in use, showing encouraging results.
Q: Schibsted is talking about increasing their marketing investment in real estate. Have you seen any change in the competitive nature of the market, and are you planning to respond?
A: Schibsted has been active in marketing, but we have maintained our normal level. We will adapt if needed but have not seen any changes in market position.
Q: How is the labor market at the moment? Are you able to retain necessary talent to ensure future growth?
A: We have a very good situation in the talent market, with a strong reputation and the ability to attract and retain top talent.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
