Otava’s
Star Moments 2019

OTAVA GROUP’S ANNUAL REPORT 2019

Please join us to see Otava’s star moments 2019. In the diversified media group there were many twinkling stars.

REVIEW BY THE CHAIRMAN OF THE BOARD

“Education, self-cultivation and freedom of speech are equal rights for everyone. It is unlikely that anyone in Finland would question this idea.”

Education, self-cultivation and freedom of speech are equal rights for everyone. It is unlikely that anyone in Finland would question this idea. These three ideas have been the pillars of Finland’s success for more than a century. And all of them are showing signs of crumbling, even through the cracks are very small. Otava’s mission is to defend all three of these rights.

At the end of 2019, Otava enjoyed a financial position that will enable us to choose our own direction and what to invest in, even if our operating environment doesn’t really favour those decisions. Our operating environment is changing at a rapid rate – just like the world and society in general. Digitality is breaking through even more strongly in all of the sectors in which Otava operates. This will usher in both new challenges and new opportunities for everyone at Otava.

Otava’s top-quality content is an asset, whether in publishing, learning materials or media content.  

Indications of this include the Finlandia Prize for Fiction won by Pajtim Statovci for Bolla, a novel published by Otava, and the Finlandia Prize for Non-fiction won by Metsä meidän jälkeemme, a book published by Like and written by Anssi Jokiranta, Pekka Juntti, Anna Ruohonen and Jenni Räinä.

There was also an historical double Nobel Prize win for Otava authors, as Olga Tokarczuk received the unawarded 2018 prize and Peter Handke the 2019 prize.  Our magazine media also received several awards in 2019.

Finland is known as a country in which everyone has the opportunity to learn, educate themselves, and build their own future.

HENRIK EHRNROOTH

Finland is known as a country in which everyone has the opportunity to learn, educate themselves, and build their own future. This equality is now being eroded by, for example, the differing financial positions of schools and municipalities. By creating new learning content and services, Otava wants to keep providing learning opportunities that are open to everyone.

Finland’s reputation in PISA tests still acts as a quality guarantee and paves the way for Finnish educational exports. There is great potential for globalisation in Otava’s learning materials.

Our learning content is already being sold abroad, and numerous new projects are ongoing. 

It is difficult to envisage education without books or books without bookstores. We want to ensure that books remain available throughout Finland. Otava has both sales channels under control: ecommerce and brick-and-mortar stores.   

286.2

Meur

Otava’s net sales

Otava provides high-quality and reliable journalism. Against the prevailing downward trend, we managed to increase our magazine sales in terms of both individual issues and subscriptions – and high-quality content was the decisive factor.

There is also great potential for development in Otava Marketplaces. Marketplaces has invested in technology and platform development. On the platforms of the future, both consumers and corporate customers will interact with us in their chosen manner.   

As a Finnish company operating in a global world and a global competitive environment, our main competitors are international companies. They play by global rules and do not pay taxes in Finland.   

Otava has invested in Alma Media, a company whose sector is very familiar to us. This has been an extremely profitable investment.

Otava will be celebrating its 130th anniversary in 2020. And as we enter the new decade, Otava will be keeping both its roots in mind and an eye to the future. 

We are living in an era that demands the courage to question old ways of working and a willingness to internalise brand-new ideas. I want to thank all Otava personnel for their courage in accepting new challenges. Without your efforts, we would not have been as successful in such a changing environment.

Henrik Ehrnrooth
Chairman of the Board of Directors

REVIEW BY THE CEO

“We are the market leader in all of our key sectors, and succeeded in strengthening our position. We also brought new products and services to market.”

Considering the market situation, 2019 was an extremely successful year for Otava financially.

We are the market leader in all of our key sectors, and succeeded in strengthening our position. We also brought new products and services to market.

Changes in the market are posing challenges for Otava, and are underlining the need for renewal. Creating new kinds of growth will now be even more important than ever.

It is also important to look to the future with an open mind, even if the pace of change feels overwhelming. Data and its analysis will play a central role in all of our business activities. We will be investing in our personnel’s expertise, as our competitive edge lies in digitally skilled employees who continually develop their competence.   

Upheavals in working culture are also affecting Otava. Team work – including a variety of different teams working together – will become increasingly important. Our new and renovated premises (on Uudenmaankatu and in Tripla, Pasila) will also enable us to work together better than ever.

E-books have made a breakthrough. Downloadable audiobooks in particular have exploded in popularity, while falling sales of printed books have already been challenging publishers for several years.

Otava intends to increase its market share in e-publishing. We have a business team that focuses on audiobooks and will be releasing a total of about a thousand e-books and audiobooks in 2020.

Listen to a podcast: Alexander Lindholm, CEO of Otava Ltd reviews the Star Moments of 2019 and outlines the new decade.

The media revolution is ongoing and the pace of change in our operating environment just keeps accelerating. Yet in spite of this, and against the general trend in the industry, we managed to increase our magazine sales both in terms of individual issues and subscription renewals. Our multiyear joint project to renew our subscription system has also been successfully concluded. We met our earnings targets for 2019. Even though the magazine advertising market remains challenging, Otava fared better than its competitors in 2019.

Otava Markkinapaikat Ltd’s companies Ampparit Ltd and SL-Mediat Ltd merged into Nettix Ltd. The merged companies will continue operating as Nettix’s business areas, providing additional news services and professional media. ​Otava Markkinapaikat Ltd will continue as an administrative company. With the new marketing names, we are seeking an even stronger position in marketplace services.

31.4

Meur

EBITA

Otava’s book club activities have been transferred to Suomalainen Kirjakauppa. Thanks to this cooperation, the book club has become much more accessible, both physically and online.

To thank our personnel for the good financial result, a total of 1.8 million in incentives (including social contributions) will be paid to personnel for exceeding business area-specific targets.

Otava will continue boldly onward.


Alexander Lindholm
CEO, Otava Ltd

KEY FIGURES 2019

2019 was an extremely successful year for Otava financially. Nevertheless, changes in the market are posing challenges for Otava, and are underlining the need for renewal. Creating new kinds of growth will be even more important than ever.

Read more about Financial Statement:

Net sales

286.2

M€

EBITA

31.4

M€

Operating profit %

8.2

%

Equity ratio %

69

%

Return on investment (ROI) %

9

%

Return on equity (ROE) %

8.2

%

Net sales, Books

70.4

M€

Net sales, Trade

102.2

M€

New digital titles published

914

kpl

Net sales, Media

90.5

M€

Net sales, Otava Marketplaces

23.7

M€

Number of magazines
and periodicals

156

kpl

STAR MOMENTS 2019

Otava is a source of both insight and experiences – a publishing house with strong roots and an inspiring future. Otava experienced many star moments in 2019.

Audio is a growing content format

Otava already holds a key position in the market for audio and other growing content formats, and intends to increase its market share in e-publishing.

Net sales of audiobooks have trebled on the previous year.

We have a business team that focuses on audiobooks and will be releasing a total of more than a thousand audiobooks and e-books in 2020.

Audiobooks also appeal to a different audience than printed books. It is 25–35 year-olds who are listening to audiobooks – a clearly younger age group than those who read printed books.

The way books are being used is changing, as you can now enjoy a book while doing other things, like housework or a hobby.

The concept of ‘a book’ is also expanding. In 2019, Otava signed its first audio-only publishing contract. This means that the book will only be published as an audio file.

The concept of ‘a book’ is also expanding. In 2019, Otava signed its first audio-only publishing contract. This means that the book will only be published as an audio file.

It is 25–35 year-olds who are listening to audiobooks – a clearly younger age group than those who read printed books.

There has been no fall in sales of printed books from Otava presses, and we increased our market share in all literary genres.

Our bookstore business has reacted to changes in the way consumers spend their free time. Suomalainen Kirjakauppa decided to focus on creating its own livestream service: Suomalainen Plus.

Suomalainen also enhanced its range in growing product categories, such as toys, boardgames, jigsaw puzzles and handicrafts.

These product groups, collectively known as leisure-time goods, are a major growth area that is already generating more than half of our margin in the bookstore business. New brands in Suomalainen stores included Marimekko, Lapuan Kankurit and Aarikka.

“Our modern webstore platform is user-friendly for customers, while also being flexible and easily adaptable with regard to webstore development.”

MANAGING DIRECTOR, SUOMALAINEN KIRJAKAUPPA LTD MINNA KOKKA

The best-selling books were Thomas Erikson’s Surrounded by Idiots, Jari Tervo’s Loiri, Pajtim Statovci’s Bolla and Enni Mustonen’s Sotaleski.

An overhaul of Suomalainen Kirjakauppa’s webstore platform in 2019 made it more agile in meeting customers’ needs. Our modern webstore platform is user-friendly for customers, while also being flexible and easily adaptable with regard to webstore development.

It is now common for video, audio and game content to be harnessed in learning.

Otava has a total of about 2,300 products for upper secondary schools, about 43 per cent of which is digital content.

Learning is also going digital in leaps and bounds. Digital learning materials are in increasing demand, particularly among upper secondary schools preparing for the new National Curriculum. It is now common for video, audio and game content to be harnessed in learning. 

Otava has a total of about 2,300 products for upper secondary schools, about 43 per cent of which is digital content.

Otava Learning’s service business also diversifies Otava’s offering with services such as digital coaching for teachers. Otava is a partner that supports teachers throughout the school day.  

Everything revolves around top-quality content 

Otava’s long-term commitment to producing top-quality content was evident in the awards we received during 2019.

The crowning glory of our publishing year was when Pajtim Statovci’s novel Bolla, a novel published by Otava, won the Finlandia Prize for Fiction, and the Finlandia Prize for Non-fiction went to Metsä meidän jälkeemme, a book  published by Like and written by Anssi Jokiranta, Pekka Juntti, Anna Ruohonen and Jenni Räinä.

Statovci’s novel Crossing was also one of the five finalists for the US National Book Award for Translated Literature. No other Finnish book has achieved anything comparable.

The crowning glory of our publishing year was when Pajtim Statovci’s novel Bolla, a novel published by Otava, won the Finlandia Prize for Fiction, and the Finlandia Prize for Non-fiction went to Metsä meidän jälkeemme, a book  published by Like and written by Anssi Jokiranta, Pekka Juntti, Anna Ruohonen and Jenni Räinä.

Finnish literature enjoys a good reputation globally, and numerous awards have demonstrated the quality of Otava’s publishing programme.

J.P. Koskinen’s Tulisiipi won the Savonia Literature Prize and was also chosen as Suomalainen Kirjakauppa’s 2019 Book of the Year. The novel was nominated for the Finlandia Prize for Fiction as well.

The Arts Council of Satakunta presented its 2019 award to Hanna-Riikka Kuisma, an author from Pori. Kuisma has written short stories and five novels, the latest of which is Kerrostalo. Kerrostalo was also nominated for the Finlandia Prize for Fiction.

“Finnish literature enjoys a good reputation globally.”

MANAGING DIRECTOR, OTAVA PUBLISHING LTD PASI VAINIO

There has also been recognition for the high-quality content of Otava’s magazines. Our magazines won several awards in 2019. Tekniikan Maailma and Suomen Kuvalehti won the Bonnier Grand Prize for Journalism.

Suomen Kuvalehti also won Aikakausmedia’s reportage photography award.

Seura received the Finnish Association for Investigative Journalism’s Snow Shovel award.

Growth in digital publishing

2019 was a successful year for Otava’s media brands. Against the general trend in the industry, we managed to increase our magazine sales in terms of both individual issues and new subscriptions.

We met our earnings targets for 2019.

Even though the magazine advertising market remains challenging, Otava fared better than its competitors in 2019.

2019 was also a good year for our digital business. During the year, visitor numbers rose on all of the main websites belonging to Otava’s media brands. Website platforms have been overhauled and, for example, Tekniikan Maailma’s website has significantly increased both its visitor numbers and site views.

In 2020, we will be further intensifying our digital business activities in particular.

In 2020, we will be further intensifying our digital business activities in particular. We will be expanding our target groups in multiple channels in the digital sale and marketing of both print and digital content. 

Otavamedia provides a media environment with requirement-driven solutions that meet customer expectations, for both our B2C and B2B clients.

Against the general trend in the industry, we managed to increase our magazine sales both in terms of individual issues and subscription renewals.

Data improves the customer experience 

Data and analytics will play a greater role in both content production and Otava’s customer experience.

We’ll be investing in personnel’s competence development in order to keep pace with the accelerating changes in Otava’s operating environment. We want everyone at Otava to have the right attitude towards learning new things and changing in tandem with our partners, whilst ensuring that we all have the desire and ability to do so

This will enable us to continue producing top-quality content that remains commercially competitive, relevant and interesting to both our readers and website visitors.    

”We’ll be further improving our customer experience with the aid of customer data in particular. This will ensure that the quality of our content remains commercially competitive, relevant and interesting to both our readers and website visitors.”

MANAGING DIRECTOR, OTAVAMEDIA LTD TIMO KOPRA

We will be further improving our customer experience by, for example, enriching the customer data available from magazine subscriptions. One example of this will be the creation of an Otavamedia account, that is, customers will be automatically registered for digital services when they purchase a subscription to access content behind our paywall.

Data is also becoming more significant in our Marketplaces business area. In addition to customer data, Marketplaces also has data about vehicles and other products that are sold.

As a consequence of the GDPR, the processing of customer data has become more important within our organisation in recent years. We will be actively monitoring this field, as new regulations will continue to come into force.

OmaNettix is just one of the services provided by the Marketplaces platform.

OmaNettix was launched to help consumers looking to buy a car. This service provides an effortless way to buy or sell vehicles. The entire transaction can be handled easily and reliably on a mobile device. When customers pay using Nettix’s own Nettimaksu service, the seller can be confident that the money will soon appear in their account.

The buyer can also rest assured that the vehicle’s details are correct and the seller has been verified as the registered owner.

A digital environment enables platform economy companies to develop new services without the need for major investments. Nettix is actively involved in this new trend.  

Customers are seeking a good service experience and online payments form an integral part of this.       

Marketplaces’ best-known products are Nettiauto and Nettimoto.

Marketplaces will be able to provide advertisers with even more diverse marketing communications and sales solutions.

The primary goal of our R&D is to enable easy and trustworthy transactions for all parties.

The services combine AI with customer data and vehicle details, thereby enabling us to provide an even more user-friendly UI for consumers looking to buy a car.

Technological expertise and our personnel’s digital skills have been identified as a competitive edge that will be maintained through knowledge sharing and competence development.

“Our UI must be even smarter. Consumers need to be provided with an even better platform that combines AI, visitor data and vehicle data. Technological expertise is a competitive advantage.”

DIRECTOR, OTAVA MARKETPLACES JAAKKO HAAPAKANGAS

At the end of the review period, Otava Markkinapaikat Ltd’s companies Ampparit Ltd and SL-Mediat Ltd were merged into Nettix Ltd.

The new Nettix Ltd’s marketplaces and tradenames will continue as their own profit centres after the merger: Marketplaces, Professional Media, and News Services. Marketplaces’ best-known products are Nettiauto and Nettimoto. Konepörssi is Professional Media’s top product, and the Ampparit news aggregator is the spearhead in News Services.

This new package will enable Marketplaces to provide advertisers with even more diverse marketing communications and sales solutions. We operate under the Nettix name when dealing with customers.

We want to see our customer accounts as a unified whole, which means sharing data between units is important.

PERSONNEL

Otava invests in competence development and personal career paths. Our operating environment requires continual learning, which means that skilled and professional personnel are also a competitive advantage.

Number of personnel at the Group

1102

persons

Average career length in the Group

10

years

Employees who joined us in 2019

372

persons

Employee breakdown by gender: women

77

%

Employee breakdown by gender: men

23

%

Number on task rotation in 2019 approx

50

persons

Average age of employees: 41

41

years

Caring for everyone’s competitiveness

The Otava Group is a responsible employer that helps to promote social stability by supporting work and employment in diverse sectors, and paying its taxes in Finland.

We are committed to taking care of our employees in areas such as creating a good work-life balance.

Our ever-changing operating environment requires continual learning. This means that skilled and professional personnel are a competitive advantage, as the Group’s targets can only be attained by skilled employees.

Continual learning is also a way of caring for everyone’s competitiveness. Otava invests in competence development and personal career paths.

In 2019, the focal points of our competence development included:

New and refurbished premises – a multi-space office supports changes in working culture and working together.

Enhancing supervisory work in response to changes in working culture.

Strengthening digital skills, and joint projects covering themes such as LEAN and renewal.

RESPONSIBILITY

Otava helps to promote social stability by supporting work and employment in diverse sectors, and paying its taxes in Finland.

Otava shoulders its responsibility for the environment

We want to leave the world in good shape for the next generations.

Good environmental management at our business locations and in our daily work play a key role in our environmental responsibility.

We work to reduce environmental hazards in many ways, such as paying attention to paper consumption and procurement, the recyclability and energy efficiency of our products, and obtaining certification for our operations.

Henrik Ehrnrooth, Chairman of Otava’s Board of Directors, has received the prestigious Energy Globe award for his notable international work and creative activities in promoting sustainable development and climate-friendly solutions.

Our concern for the environment can also be seen in our published content.

In recent years, there has been a great deal of public debate about the reasons for climate change, its consequences, and what must be done to prevent it.

There is a need for accurate information, and Otava wants to be involved in finding solutions to climate change.

In 2019, every issue of Tekniikan Maailma published at least 4–8 pages of well-founded articles on practical solutions for preventing climate change.

Business continuity means stable jobs and responsible investments. We seek long-term profitability, not get-rich-quick schemes.

We comply with Corporate Governance and the recommendations for good governance for family business issued by the Finnish Family Firms Association.

We pay our taxes in Finland. We help to promote social stability by supporting employment in Finland.

We make responsible acquisitions.

Otava shoulders its social responsibility

As a company, we are a bold and proactive member of society.

We support learning and education.

We enable freedom of speech and media diversity by promoting Finnish and Finnish-language publishing, and by nurturing Finnish culture and the Finnish language.

Social responsibility has been one of Otava’s fundamental values ever since the company was established.

”The company’s success is closely tied to the success of our nation as a whole,” said Alvar Renqvist, Otava’s founder, back in 1915.

And it is on the basis of these firm values that Otava will move into the next decade.