Sanoma Oyj · OMXHEX:SANOMA

Sanoma Oyj — Non-Deal Roadshow (November 2018)

45 slides from Sanoma Oyj's roadshow presentation, November 2018

  1. Slide 1: Building on our solid base for selective growth

    Roadshow presentation November–December 2018 Building on our solid base for selective growth

  2. Slide 2: Sanoma in brief

    Sanoma in brief

  3. Slide 3: Sanoma in 2017

    Sanoma in 2017 Media Finland Net sales 2017 EUR 571 million News TV/Radio 44% non-print Online & Mobile NET SALES 11.5% margin Magazines other EUR 1,327 million 0 100 200 300 Media Netherlands NON-PRINT SALES EUR 440 million Magazines 40% Online & Mobile 30% non-print Distribution OPERATIONAL EBIT M

  4. Slide 4: Media Finland: Continuing to strengthen our market position

    Media Finland: Continuing to strengthen our market position  Leading media company in Finland Net sales splits 2017  Information, experiences, inspiration and entertainment Other 9% Advertising through multiple media platforms: newspapers, TV, Single copy 8% radio, events, magazines, online and mo

  5. Slide 5: Media Netherlands: Focusing on profitability and cash flow generation

    Media Netherlands: Focusing on profitability and cash flow generation  Dutch consumer media operations and the press Net sales splits 2017 distribution business Aldipress  Leading cross media portfolio with strong brands and Other Advertising market positions in magazines, news, digital, events 19

  6. Slide 6: Learning: Creating a European Champion in Learning

    Learning: Creating a European Champion in Learning  Leading positions in countries with some of world’s best Net sales splits 2017 educational systems Sweden Poland  Solutions that drive higher learning outcomes, 7% Belgium engagement and efficiencies 16% 31% Print Non-print  Scalable technologie

  7. Slide 7: Strategy and financial targets

    Strategy and financial targets

  8. Slide 8: We are building on a solid base for selective growth

    We are building on a solid base for selective growth We have completed major portfolio Resulting in: changes  Solid profitability  Growing cash flow We continue to focus on our  Increasing dividends customers, profitability & cash flow…  Equity ratio and leverage within long-term target … and in

  9. Slide 9: Our major portfolio changes are now completed

    Our major portfolio changes are now completed… De Boeck Scoupy BE NL Acquisitions Tutorhouse Kortingisleuk.nl Routa N.C.D. FI Scoupy FI FI NL 2016 2017 2018 AAC Global HeadOffice Sanoma SBS Women’s Divestments FI FI Baltics NL magazines BE Autotrader.nl Kieskeurig.nl NL NL Media Finland Media Nether

  10. Slide 10: …resulting in a more balanced business portfolio

    …resulting in a more balanced business portfolio  Higher share of more stable Group net sales by category subscription and learning sales 14% 14%  Lower exposure to more 10% 9% volatile advertising sales – Finland 75% of the Group’s Advertising 26% 36% advertising sales: MEUR 250 27% – The Netherl

  11. Slide 11: Our profitability has improved…

    Our profitability has improved… Above  Profitability continued to improve Operational EBIT 14% in 2017 EUR million 13.6% – Streamlined and more efficient 11.3% operations – Divestments of Dutch TV operations SBS and Belgian 7.4% women’s magazine portfolio 6.2% 4.8% – Cost innovations  Outlook for

  12. Slide 12: … and has a characteristic annual seasonality pattern

    … and has a characteristic annual seasonality pattern  Our quarterly financial performance is Operational EBIT EUR million strongly affected by the seasonal pattern of the Learning business: – Q1 and Q4 are typically loss-making, while most of net sales and earnings are accrued during Q2 and Q3  I

  13. Slide 13: Our leverage is at the long-term target level

    Our leverage is at the long-term target level  Our leverage has decreased: Net debt / Net debt EUR million adjusted EBITDA from 2.4 at the end of Q3 4 2017 to 1.6 at the end of Q3 2018 – Long-term target < 2.5 3 1.6  Net debt improved significantly to EUR 392 2 million 1  Equity ratio 40.9% at th

  14. Slide 14: We are targeting a higher cash conversion

    We are targeting a higher cash conversion Our mid-term cash conversion * Free cash flow target is 60–70% EUR million 150  In 2017, cash conversion approx. 50% 100 Assumptions for key cash 50 flow elements for 2018  Profitability improvement 0  Lower net financing costs  Lower IAC in continuing -

  15. Slide 15: We expect headroom for acquisitions to increase to EUR 300-400 million…

    We expect headroom for acquisitions to increase to EUR 300-400 million…  With our leverage at the target level (net debt / adj. EBITDA < 2.5), we estimate to have approx. EUR 300–400 million headroom for acquisitions in 2019, due to – Solid profitability – Improved free cash flow – Reduced leverage

  16. Slide 16: … with selective growth through M&A opportunities across all three businesses

    … with selective growth through M&A opportunities across all three businesses Three target areas  Core business in current footprint markets Learning  Adjacent business in current footprint markets  Synergistic  Core business outside current footprint markets bolt-on acquisitions  Organic Three

  17. Slide 17: We are fully committed to our dividend policy

    We are fully committed to our dividend policy Dividend policy: Progressive dividend EUR Sanoma aims to pay an increasing dividend, equal to 40–60% of annual cash flow from 0.80 operations, after capital expenditure. 0.60 When proposing a dividend to the AGM, the Board of 55% 0.40 60% Directors will

  18. Slide 18: We continue to focus on our role in society

    We continue to focus on our role in society Content Learning  Journalistic content supporting freedom of  Our modern learning methods supporting teachers speech and independent information gathering in developing the full potential of every pupil  Local entertainment contributing to shared  Help

  19. Slide 19: Q3

    Q3 2018

  20. Slide 20: Highlights of Q1-Q3 2018

    Highlights of Q1-Q3 2018 ’ Net sales Operational EBIT Operational EBIT Operational EPS Free cash flow margin M€ 1,017 M€ 179 17.6% € 0.77 M€ 40 (2017: 1,022) (2017: 175) (2017: 17.1%) (2017: 0.70) (2017: 23)  Profitability improved due to good performance of Media Netherlands and Learning  Strong

  21. Slide 21: Operational EBIT improved in Q1-Q3 2018

    Operational EBIT improved in Q1-Q3 2018  Improvement driven by Media Netherlands and further supported Q1-Q3 2018 Operational EBIT by SBU EUR million by Learning  Slight decline in Media Finland as 53 Media Finland Q1-Q3 2017 earnings included a 56 positive one-off correction of EUR 4 million 53 M

  22. Slide 22: Q3 profitability improved in media businesses

    Q3 profitability improved in media businesses Media + Discontinuation of Liiga (no MEUR 6 write- Finland off) Operational EBIT Q3 18 vs. Q3 17 by SBU + Lower TV program amortisations EUR million + Acquired festival and events business N.C.D. Production -3 3 - Declining advertising, subscription and

  23. Slide 23: Media Finland: Stable performance during Q3

    Media Finland: Stable performance during Q3  Net sales grew to EUR 151 million (2017: 131) Operational EBIT – Good development of the festival and events business EUR million during the high season – Growth in digital subscriptions continued driven 15.5 % by Ruutu and HS; magazine subscriptions dec

  24. Slide 24: Media Netherlands: Significant earnings improvement during Q3

    Media Netherlands: Significant earnings improvement during Q3  Net sales stable at EUR 106 million (2017: 104) Operational EBIT EUR million – Stable circulation sales – Strong growth in Scoupy 17.8 % 18.0 % 17.5 % 16.4 % – Both print and non-print advertising sales declined 15.5 % slightly; further

  25. Slide 25: Learning: Good performance in Q1-Q3 2018

    Learning: Good performance in Q1-Q3 2018  Net sales stable in Q1-Q3 2018 amounting to EUR 274 million (2017: 280) Operational EBIT EUR million – Poland EUR 10 million lower compared to exceptionally 18.8 % 18.7 % 18.3 % 18.4 % strong performance in 2017 due to two simultaneous 16.7 % 17.5 % curricu

  26. Slide 26: Free cash flow (12mr) continues on a good level

    Free cash flow (12mr) continues on a good level  Free cash flow improved to EUR 40 million (2017: 23) Free cash flow EUR million in Q1-Q3 2018 150 + Lower net financial items + Positive working capital development 100 – Higher taxes – Restructuring costs of EUR 13 million 50 related to the divested

  27. Slide 27: Net debt substantially lower vs. end of Q3 2017

    Net debt substantially lower vs. end of Q3 2017  At the end of Q3 2018 Net debt EUR million – Net debt to adjusted EBITDA 1.6 (2017: 2.4) 4 – Net debt EUR 392 million (2017: 519) – Equity ratio 40.9% (2017: 33.9) 3  EUR 50 million term loan was repaid in September 1.6 2  Net financial items decli

  28. Slide 28: Second dividend instalment was paid on 1 November

    Second dividend instalment was paid on 1 November  Second dividend instalment of EUR 0.15 per share Progressive dividend was paid on 1 November EUR – Record date 25 October 0.80  Total dividend for 2017 EUR 0.35 per share – 1st instalment was paid in April 0.60 55% 0.40 60% Dividend policy: 40% Sa

  29. Slide 29: Adoption of IFRS 16 as of 1 January 2019

    Adoption of IFRS 16 as of 1 January 2019: Simulation of preliminary impacts on key ratios  Sanoma will adopt the new IFRS 16  Significant impacts on certain key ratios expected Leases standard as of 1 Jan 2019  Based on current simulation of preliminary impacts, the following – Lease agreements w

  30. Slide 30: Outlook for 2018

    Outlook for 2018 (as revised on 11 October) In 2018, Sanoma expects that the Group’s  Consolidated net sales adjusted for structural changes will be slightly below 2017  Operational EBIT margin will be above 14% The outlook is based on an assumption of the consumer confidence and advertising marke

  31. Slide 31: Appendix

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  32. Slide 32: We adapt to a rapidly changing media landscape

    We adapt to a rapidly changing media landscape Increasing time used on Video is used more Data is increasingly 1 2 3 media though mostly mobile and more important  Constant growth in time spent  Requires different ‘story telling’ utilizing  Recommendations increase expertise from our media portfo

  33. Slide 33: Sanoma in 2017

    Sanoma in 2017 Learning Net sales 2017 EUR 318 million Poland Netherlands 45% Finland Belgium NET SALES 17.5% Sweden EUR 1,327 million 0 50 100 Media Finland NON-PRINT SALES Newspaper EUR 571 million 40% TV/Radio 44% Online & Mobile Magazines OPERATIONAL EBIT MARGIN 11.5% other 13.6% 0 100 200 300 M

  34. Slide 34: Group key figures 2017

    Group key figures 2017 Adjusted for the SBS divestment EUR million 2017 2016 EUR 2017 2016 Net sales 1,328.0 1,322.3 Operational EPS, continuing 0.71 0.46 Operational EBITDA 328.5 299.0 operations margin 24.7% 22.6% Operational EPS * 0.74 0.47 Operational EBIT 186.4 149.6 EPS, continuing operations

  35. Slide 35: Media Finland: Quarterly key figures

    Media Finland: Quarterly key figures EUR million Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Net sales 150.7 146.2 137.0 150.4 131.3 144.5 144.1 Operational EBITDA 33.7 37.9 35.8 35.3 35.5 42.1 42.9 Operational EBIT 21.2 18.6 13.1 9.8 14.2 22.4 19.0 margin 14.0% 12.7% 9.5% 6.5% 10.8% 15.5% 13.2% EBIT

  36. Slide 36: Media Netherlands: Quarterly key figures

    Media Netherlands: Quarterly key figures Q1-Q3 2017 adjusted for the SBS divestment EUR million Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Net sales 106.0 108.4 95.8 116.9 103.9 116.9 101.9 Operational EBITDA 19.7 20.9 16.3 21.9 16.0 22.9 16.4 Operational EBIT 18.6 19.5 14.9 19.2 14.0 20.8 14.2 margi

  37. Slide 37: Learning: Quarterly key figures

    Learning: Quarterly key figures EUR million Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Net sales 136.3 108.3 28.9 38.5 145.7 97.9 36.2 Operational EBITDA 64.2 54.3 -7.3 -7.2 66.1 41.8 -0.7 Operational EBIT 53.4 43.7 -18.0 -21.6 56.1 31.9 -10.9 margin 39.2% 40.3% -62.2% -56.0% 38.5% 32.6% -30.0% EBIT

  38. Slide 38: Overall advertising market declined slightly in Finland in Q3 2018

    Overall advertising market declined slightly in Finland in Q3 2018 Finnish measured media advertising markets Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Remarks on Q3 18 development Newspapers -8% -13% -12% -10% -12%  Lower decline of magazine advertising due to seasonality: strong growth in Magazines -3% -10%

  39. Slide 39: We have a balanced debt portfolio

    We have a balanced debt portfolio  Gross external debt EUR 425 million Debt structure Maturity profile (2017: 555) at the end of Q3 2018 EUR million, 30 September 2018 EUR million, 30 September 2018  EUR 50 million term loan was repaid in September 2018 Bank account 50 limits Other loans 12 6  Ne

  40. Slide 40: Largest shareholders

    Largest shareholders Largest shareholders Holding by category 30 September 2018 Number of shares 3.0% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4% 18.0% 13.6% 2. Antti Herlin 19,506,800 11.9% (Holding Manutas Oy: 11.91%, personal: 0.02%) 3. Robin Langenskiöld 12,273,371 7.5% 4. Rafaela Seppäl

  41. Slide 41: Financial reporting in 2019

    Financial reporting in 2019 6 February Full-Year Result 2018 Week 10 Financial Statements and Directors’ Report 2018 27 March Annual General Meeting 2019 30 April Interim Report Q1 2019 25 July Half-Year Report 2019 25 October Interim Report Q3 2019 Roadshow presentation 41 November - December 2018

  42. Slide 42: Analyst coverage

    Analyst coverage Carnegie Investment Bank Matti Riikonen +358 9 6187 1231 Danske Markets Equities Panu Laitinmäki +358 10 236 4867 Handelsbanken CM Rasmus Engberg +46 8 701 5116 Inderes Petri Aho +358 50 340 2986 Nordea Sami Sarkamies +358 9 165 59928 Pohjola Kimmo Stenvall +358 10 252 4561 SEB Ensk

  43. Slide 43: Adjustments and restatements

    Adjustments and restatements  All 2016-2017 figures presented in this presentation are for continuing operations only. – Sanoma announced on 16 January 2018 the intention to divest its Belgian women’s magazine portfolio. The divested business was consequently classified as Discontinued operations i

  44. Slide 44: Disclaimer

    Disclaimer The information above contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or future financial performance, including, but not limited to, expectations regarding market growth and development as well growth and profitability of Sanoma

  45. Slide 45: Please contact our Investor Relations

    Please contact our Investor Relations: Kaisa Uurasmaa, Head of IR & CSR M +358 40 560 5601 E kaisa.uurasmaa@sanoma.com ir@sanoma.com www.sanoma.com

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