Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Investor Day (December 2020)
69 slides from Sanoma Oyj's investor day presentation, Dec 8, 2020
Slide 1: Two focused and leading businesses poised for further growth
Capital Markets Day 2020 Two focused and leading businesses poised for further growth 8 December 2020
Slide 2: Today's speakers
Today’s speakers: Sanoma Executive Management Team Susan Duinhoven Markus Holm Pia Kalsta Rob Kolkman President and CEO CFO & COO CEO CEO Sanoma Corporation Sanoma Corporation Media Finland Learning 2 Capital Markets Day 2020
Slide 3: Agenda
Agenda 14:00 Welcome Two focused and leading businesses poised for further growth Susan Duinhoven Q&A Sanoma Learning: Leading European K12 business focused on growth Rob Kolkman Q&A Break Media Finland: Leading media company successful in digital transformation Pia Kalsta Q&A Financial strength
Slide 4: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for further growth Susan Duinhoven, President & CEO Capital Markets Day 2020
Slide 5: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for ▪ We continue to grow Sanoma Learning, the leading European K12 learning further growth business ▪ We are the leading cross-media company in Finland and continue our successful digital transformation ▪ We have 300-400m€ headroom for M&A and focus on gr
Slide 6: We have accelerated our transformation during the past year
We have accelerated our transformation during the past year ≈ 800m€ invested More than 400m€ new, highly profitable net sales acquired Four acquisitions Regional news Santillana Spain, in K12 learning media business leading provider of services in 2019 in Finland K12 learning content Iddink | Itslea
Slide 7: Learning is now contributing close to 70% of Group earnings
Learning is now contributing close to 70% of Group earnings We have a balanced …B2C more than half of our Learning close to revenue profile with… media sales 70% of earnings Net sales by SBU, % Group net sales by category, % Operational EBIT excl. PPA by SBU, % 5% Other 33% Media Finland 49% Media F
Slide 8: We continue to grow Sanoma Learning with strong focus on K12 learning services
We continue to grow Sanoma Learning with strong focus on K12 learning services… ▪ We focus on growing our K12 learning services Net sales split Pro forma LTM Q3 2020 – K12 being primary, secondary and vocational education – Learning services being blended learning content (print & digital), digital
Slide 9: We are the leading European player in a highly fragmented market
… and we are the leading European player in a highly fragmented market ▪ European K12 learning services market ‒ Fragmented market of approx. 4-5bn€ ‒ Serving a total of about 75 million students ▪ Our annual net sales of around 600m€ represent a market share of only about 13% – Already leading play
Slide 10: We continue to grow our learning business through M&A
We continue to grow our learning business through M&A M&A headroom ▪ We have a well-developed pipeline and a good momentum for further acquisitions 300-400m€ – Focus on European K12 learning services by 2022 – Both learning content and digital platform businesses – Entering new geographies and expan
Slide 11: Sanoma is the leading media company in Finland successful in its digital transformation
Sanoma is the leading media company in Finland successful in its digital transformation… ▪ Focused media company with scale – News & feature, entertainment and B2B marketing solutions – Highly synergistic, bolt-on acquisitions could be considered ▪ Increasing share of consumer income and subscriptio
Slide 12: Proven resilience even in an exceptional year
… and has proven resilience even in an exceptional year ▪ Corona pandemic had a significant impact on Finland’s advertising and events market in 2020 – Our advertising sales declined by 13% in January-September, strong recovery since September ▪ We have been gaining 2-3%-points in market share over
Slide 13: Solid dividend for our shareholders while growing through M&A
Solid dividend for our Dividend per share shareholders while growing € through M&A 60% Dividend policy unchanged Sanoma aims to pay an increasing dividend, 40% equal to 40–60% of annual free cash flow 0,20 0,63 0,45 0,86 0,10 0,76 0,35 0,77 0,50 -0,18 Dividend yield 4.1% as of 30 Nov 2020 2015 2016
Slide 14: Learning and media have a positive impact on society
SANOMA SUSTAINABILITY PROGRAM Learning and media have a positive impact on society Inclusive Sustainable Trustworthy Vital Value learning media data environment people We develop inclusive We provide trusted Finnish We use the data you trust We act to protect We promote equality and learning solutio
Slide 15: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for ▪ We continue to grow Sanoma Learning, the leading European K12 learning further growth business ▪ We are the leading cross-media company in Finland and continue our successful digital transformation ▪ We have 300-400m€ headroom for M&A and focus on gr
Slide 16: Q&A
Q&A
Slide 17: Sanoma Learning: Leading European K12 business focused on growth
Sanoma Learning: Leading European K12 business focused on growth Rob Kolkman, CEO Capital Markets Day 2020
Slide 18: Market leader in European K12 with strong digital footprint
LEARNING: Market leader in European K12 with strong digital footprint and benefits of scale ▪ Upgrading long-term profitability target to ‘above 23%’ operational EBIT margin excl. PPA ▪ Successfully executing on M&A strategy ▪ Increasing attractiveness due to conversion from single product to subscr
Slide 19: We are a focused European provider of K12 learning products and services
We are a focused European 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 prod
Slide 20: We have developed as a publisher into an integrated provider
We have developed as a publisher of learning materials into an integrated provider… Commercial contact Learning products Net sales share* Teachers Administrators & services Blended learning content 60% Material distribution 25% Digital platforms for teaching 5% Digital platforms for administration 5
Slide 21: Significant increase in usage on platforms during the corona pandemic
… with significant increase in usage on platforms supporting teachers during the corona pandemic ▪ Platforms performed well Usage of selected Sanoma Learning platforms in 2020 Magister to deal with increased Key functionalities, indexed to pre-corona period (09 2019 – 02 2020) Itslearning Itslearnin
Slide 22: We support the education of around 20 million students
We support the #1 education of around #2 20 million students… ▪ Total European K12 learning products and services market is valued at 4-5bn€ #1 ▪ With our market share of ~13% #1 we are leading the market #1 ▪ We operate in more than 10 countries – Most competitors operate locally only in one or a f
Slide 23: Expanded footprint in blended learning with the acquisition of Santillana
… and have expanded our footprint in blended learning solutions in Europe with the acquisition of Santillana ▪ Santillana Spain is a leading provider of learning materials, primarily Net sales split 2019 K-12 textbooks, for primary and secondary education in Spain ~90% 6% 7% ▪ Net sales of 122m€ and
Slide 24: Santillana is a leader with a unique value proposition in Spain
Santillana is a leader with a unique value proposition in Spain, a market with high barriers to entry ▪ Unique value proposition Position 2 2 1 by region 1 – Commercial teams well embedded in 17 1 1 autonomous regions in Spain 1 1 1 – Central and regional content development teams 1 – Strong brands
Slide 25: Strategic levers support our growth ambitions
Strategic levers support our growth ambitions… Our growth levers M&A: enter new geographies 3 in K12 and expand our offering in existing markets 2-5% p.a. organic growth target Increase value per student 2 through extending offerings, Classroom as a Service Grow market share 1 by continuing to win i
Slide 26: Modest market growth over the cycle
… with modest market growth over the cycle ▪ In Poland, fluctuations due to the Value of K12 publishing market* educational reform ending in 2020-2021 120 Spain ▪ In Spain, the LOMLOE reform is 115 Poland Netherlands driving fluctuation in 2022-2024 110 ▪ Dutch market will be modestly 105 growing du
Slide 27: The market is shifting towards a subscription model
Through greater integration of products and services, the market is shifting towards a subscription model… Blended materials Blended learning content Print Only Print + Free digital Print + Paid digital Subscription Greater benefits for all through subscription ▪ For students: more up-to-date materi
Slide 28: Pace of shift to subscription differs by country
… the pace of this shift differs by country but we aim to move to the subscription model across all our European markets… Blended learning content Print Only Print + Free digital Print + Paid digital Subscription Poland Finland Netherlands Spain Rest of Nordics France Belgium Germany UK Sanoma view
Slide 29: Increasing the share of subscription in net sales to above 50%
… increasing the share of subscription in net sales to above 50% ▪ Currently, subscription sales represent Share of subscription in net sales % approx. 25% of our net sales ▪ Ambition supported by various initiatives to raise this to over 50% by 2025 ▪ With countries at different stages of Our digit
Slide 30: We have been successful in M&A
We have been successful in M&A… the Netherlands, Belgium, Spain Finland Spain Finland Belgium Sweden the Netherlands Spain 1999 2004 2008 2011 2016 2019 2020 the Netherlands 9 countries Poland De Boeck Belgium Spain 30 Sanoma Learning: Leading European K12 business focused on growth
Slide 31: We want to continue to grow in European K12 through M&A
… and we want to continue to grow in European K12 through M&A ▪ Using our scale and capabilities in learning products & services – To enter new geographies – To expand our offering in existing markets ▪ Increase market leader position in K12 31
Slide 32: Market leader in European K12 with strong digital footprint
LEARNING: Market leader in European K12 with strong digital footprint and benefits of scale ▪ Upgrading long-term profitability target to ‘above 23%’ operational EBIT margin excl. PPA ▪ Successfully executing on M&A strategy ▪ Increasing attractiveness due to conversion from single product to subscr
Slide 33: Q&A
Q&A
Slide 34: Media Finland: Leading media company successful in digital transformation
Media Finland: Leading media company successful in digital transformation Pia Kalsta, CEO Sanoma Media Finland Capital Markets Day 2020
Slide 35: Leading media company successful in digital transformation
▪ Leading positions in news & features, entertainment and B2B marketing solutions ▪ Rapidly increasing digital subscriptions ▪ Stable net sales (+/-2%*) and improving profitability (12-14%*) MEDIA FINLAND: ▪ Important role in Finnish society: Leading media company independent journalism and successf
Slide 36: Finland's leading cross media company
Finland’s leading cross media company… 580m€ 10.9% >50% 97% net sales oper. EBIT B2C revenue weekly reach margin excl. PPA Long-term Long-term target for target comparable 12-14% growth +/-2% 36 Sanoma Media Finland: Leading media company successful in digital transformation All figures LTM Q3 2020
Slide 37: Outperforming the advertising market despite challenging conditions
…while outperforming the advertising market despite challenging conditions ▪ Advertising sales have made a significant recovery Monthly advertising development, Jan-Oct 2020* in H2 2020 as marketing spend has resumed in % many industries not significantly affected by corona Jan Feb Mar Apr May Jun J
Slide 38: Continuing to implement our digital transformation strategy
In 2020, we continued to implement our digital transformation strategy… Strong digital growth Focus on core business Helsingin Sanomat (HS) 70% ▪ Combined News & Features out of over 400k subscriptions organisation settled in and include a payable digital showing strategic benefits of element (+8% Y
Slide 39: Long-term digital transformation of media continues
Long-term digital transformation of media continues – corona accelerating digital adoption both in B2C and B2B Finnish media market outlook Market drivers long-term ▪ Consumer willingness to pay for high-quality news, video and audio on a subscription basis is growing +19% +12% +15% ▪ Increasing int
Slide 40: Leading positions in news & feature, entertainment and B2B marketing
We have leading positions in news & feature, entertainment and B2B marketing solutions ▪ Sustainable demand ▪ Our strong history and position #1 in domestic, ▪ Proven track record in digital independent journalism News & feature transformation ▪ Increasing consumer revenue #1 in domestic entertainme
Slide 41: #1 in Finnish journalism, strengthened by acquired regional news media
NEWS & FEATURE #1 in Finnish journalism, further strengthened by acquired regional news media Leading national and regional news media Focus on ▪ Growing digitally active subscription base ▪ Growing daily national reach 41 Sanoma Media Finland: Leading media company successful in digital transformat
Slide 42: Integration and synergy capture proceeding to plan
CASE REGIONAL MEDIA Integration and synergy capture proceeding to plan Background Synergy realization ▪ On 30 April 2020, Sanoma acquired Alma Media’s on track to achieve regional news media business in Finland full run rate net synergies of Deal rationale 13m€ by 2022 ▪ Highly synergistic bolt-on a
Slide 43: Helsingin Sanomat subscriptions growing for the fourth year in a row
CASE HELSINGIN SANOMAT Subscriptions growing for the fourth year in a row with strong growth in digital 1-2% annual growth in HS subscription base ▪ HS total number of subscriptions over 400k 400k ▪ Number of digital-only subscriptions well above 100k, 30% of total subscription base 30% Print – Alre
Slide 44: Digital transformation increases profit contribution per incremental subscriber
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 subscription* reduces… increases* – Generate 50% the net incremental
Slide 45: Ilta-Sanomat stable net sales driven by digital advertising
CASE ILTA-SANOMAT Stable net sales driven by digital advertising 43m site visits a week +17% YoY ▪ Digitalisation has increased the reach significantly Net sales split print vs. digital – IS reaches the whole of Finland and often audiences Corona effect on who don’t currently subscribe to news print
Slide 46: We have leading positions in our selected areas
ENTERTAINMENT We have leading positions in our selected areas TV & video Radio & audio Live events Our market positions #1-2 #2 #1 46 Sanoma Media Finland: Leading media company successful in digital transformation
Slide 47: Entertainment is expected to return to growth
Entertainment is expected to return to growth as corona impact likely to be temporary TV & video Radio & audio Live events Our mid- and ▪ Drive growth in subscription- ▪ Capture potential from ▪ Long-term growth market long-term based VOD service Ruutu+ regional advertising ▪ We aim to be the leadin
Slide 48: All time high subscriptions in our SVOD business
CASE RUUTU+ All time high subscriptions in our SVOD business Total number of Ruutu+ subscriptions YoY growth >300k 16% Differentiation through focus on Finnish entertainment and national and regional sports, combined with affordable SVOD pricing 48 Sanoma Media Finland: Leading media company success
Slide 49: Increasingly stronger position also in the SME segment
B2B MARKETING SOLUTIONS Increasingly stronger position also in the SME segment SME (small and mid-size enterprise) Market share per customer segment* 2020 customers – significant potential to grow ▪ Our market share in SME is relatively low Large customers (~15% vs. over 30% in large customers) >30%
Slide 50: Digital transformation driven by a unique combination of success factors
Our digital transformation is driven by a unique combination of success factors, shared between businesses Success factors across our units Excellent digital Subscription sales B2C and B2B News & feature customer management and cross-sales of experience different products to enable easy use and buyi
Slide 51: Leading media company successful in digital transformation
▪ Leading positions in news & features, entertainment and B2B marketing solutions ▪ Rapidly increasing digital subscriptions ▪ Stable net sales (+/-2%*) and improving profitability (12-14%*) MEDIA FINLAND: ▪ Important role in Finnish society: Leading media company independent journalism and successf
Slide 52: Q&A
Q&A
Slide 53: Financial strength to grow our European K12 learning business
Financial strength to grow our European K12 learning business Markus Holm, CFO & COO Capital Markets Day 2020
Slide 54: Financial strength to grow our European K12 learning business
Financial strength to grow our European K12 learning business ▪ Both Learning and Media Finland performing well towards their long-term targets ▪ Increased long-term target for Learning’s operational EBIT margin excl. PPA, ‘above 23%’ ▪ We will deliver an improving cash flow ▪ We have a 300-400m€ he
Slide 55: Learning's share of our earnings close to 70%
Learning’s share of our earnings close to 70% We have a balanced portfolio Learning close to 70% of earnings Net sales by SBU, % Operational EBIT excl. PPA by SBU, % 33% Media Finland 49% Media Finland 67% Learning 51% Learning 55 Financial strength to grow our European K12 learning business All fig
Slide 56: We have raised Learning's margin target
We have raised Learning’s margin target to reflect the Santillana Spain acquisition ▪ Learning’s target of operational EBIT margin excl. PPA increased to ‘above 23%’ from previous 20-22% ▪ Media Finland’s target of operational EBIT margin excl. PPA remains unchanged ‒ Proven resilience in an excepti
Slide 57: Proven resilience even in an exceptional year 2020
Proven resilience even in an exceptional year 2020… ▪ Learning’s net sales will be around 500m€ and Outlook for 2020 operational EBIT margin excl. PPA around 20% (given on 8 October) – No major impact due to the coronavirus ▪ In 2020, Sanoma expects that the Group’s reported net sales will be around
Slide 58: Largely supported by significant but temporary cost savings in Media Finland
…largely supported by significant but temporary cost savings in Media Finland Temporary savings in key 2021 outlook for key financials cost categories in 2020 ▪ Impact of structural changes somewhat positive 15-20m€ + Acquired regional news media business ▪ Lower operating and content – Divested onl
Slide 59: Learning's net sales and profitability expected to grow in 2021
Learning’s net sales and profitability expected to grow in 2021 ▪ We expect strong organic growth driven by curriculum renewals especially in Poland and the Netherlands ▪ Improving profitability driven by organic growth, to be further supported by Santillana Spain acquisition ▪ Closing preparations
Slide 60: We will deliver an improving free cash flow
We will deliver an improving free cash flow Key items estimated to have an impact on our free cash flow in 2020 and 2021 Free cash flow Impact in 2020 Impact in 2021 m€ 150 Divestment of Media Netherlands Operating cash flow from 100 Santillana Spain ‒ Transaction and integration costs (IACs)
Slide 61: Strong financial position allows us to pay a solid dividend
The Group’s strong Dividend per share financial position and € improving cash flow allow us to pay a solid dividend 60% Dividend policy unchanged ▪ Sanoma aims to pay an increasing dividend, 40% equal to 40–60% of annual free cash flow ▪ Payment in two instalments in-line with annual seasonality of
Slide 62: Introduced a higher leverage target
With a solid financial position, we have introduced a higher leverage target Updated ▪ We have increased our leverage Long-term financial targets target 30 Sep 2020 target* to ‘below 3.0’ (previous: below 2.5) as Net debt / – Increasing share of growing and more predictable learning business adj. EB
Slide 63: We have diversified funding sources available
We have diversified funding sources available… ▪ Bridge financing facility of 480m€* in place to External loans finance Santillana Spain acquisition 30 September 2020 – Maximum maturity 12 + 6 months Other – Part of the bridge funding converted into a 3+1 year 21 syndicated term loan of 200m€ with t
Slide 64: Continue to grow our learning business through M&A
… and continue to grow our learning business through M&A ▪ We have a well-developed pipeline and a good momentum for further acquisitions – Focus on European K12 learning services M&A headroom – Both learning content and digital platform businesses 300-400m€ in 2022 – Entering new geographies and ex
Slide 65: Financial strength to grow our European K12 learning business
Financial strength to grow our European K12 learning business ▪ Both Learning and Media Finland performing well towards their long-term targets ▪ Increased long-term target for Learning’s operational EBIT margin excl. PPA, ‘above 23%’ ▪ We will deliver an improving cash flow ▪ We have a 300-400m€ he
Slide 66: Q&A
Q&A
Slide 67: Thank you!
Thank you!
Slide 68: 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 69: 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