Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (September 2023)
49 slides from Sanoma Oyj's roadshow presentation, September 2023
Slide 1: Leading K12 learning company capturing further growth
Pictures to be changed Leading K12 learning company capturing further growth in an attractive global market Roadshow presentation August-September 2023
Slide 2: We have an ambitious strategy for sustainable, profitable growth
We have an ambitious strategy for sustainable, profitable growth… We are one of the global leaders in K12 education serving 25 million students ▪ Producing inclusive learning materials and platforms to promote equal learning opportunities Our purpose ▪ Strengthening our #1 position in European K12 l
Slide 3: Year 2022 at a glance
… based on a well- Year 2022 at a glance balanced portfolio with clear long- Net sales term targets More than Free cash flow 1,298m€ 85% 112m€ 53% 47% of customers pay for Learning Media digital services Finland Operational EBIT excl.PPA Operating in More than 189m€ Margin 14.6% 12 5,000 73% 27% Eur
Slide 4: Our key long-term targets
Our key long-term targets (FY 2022 in brackets) Net debt / Equity Increasing Adj. EBITDA ratio dividend < 3.0 35−45% 40−60% (3.2) (35.8%) of free cash flow (93%1)) Annual emission Employee Experience Management reductions of Index gender balance -4.2% >7.5 50/50 in line with SBTi by 2030 by 2030 by
Slide 5: We are #1 in K12 learning services in Europe
We are #1 in K12 learning services in Europe… ▪ We focus on K12, which is primary, secondary and vocational education (ie. 6−18 year-olds) – Supporting more than 25 million students in 12 European countries – Having a ~17% market share ▪ Teachers and schools are our primary customers – Teachers are
Slide 6: Leading the way in consolidating the market
…and are leading the way in consolidating the market #1 ▪ K12 is a stable and resilient market – Stable population of approx. 75 million students in Europe, #2 corresponding to a market size of 4−5bn€ – Public spending on education is increasing, spend per student varies between countries – Signific
Slide 7: Curriculum renewals contribute to our long-term growth
Curriculum renewals contribute to our long-term growth… ▪ Long-term growth over the cycle K12 publishing market values in Sanoma’s key operating countries indexed to 2020 driven by wider geographical presence and position in both key segments 140% (primary & secondary) regardless of local market flu
Slide 8: Successful track record and ambitious plan for profitable growth
… and we have a successful track record and ambitious plan for profitable growth 800 25% M&A has accelerated our transformation ▪ 2019: Four acquisitions in K12 learning services 700 ▪ 2020: Santillana, leading provider of K12 learning content in Spain 20% ▪ 2022: Pearson Italy, the third largest pr
Slide 9: M&A strategy: Focus on growth opportunities in K12 learning business
M&A strategy: Focus on growth opportunities in K12 learning business We aim to grow in K12 We aim to acquire Our M&A pipeline is learning content by companies that healthy ▪ Strengthening our position in ▪ Focus on K12 learning ▪ Market consolidation current operating countries content driven by acc
Slide 10: We have leading positions and media brands in Finland
We have leading positions and media brands in Finland… 97% 1.4m subscriptions >30% weekly reach ~60% pay for a digital component market share in local B2B #1 #1–2 #1–2 #1 #1 in news in TV & VOD in audio in magazines festivals 10 Roadshow presentation August-September 2023
Slide 11: Finland's #1 cross-media company
… and are Finland’s #1 cross-media company ▪ Independent and trusted media is essential for an open and democratic society ▪ We reach 97% of all Finns every week by providing trusted Finnish journalism and inspiring entertainment ▪ Our strategy focuses on – News & feature – Entertainment Share of st
Slide 12: Solid track record of stable net sales and earnings
We have a solid track record of stable net sales and earnings, while the operating environment will have a short-term impact In Media Finland, stable net sales and profitability ▪ Sustainable performance in the digital era development continued during the pandemic requires scale 700 20% – We have 1.
Slide 13: Our Sustainability Strategy emphasises the positive impact of learning and media
Our Sustainability Strategy emphasises the positive impact of learning and media on society Trustworthy data Valued people Target: Continuous Target: Employee privacy and security Engagement Index (EEI) training for our above 7.5 employees No Inclusive learning major data Empowering learning of EEI
Slide 14: Balancing our capital allocation between M&A and a growing dividend
Balancing our capital allocation between M&A and a growing dividend € Aiming to continue Growing dividend with Investing in further to grow through M&A an attractive yield digital growth ▪ Implementing our ▪ Our policy is to pay an ▪ Harmonising and clear growth strategy increasing dividend, develop
Slide 15: We have an ambitious strategy for sustainable, profitable growth
We have an ambitious strategy for sustainable, profitable growth ▪ We are one of the global leaders in K12 education serving Our purpose 25 million students and want to grow globally through M&A Through learning and media, we have a positive impact on the lives of millions of people ▪ We are Finland
Slide 16: H1 2023 Financials
aici, | H1 2023 Financials
Slide 17: Net sales grew, operational EBIT supported by solid Learning performance
H1 2023 Key figures Q2 and H1 2023 Net sales grew, operational EBIT supported by solid Learning performance ▪ The Group’s net sales grew Q2 2023 H1 2023 – Learning growth was driven by the acquisition in Italy and 4% organic growth Net sales 341m€ 559m€ – Lower net sales in Media Finland mainly due
Slide 18: Italian acquisition and organic growth increased net sales
LEARNING H1 2023 Italian acquisition and organic growth increased net sales ▪ Net sales grew to 264m€ (2022: 219) – The Italian and German business contributed 42m€ to net sales, while divestment of Eduarte reduced sales by 4m€ – Organic growth of 4% with solid development across content businesses
Slide 19: Growth in net sales supported earnings in Q2
LEARNING H1 2023 Operational EBIT excl. PPA Growth in net sales supported m€ earnings in Q2 ▪ Operational EBIT excl. PPA amounted to 15m€ (2022: 21) 21,0 % 19,5 % – Typical annual seasonality of the business 19,8 % 129 19,4 % – The impact of the inflation on paper, personnel and fixed 17,1 % 17,2 %
Slide 20: Advertising sales decreased in-line with expectations
MEDIA FINLAND Q2 2023 Advertising sales decreased in-line with expectations ▪ Net sales declined to 153m€ (2022: 164) – Advertising sales declined by 11% with negative development across all media categories ▪ Sanoma performed in-line with the market in online and radio; weaker than market in TV and
Slide 21: Lower earnings due to advertising sales and inflation
MEDIA FINLAND Q2 2023 Operational EBIT excl. PPA Lower earnings due to m€ advertising sales and inflation ▪ Operational EBIT excl. PPA decreased to 15,4 % 9m€ (2022: 17) 13,3 % – Advertising sales below PY 12,5 % 24 11,7 % – Positive earnings impact of lower variable costs, 10,5 % 21 11,4 % e.g. pri
Slide 22: Stable operational EBIT supported by growth in Learning
Q2 2023 Operational EBIT excl. PPA Q2 2023 vs. Q2 2022 Stable operational EBIT m€ supported by growth in Learning Learning + Growth in Spain driven by LOMLOE + Acquired Italian and German business ‒ Inflation impact on paper, personnel 2 and fixed costs, partially mitigated by thoughtful cost manage
Slide 23: Successful actions mitigating increased seasonality improved free cash flow in Q2
Successful actions mitigating the Free cash flow m€ increased seasonality improved the free cash flow in Q2 ▪ Free cash flow was -84m€ (2022: -99) in H1 200 2023 + Changes to the operating model to mitigate the 150 increasing cash seasonality in Learning including wider use of pre-payments, earlier
Slide 24: Leverage remained stable
Leverage remained stable Net debt m€ ▪ Net debt increased to 792 m€ from end of March Long-term target 3,1 3,2 3,3 3,2 3,2 3,3 – In-line with the seasonally high working capital of <3.0 the learning business 2,6 2,5 – Net debt / Adj. EBITDA stable at 3.3 (2022: 3.2) 2,4 – Equity ratio at 35.4% (2022
Slide 25: Outlook for 2023 (unchanged)
Outlook for 2023 (unchanged) ▪ In 2023, Sanoma expects that the Group’s reported net sales will be 1.35‒1.4bn€ (2022: 1.3) ▪ The Group’s operational EBIT excluding PPA is expected to be 150‒180m€ (2022: 189) ▪ Regarding the operating environment Sanoma expects that: – The economies in the Group’s op
Slide 26: Appendix: Sanoma Learning
Appendix: Sanoma Learning
Slide 27: Sanoma is one of the global leaders in K12 education
LEARNING: Sanoma is one of the global leaders #1 #2 in K12 education ▪ Serving more than 25 million K12 students in 12 countries across Europe, market share approx. 17% – European K12 student population stable at 75 million #1 – Value of K12 learning services market approx. #1 4−5bn€ p.a. with low s
Slide 28: We are a focused provider of K12 learning products and services
LEARNING: We are a focused provider of K12 learning products and services… Education K12 Higher Corporate Life-long Pre-school Key market sectors Primary Secondary Vocational education learning learning School infrastructure ▪ ICT and other equipment ▪ Distribution & Maintenance services Learning pr
Slide 29: Leading the way in digitalisation across our markets
LEARNING: …leading the way in digitalisation across our markets Stage Print Free digital Paid digital Subscription digital Digital Model Print only Free digital Paid digital Subscription digital Markets Poland Finland Netherlands Italy Belgium ~65% Spain Sweden of learning material France UK sales G
Slide 30: Our wide footprint in learning content enables us to scale digital competences
LEARNING: Our wide footprint in learning content enables us to scale our digital competences Share of net sales and operational EBIT margin excl. PPA in 2022 Distribution services 15% Below average Digital platforms 1) 15% Below average Printed and digital learning content 70% Above average 681m€ 19
Slide 31: Sanoma Learning has been successfully built through M&A
LEARNING: Sanoma Learning has been successfully built through M&A Malmberg the Netherlands Tammi (Sanoma Pro) Nowa Era Finland De Boeck Pearson Italy Poland Belgium Italy Sanoma WSOY Van In Sanoma Utbildning Essener Santillana Spain STARK Finland Belgium Sweden the Netherlands Spain Germany Content
Slide 32: Sanoma acquired Pearson's K12 learning business in Italy
LEARNING: Sanoma acquired Pearson’s K12 learning business in Italy as of 31 August 2022 ▪ Italy is one of the largest K12 learning services markets in Europe – Sanoma is the 3rd largest educational publisher with a market share of 15% – Stable development in the number of students and government spe
Slide 33: Appendix: Sanoma Media Finland
Appendix: Sanoma Media Finland
Slide 34: Leading positions in news & feature, entertainment and B2B marketing
MEDIA FINLAND We have leading positions in news & feature, entertainment and B2B marketing solutions ▪ Sustainable demand ▪ Continue to grow the digitally active #1 in domestic, subscription base ▪ Strong history, position and proven track independent journalism News & feature record in digital tran
Slide 35: Digital transformation increases profit contribution per incremental subscriber
MEDIA FINLAND, NEWS & FEATURE: Digital transformation increases profit contribution per incremental subscriber, but reduces net sales ▪ Acquiring an additional subscriber Net sales per additional … but profit contribution for digital instead of printed news will subscription1) reduces… increases1) I
Slide 36: Stable subscription development after the corona driven peak
MEDIA FINLAND, CASE HELSINGIN SANOMAT: Stable subscription development after the corona driven peak ▪ HS total number of subscriptions approx. 425k HS subscription base development ▪ Number of digital-only subscriptions over 170k, approx. 40% of total subscription base 400k – Approx. 85% of all subs
Slide 37: Stable net sales driven by digital advertising
MEDIA FINLAND, CASE ILTA-SANOMAT: Stable net sales driven by 188m 46m digital advertising page views site visits a week 3m a week readers ▪ Digitalisation has increased the reach significantly a week – IS reaches the whole of Finland and often audiences Net sales split print vs. digital who don’t cu
Slide 38: We have leading positions in key segments
MEDIA FINLAND, ENTERTAINMENT: We have leading positions in key segments Our market positions #1-2 #2 #1 TV & video Radio & audio Live events ▪ #1 in domestic entertainment with most attractive brands and stars ▪ Increasing consumer revenues – Transformation from linear TV to SVOD continues – our SVO
Slide 39: Appendix: Sanoma Group
Appendix: Sanoma Group
Slide 40: Sanoma in 2022
Sanoma in Learning Media Finland 2022 Net sales 681m€ Net sales 618m€ NET SALES Non-print 62% Non-print 52% 1,298m€ Margin 19.4% Margin 10.6% NON-PRINT SALES NET SALES, m€ NET SALES, m€ 57% Netherlands Subscription Spain Non-print advertising OPERATIONAL EBIT MARGIN Poland 14.6% Belgium Finland Prin
Slide 41: Sanoma is a sustainable investment with solid ESG performance
Sanoma is a sustainable investment with solid ESG performance MSCI rating Sustainalytics risk rating CDP Climate score ISS rating Upright net impact AA 10.9 A- C+ AA+ Scale 100-0, Scale CCC to AAA Scale D- to A Scale D to A+ Scale CC to AAA lower score = lower risk Aligned with Signatory of Science
Slide 42: We have a well-balanced debt portfolio
We have a well-balanced debt portfolio External debt structure 1) Maturity profile 2023–2026 m€, 30 June 2023 m€, 30 June 2023 400 3 77 100 250 200 300 200 655m€ 1) 200 200 50 0 25 125 2023 2024 2025 2026 Term loan 2022 Term loan 2020 Bond Term Loan 2022 Bond Commercial papers Other loans Term Loan
Slide 43: 150m€ hybrid bond was issued in March
150m€ hybrid bond was issued in March ▪ The bond seen as the best way to strengthen the balance sheet to increase financial flexibility that supports the execution of the strategic plan at all times ▪ With the learning business being an increasing part of Sanoma, its annual cyclicality relating to t
Slide 44: We aim to pay an increasing dividend
We aim to pay an increasing Dividend per share € Yield Total dividend dividend 3.8% approx. at the end of 60m€ 2022 ▪ A dividend of 0.37€ (2021: 0.54) per share to be paid for 2022 in order to balance capital use between dividend and continuing growth investments 93% ▪ Payments in three parts follow
Slide 45: Largest shareholders
Largest shareholders 31 July 2023 Largest shareholders Holding by sector Number of % of Shareholders shares shares 1. Jane and Aatos Erkko Foundation 39,820,286 24.4 3% 14% 2. Holding Manutas Oy 19,785,000 12.1 3. Langenskiöld Robin 12,273,371 7.5 15% Private companies 4. Seppälä Rafaela 7,654,746 4
Slide 46: Analyst coverage
Analyst coverage Carnegie Investment Bank Pia Rosqvist-Heinsalmi +358 9 6187 1232 Danske Markets Equities Sami Sarkamies +358 40 502 9194 Inderes Petri Gostowski +358 40 821 5982 Kepler Cheuvreux Kristoffer Carleskär +44 207 621 5149 Nordea Sanna Perälä +358 40 779 0845 OP Corporate Bank Kimmo Stenv
Slide 47: Capital Markets Day and financial reporting in 2023
Save Capital Markets Day the Date 22 November 2023 Helsinki & virtual Financial reporting in 2023 Interim Report Q3 2023 Thu 26 October
Slide 48: 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
Slide 49: Please contact our Investor Relations
Please contact our Investor Relations: Kaisa Uurasmaa, Head of IR & Sustainability M +358 40 560 5601 E kaisa.uurasmaa@sanoma.com ir@sanoma.com www.sanoma.com