Otava’s
Star Moments 2021

OTAVA GROUP’S ANNUAL REPORT 2021

Please join us to see Otava’s star moments 2021. In the diversified media group there were many twinkling stars.

OTAVA IN A NUTSHELL

The Otava Group is Finland’s third-largest diversified media group. We engage in some way with almost all Finns. Our business areas are general literature, learning services, trade, magazine publication and online services.

REVIEW BY THE CHAIRMAN OF THE BOARD

“Otava’s coronavirus strategy is a success.”

Do you remember where you were and what you were doing a year ago? Or what happened last summer? As the global coronavirus pandemic enters its third year, it may seem as if time is standing still.

The threats and opportunities in our operating environment are the same as they were a year ago. The same phenomena have persisted and intensified during the pandemic. These include accelerating digitalisation, a revolution in retail, the need for quality journalism and an appreciation of nature and Finnishness.

Otava’s coronavirus strategy has been success­ful. This has been reflected in our continued financial success, and also in the fact that we have been able to change our way of working with agility.

In spring 2021, we successfully concluded a transaction in which NettiX Ltd was sold to Alma Media. Alma’s strategy has been clarified, its share price has responded favourably to the changes and its main owner, the Otava Group, is satisfied with these developments. 

The threats and opportunities in our operating environment are the same as they were a year ago. The same phenomena have persisted and intensified during the pandemic.

HENRIK EHRNROOTH

In the book business, 2021 culminated in a unique hattrick for us when Taivaallinen vastaanotto written by Jukka Viikilä  won the Finlandia Prize for fiction, Miksi nykymusiikki on niin vaikeaa, written by Osmo Tapio Räihälä won the Finlandia Prize for non-fiction, and Mistä valo pääsee sisään written by Anna-Maija Aalto won the Finlandia Prize for children’s and young adult literature.

In the media business, our high-quality periodicals once again found a readership. Otavamedia is the only media company whose readership for general interest magazines grew in 2021. 

In the trade business the pandemic has changed consumer behaviour. In addition to consumption habits, the extension of compulsory education in Finland will affect business opportunities for bookstores.

Suomalainen Kirjakauppa will be able to survive the crisis, but the fate of many small bookstores is still in the balance. It is important for Otava that both the book industry and the bookstore as an institution retain their vitality in Finland.

255.3

Meur

Otava’s net sales

Reading and multiliteracy are vital for learning. A well-educated Finnish teacher with professionally published learning materials guarantees high-quality teaching and equal treatment for all students. High-quality learning materials provide support for teachers and give them the peace of mind to focus on teaching.

We have succeeded in many things, but our team spirit is suffering from not being able to share these successes. There have been none of those important informal encounters, and it has not been possible to organise any joint events.

I hope that things will change soon, so that we can meet face to face.

Henrik Ehrnrooth
Chairman of the Board of Directors

REVIEW BY THE CEO

“The question on everyone’s mind is, how long is the pandemic going to last?”

Financially, the Otava Group successfully survived the second year of the coronavirus pandemic. The gloomiest predictions made at the start of the pandemic were not realised.

Favourable trends were also seen in the general economic situation in Finland, with GDP gaining momentum in the second quarter in spite of the deterioration in the pandemic situation.

Although the Otava Group’s finances are on a more solid footing than ever, there is still a lot of uncertainty in our operating environment. As we enter a third year of exceptional circumstances, the question on everyone’s mind is, how long is the pandemic going to last?

In retail, consumers’ habits and types of purchases have changed, as coronavirus restrictions have meant that people are travelling less and visiting shops less frequently. We still don’t know if this change is going to be permanent.

Media consumption is also undergoing an upheaval.  The challenge is to find new business models to use alongside traditional print magazine subscriptions. Problems with magazine distribution and the availability of paper also illustrate the uncertainty of the times.

In the book business, strong growth in the popularity of audiobooks has continued as in the previous year. Listening and the pandemic have enabled new audiences to discover literature.

The pandemic has speeded up schools to take an enormous digital leap. In the publication of learning materials, we have very quickly moved into the digital era, as 70 per cent of learning materials for upper secondary schools are already digital. This is an amazing achievement that has been made possible by the improved IT capabilities of Finnish schools.

The pandemic has posed many challenges for our trade business. Suomalainen Kirjakauppa has done a great deal of work to improve things such as productivity and its selection. Everything now revolves around taking a customer-oriented approach.

Compared to the first year of the pandemic, the media market picked up in 2021 and Otavamedia’s media sales have grown better than the market as a whole. Continued growth has been seen in online media is particular.

Everyday life in the midst of a pandemic is challenging. No doubt everyone has had problems coping at times, what with the need to combine family life with remote working, and concerns and uncertainty about our own health and the health of our loved ones. Yet at Otava, we have shown that we can succeed in spite of these challenges. We have not lost heart. Instead, we have done a good job and achieved an excellent result for the second year in a row.

And for that, I would like to extend a warm thank you to all Otava personnel. 

142.6

Meur

Otava’s EBITA


Alexander Lindholm
CEO, Otava Ltd

KEY FIGURES 2021

In the area of general-interest literature, sales of books grew. The market for learning services also increased on the previous year.

Read more about Financial Statement:

Net sales (277.7 M€  in 2020)

255.3

M€

EBITA ( 31.6 M€ in 2020)

142.6

M€

EBITA % (11.4 % in 2020)

55.9

%

Equity ratio % ( 63.7 % in 2020)

83.9

%

Return on Investment (ROI) % 11.3 % in 2020)

37.6

%

Return on Equity (ROE) % (11.8 % in 2020)

41.9

%

Net sales, Books ( 72.3 M€ in 2020)

77.9

M€

Net sales, Trade (111.6 M€ in 2020)

102.2

M€

New digital titles published (1,089 in 2020)

2,012

pcs

Net sales, Media (85.9 M€ in 2020)

82.9

M€

 

Number of magazines
and periodicals (157 in 2020)

136

pcs

STAR MOMENTS 2021

The global coronavirus pandemic impacted on our lives in many ways. Even under these exceptional circumstances, Otava created star moments – new products, achievements and services.

Otava scoops every Finlandia Prize

In Otava’s Books business area, the second year of the pandemic saw a continuation of the previous year’s trends: reading and listening to audiobooks has been a popular way of spending time during the pandemic. This was reflected in the result for general literature, which was immediately profitable from January onwards for the first time in more than a quarter of a century. Both sales and earnings rose in all literary genres, in print and digital alike. Net sales from the Books business area totalled EUR 77.9 (72.3) million, representing a rise of eight per cent. The direct operating result was EUR 12.6 (11.9) million, or 16.1 (16.5) per cent of net sales. Sales of e-book subscription services also rose significantly.

Printed books continued to be popular. The coronavirus pandemic has prompted consumers to return to printed books. Many people have also been seeking a counterbalance to all the time they have been spending in front of screens.

Digitalisation progressed strongly in the book sector. The market for audiobooks and e-books has grown considerably, and this growth looks set to continue. Otava released 2,012 audiobooks and e-books in 2021 compared to only 1,089 in 2020. Growth has been particularly strong in fiction and titles for children and young adults.

Audiobooks have also attracted new audiences to literature. Children have discovered audiobooks, and audiobooks read by youtubers and social media influencers have led many young people into the world of literature.

Printed books continued to be popular. The coronavirus pandemic has prompted consumers to return to printed books.

The financial result for general literature was immediately profitable from January onwards for the first time in more than a quarter of a century.

Both sales and earnings rose in all literary genres.

“The second year of the pandemic saw a continuation of the previous year’s trends: reading and listening to audiobooks has been a popular way of spending time during the pandemic.”

PASI VAINIO, MANAGING DIRECTOR OF OTAVA PUBLISHING COMPANY LTD

Otava’s books were successful in 2021.

Otava achieved a historic hat-trick at the Finlandia Awards when Taivaallinen vastaanotto by Jukka Viikilä won the Finlandia Prize for fiction, Mistä valo pääsee sisään by Anna-Maija Aalto won the Finlandia Prize for children’s and young adult literature, and Miksi nykymusiikki on niin vaikeaa by Osmo Tapio Räihälä won the Finlandia Prize for non-fiction. All of the public votes were also won by Otava, Like and Atena authors. Wivi & Hanna by Kristiina Markkanen and Leena Virtanen, Mistä valo pääsee sisään by Anne-Maija Aalto, and Väylä by Rosa Liksom all emerged as readers’ favourites.

The best-selling fiction title of the year was Enni Mustonen’s Näkijä. In children’s literature, the best-selling book was Tatu and Patu at Summer Camp by Aino Havukainen and Sami Toivonen. The best-selling non-fiction title was the Samu Haber biography Forever Yours.

Our process of dismantling hierarchy and transitioning to an agile team model successfully continued as planned in the Books business area.

Otava Learning Services invested in the future via recruitment and production renewal, for instance.

Finland’s transition to free secondary school education and a digital matriculation examination led to strong growth in demand for digital learning materials. By the end of 2021, 70 per cent of the learning materials used in upper secondary schools were digital.

The transition to free secondary school education and a digital matriculation examination led to strong growth in demand for digital learning materials.

A new curriculum for upper secondary schools was introduced in August 2021. All schools now employ modular teaching that combines different subjects – something that is made possible by digitalisation. Modularity also requires a new kind of flexibility from learning materials.

The development of future learning materials will also be guided by analytics and automation, which will facilitate teaching work and make everyday life easier for teachers.  For example, creating content and marking homework can be made more efficient with the aid of artificial intelligence.

Investments have enabled Otava Book Printing to launch shortrun production. Book printing sales grew and led to an extremely good result for 2021.

In the midst of the coronavirus pandemic – and as retail sales are being further reduced by a reform to make secondary education free – it has become clear that the ways in which Suomalainen Kirjakauppa stands out from other companies are safeguarding business continuity in our changing world.

One important differentiating factor is the retail chain’s way of providing customer service.

The best customer encounters are an open dialogue.

Customer encounters yield a competitive advantage

The coronavirus pandemic has accelerated many trends in retail. It has accelerated growth in e-commerce, and the impact of this growth on retail structures will be permanent.

According to preliminary data, full-year retail sales in general rose by about three per cent, although Christmas sales contracted and were therefore disappointing. There was huge variation in sales trends between different sectors. The net sales of Otava’s Trade business area were down eight per cent due to the coronavirus pandemic and amounted to EUR 102.2 (111.6) million. Sales in the bookstore sector have fallen by 21 per cent on the last pre-pandemic year (2019).

In the midst of the coronavirus pandemic – and as retail sales are being further reduced by a reform to make secondary education free – it has become clear that the ways in which Suomalainen Kirjakauppa stands out from other companies are safeguarding business continuity in our changing world.

In August 2020, Suomalainen Kirjakauppa launched a change process that will pave the way for Finland’s best customer encounters.

One important differentiating factor is the retail chain’s way of providing customer service. In August 2020, Suomalainen Kirjakauppa launched a change process that will pave the way for Finland’s best customer encounters. We have been using research data and customer interviews to aid us in this process. However, the most important thing was a desire to gain a better understanding of our customers and harness assortment management to make our business more customer-oriented.

The process resulted in FBCE, Finland’s Best Customer Experience. This means that everything – in both the online and brick-and-mortar stores – is considered from the customer’s perspective. 

In Suomalainen Kirjakauppa stores, everything revolves around customer encounters. Studies show that more than half of our customers pop in when they happen to be visiting one of the 50 shopping centres that has a Suomalainen Kirjakauppa store – simply because it’s enjoyable. The best customer encounters are an open dialogue in which the sales assistant can get a feel of what the customer wants and is therefore able to get on the same wavelength in relation to the selection. That is, to recommend and offer things that will genuinely suit that particular customer. For staff, this demands a new kind of expertise, a fresh approach and a bold attitude in their everyday work. Good service with genuine encounters is therefore one of the most important aspects of in-store work. When sales assistants are experts in customer encounters, this is reflected in both higher conversions and customer feedback. And also in sales results. In our online store – which lacks a real-life sales assistant – FBCE means friendly communication, pleasant visuals, and the ability to awaken emotions and harness AI to show a relevant selection.

“When sales assistants are experts in customer encounters, this is reflected in both higher conversions and customer feedback. And also in sales results.”

MINNA KOKKA, MANAGING DIRECTOR OF SUOMALAINEN KIRJAKAUPPA LTD

It also means superior recommendations, from both staff and other customers, that will get purchases sliding into shopping baskets.

Data utilisation is becoming increasingly important. Suomalainen Kirjakauppa collects user-specific data on the basis of in-store purchases, use of the online store and Suomalainen Plus usage data. With this user-specific data, we can make recommendations tailored to the interests of each customer from our range. We can also enrich our own customer data with external data, and use it more accurately in both our selections and marketing.

Customer behaviour is monitored not only with data but also by listening, studying, developing and reacting online, in stores and in our customer service.  This helps us to keep up to date.

Productivity development has played a key role in the Trade business area during the pandemic. In-store work has been enhanced by clarifying tasks, removing non-value-producing tasks or processes, focusing on the most essential sales development measures, adapting the Suomalainen Kirjakauppa store network to meet future needs, and using data to make store profiles more customer-oriented.

For staff, customer encounters demand a new kind of expertise, a fresh approach and a bold attitude in their work.

In the future, there will be more overlap between shopping online and at brick-and-mortar stores. Stores will also act as e-commerce distribution channels, as customers can choose to collect their online orders from a store – and in-store customers can also order from the online selection.

The best-selling books at Suomalainen Kirjakauppa in 2021 were Väylä by Rosa Liksom and Tatu and Patu at Summer Camp. The most listened to audiobooks in Suomalainen Plus were Carl-Johan Forssén Ehrlin’s The Rabbit Who Wants to Fall Asleep and The Seven Sisters by Lucinda Riley.

The Trade business area is seeking net sales growth from new product groups in particular, such as leisure consumables.

A new product group was introduced in early 2022: wellbeing products, such as natural cosmetics, nutritional supplements and household cleaning accessories. Our products to promote holistic wellbeing are sustainable, ecological and of high quality, and are made in Finland.

Otavamedia’s digital net sales are growing

Compared to the market as a whole, Otavamedia was reasonably successful last year in both consumer and media sales. Although there were difficulties in making new sales, more existing subscribers renewed their subscriptions after the introductory period. Digital net sales grew significantly in consumer sales, which partly compensated for the decrease in print subscribers. Media sales were better than the market average in both print and online advertising. In monetary terms, digital sales grew by twenty per cent, while print was down six per cent on the previous year.

Digital content consumption also saw year-on-year growth, as more and more older consumers switched to reading online.

Digital content was also created more quickly and in greater quantities, as editorial workflows quickly changed in line with our Digital First model. In this model, articles are published online and in social media as soon as they are ready, and are then collated into high-quality packages for print audiences on agreed publication dates. Competition for visitors led us to renew our digital services by improving their user experiences and increasing their commercial potential.

Digital content consumption also saw year-on-year growth, as more and more older consumers switched to reading online.

We’ve also kept the basics in good order: The print magazines Anna and Seura were given a facelift in early 2021. Kotiliesi, which is celebrating its centenary, was also given a makeover at the turn of 2022. Our traditional hunting and fishing magazine, Metsästys & Kalastus, was given an overhaul in February and the M&K digital service was launched in April. We also honed Tekniikan Maailma’s content to make it more reader-friendly. There is now a greater sense of community between readers and editorial staff: for example, Tekniikan Maailma organised reader meetings over Teams.

Even during the coronavirus pandemic, it has been possible to increase cooperation between the sales and editorial teams in particular. The number of digital subscriptions to Suomen Kuvalehti and Tekniikan Maailma is being increased through close cooperation between consumer sales and editorial staff. Editorial staff working with Anna and Kaksplus are seeking a significant rise in digital media sales in collaboration with the media sales team.

In autumn 2021, a new B2B organisation was created to combine media sales, OMA and the golf business. The goal is to generate profitable growth through a more versatile approach and more diverse offering.

“In 2021, Otavamedia performed better than the market average in both print and digital sales.”

The pandemic has permanently changed the way people work. In 2021, we worked with all personnel to draw up a set of rules for multi-location work. This rulebook highlights leadership and supervisory work, employee wellbeing, a sense of communality, and competence and learning. We scaled back our premises in Tripla and moved into a space that is better suited to our new way of working. As part of our HR programme (Putting responsibility into practice, from employer promise to employer action), we continued to develop services to support supervisory work, wellbeing and different forms of learning, guided by the results of our employee experience measurements.

Although 2022 got off to a fairly good start, it will be difficult to achieve growth in either consumer or media markets. Additional challenges for the year include paper availability issues and price increases.

The print magazines Anna and Seura were given a facelift in early 2021. Kotiliesi, which is celebrating its centenary, was also given a makeover at the turn of 2022.

     

CORPORATE RESPONSIBILITY

Origin-certified electricity was used at all of the Group’s locations in 2021.

Reducing our carbon footprint

Energy consumption plays a key role in the Otava Group’s environmental responsibility. Origin-certified electricity was used at all of the Group’s locations in 2021.  This electricity was produced in Finland using bioenergy and wind power. Its guarantees of origin ensure that the electricity used by Otava has been fully generated from renewable sources without any direct carbon dioxide emissions. Origin-certified electricity is used at all of the Group’s locations, including bookstores, and we will acquire electricity in a similar manner in 2022.

The Otava Group’s procurement and consumption of paper also play a central role in our environmental responsibility.  A significant proportion of the paper and cardboard used by Otava Book Printing Ltd comes from certified domestic sources. Our printers use vegetable oil-based inks.

In order to promote environmentally sustainable business practices, Otavamedia began consolidating the printing of its magazines on PunaMusta in October 2021. The carbon-neutral production of Otavamedia’s magazines at PunaMusta was launched in stages during the year.

EECS RES-GO guarantees of origin are defined in the Renewable Energy Directive 2018/2001/EU, and they verify that the electricity in question has been fully produced from renewable energy sources.

The electricity has been produced without direct carbon dioxide emissions.

All of Otava’s guarantees of origin carry the EKOenergy ecolabel, which means that our procurement meets the EKOenergy Network and Label criteria approved by EKOenergy on 19 June 2013.

At least EUR 0.10 is paid into the EKOenergy Climate Fund for every MWh of EKOenergy electricity we use. The fund invests in energy-saving projects and sustainable new sources of renewable energy.

EKOenergy is a pan-European, non-profit electricity ecolabel. It is run by a network of European NGOs that specialise in environmental issues.

Active cooperation with educational establishments is part of Otava’s social responsibility. We offer a variety of opportunities for young people to get acquainted with working life.

Otava provides many young people with their first job

Active cooperation with educational establishments is part of Otava’s social responsibility. The Otava Group offers a variety of opportunities for young people to get acquainted with working life and find their place in the world. It also gives us a chance to present the options offered by our Group.

Our various businesses are involved in planning curricula, and their experts give lectures as part of courses at educational establishments. Otava provides summer jobs and internships to students at our partner establishments, and we also participate in recruitment events run by educational establishments. 

A total of over fourty interns usually work at Otava’s publishing houses and Otavamedia every year. Some of them are college students, some high school students doing work experience under the TET programme, and our summer job campaign also provides a couple of weeks of employment for several more. 

A couple of dozen trainees also work at Suomalainen Kirjakauppa every year. About half of these are doing TET work experience or have been hired as part of the TTT programme, which enables young people to get acquainted with working life while also earning money. In 2021, Suomalainen Kirjakauppa took part in the world’s largest remote TET work experience programme. 

PERSONNEL

Ensuring personal wellbeing and competitiveness is part of Otava’s employer promise.

Number of personnel at the Group

987

persons

Average career length in the Group

10

years

 

Employee breakdown by gender: women

76

%

Employee breakdown by gender: men

24

%

 

Average age of employees:

41

years

A responsible employer takes care of personnel wellbeing

At Otava, we take care of our personnel’s wellbeing. Systematic and innovative HR development is part of the Group’s strategy. Ensuring personal wellbeing and competitiveness is part of Otava’s employer promise.

As the pandemic waxed and waned during 2021, the Otava Group responded with a hybrid working model that combined remote and in-person work for those tasks in which remote work was possible. This exceptional period has created an even greater need to enhance supervisory work and occupational wellbeing in all of Otava’s business areas.

In 2021, every Otava employee had a personal development plan that included one-on-one themed discussions with their supervisor.

 Periods of remote working have shown how important it is to regularly discuss work content and how people are coping. During these one-on-one discussions, it is natural for both parties to give feedback. Special attention has been paid to supervisory work.

Otava also measures its employee experience and conducts Mehiläinen wellbeing surveys. All of these tools provide us with up-to-date information about our personnel’s wellbeing and work situation, thereby enabling us to react quickly.

Rules for multi-location work

The pandemic has permanently changed the way people work. In 2021, we worked with all personnel to draw up a set of rules for multi-location work. This rulebook highlights leadership and supervisory work, employee wellbeing, a sense of communality, and competence and learning.

We also modified our premises to better suit our new way of working.

The focuses of personnel development at Otava in 2021 are:

Everyones wellbeing –specially physical and emotional security – and managerial work.

Personal development plan that includes one-on-one themed discussions with their supervisor.

The new rules for multi-location work.