Eastern Europe Job Seekers Spur Rebound for This Finnish Stock

  • Alma Media expands in Slovakia, Poland as home market slows
  • Publisher’s CEO Telanne eyes more purchases of digital outlets

During a tough year for media stocks, a bet on Eastern Europe is paying off for one Finnish publisher.

Hurt by slowing demand for print advertising in its home market, newspaper company Alma Media Oyj has forged ahead in the online markets of the Czech Republic, Slovakia, Poland and the Baltic countries. While major European media indexes have slumped, Alma Media has gained 36 percent this year.

Chief Executive Officer Kai Telanne has taken a page out of the playbook of larger peers Schibsted ASA and Sanoma Oyj, pushing into classifieds websites including job listings at a time when newspapers and magazines are under pressure. With competition from Facebook Inc., Alphabet Inc.’s Google and Microsoft Corp.’s LinkedIn intensifying, the CEO plans further purchases in Alma Media’s growth regions to safeguard its position.

“Our interest in further investments has grown considerably,” Telanne, 53, said in an interview in Helsinki. Alma Media could use equity and loan financing for any deals, which would allow it to make “sizable moves,” Telanne said. He said the company can also invest about 40 million euros ($48 million) a year from its cash and still pay “good dividends.”

Telanne, who took the helm in 2005, isn’t shy to spend. Alma Media, which traces its roots to the 1840s, made one of its biggest takeovers yet last year by buying rival Finnish publisher Talentum Oyj for about 67 million euros. That deal reduced costs at home, reviving sales and earnings as the company cut jobs and combined functions.

The improvement of its domestic operations is allowing Alma Media to continue with an eastern Europe expansion started in the early 2010s. The basis of its business in the market is services such as jobs.cz and prace.cz in the Czech Republic, and profesia.sk in Slovakia, acquired in 2012.

“We saw that the growth of the Nokia-driven Finnish market has its limits,” Telanne said, referring to the technology giant which shed tens of thousands of jobs after being overtaken by Apple Inc. and Google Inc. in the smartphone market.

Alma Media says it now has 70 percent to 90 percent market share in recruitment services in the Czech Republic and Slovakia and about half of the market in the Baltic countries, which are Estonia, Latvia and Lithuania.

Digital Targets

Yet with competition from networking and recruitment companies like LinkedIn and Indeed accelerating, Alma Media is eyeing for more assets. The company is seeking acquisitions in its current geographies or “a bit beyond” and isn’t likely to go to bigger European markets like Germany or France, as the large investments required for such an expansion could prove too risky.

Even though its roots are in newspapers and magazines read by generations of Finns, the company sees its future growth beyond publishing, on the web.

“Primarily we are seeking digital services companies,” Telanne said. “The proportion of journalistic media in our business will continue to shrink.”

Of four analysts covering the company, two recommend buying, one says hold and one recommends selling the stock, according to data compiled by Bloomberg. Kimmo Stenvall, an analyst at Finnish bank OP, cut his rating to reduce in July, saying the share price had risen to a “challenging level.”

“The situation now is as good as it gets -- the economy is booming, the market is good and the profitability is very high in the recruitment business,” Stenvall said by phone.

Telanne is confident of the company’s prospects. While the stock is near its highest level since 2011, it’s still down more than 40 percent from a pre-financial crisis peak in 2007.

“It looks like investors have understood what’s happening with the company and where it is heading,” Telanne said.

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