Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (December 2023)
42 slides from Sanoma Oyj's roadshow presentation, December 2023
Slide 1: Unique sustainability profile with increasing profitability
Pictures to be changed Unique sustainability profile with increasing profitability Roadshow presentation December 2023
Slide 2: We are a leading European K12 learning company and #1 digital media company in Finland
We are a leading European K12 learning company and #1 digital media company in Finland ▪ We are a leading European K12 learning company serving 25 million students – Focusing on stable and resilient K12 market (ie. 6−18 year-olds) with high barriers to entry #1 – Teachers and schools are our primary
Slide 3: Three strategic focus areas to deliver increasing profitability and prepare for future growth
Three strategic focus areas to deliver increasing profitability and prepare for future growth 1. Increasing profitability of Learning and Media Finland ▪ In Learning, we benefit from our increased scale and will reach the long-term profitability target in 2026 through Program Solar ▪ In Media Finlan
Slide 4: We have more than doubled Learning's net sales, creating a leading European K12 learning business
We have more than doubled Learning’s net sales, creating a leading European K12 learning business Italian integration Successful nearly integration and completed implementation Pearson Italy of LOMLOE Italy Group net sales Iddink ITS Learning the Netherlands, 9 countries Santillana Spain Pearson Ger
Slide 5: Deleveraging will be central to our near-term capital allocation
Deleveraging will be central to our near-term capital allocation In recent years, we have grown Short-term cash flow will be In 2024−2026 we will focus Learning through M&A impacted by on deleveraging to build − Higher financing costs headroom for future growth − Costs related to Program Capital all
Slide 6: We are making good progress towards our ambitious long-term targets
We are making good progress towards our ambitious long-term targets Our key long-term financial and sustainability 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%*) Employee Experience Management Annual Sc
Slide 7: Sanoma represents a unique sustainability profile
Sanoma represents a unique sustainability profile MSCI Sustainalytics We have a unique sustainability profile… Intrinsic positive impact of both business in the lives of millions of people every day combined with ambitious AA 10.9 Scale 100-0, targets and solid ESG performance Scale CCC to AAA lower
Slide 8: We have a successful track record in both businesses
Learning & Media Finland We have a successful track record in both businesses In Learning, M&A has accelerated our In Media Finland, stable net sales and profitability transformation development continued during the pandemic 800 25% 700 20% 700 600 15% 20% 600 10% 500 15% 500 5% 400 400 10% 0% 300 3
Slide 9: Sales outlook for the Group in 2024 is relatively stable
Learning & Media Finland Sales outlook for the Group in 2024 is relatively stable… Distribution business and lower cycle in Spain Media Finland net sales expected to be relatively will impact Learning net sales in 2024, other stable in 2024 Net sales, m€ content markets growing Net sales, m€ ~800 ~6
Slide 10: …and we have margin improvement initiatives running in both Learning and Media Finland
Learning & Media Finland …and we have margin improvement initiatives running in both Learning and Media Finland Learning’s profitability to reach the long-term Media Finland’s profitability to improve towards target of 23% in 2026 supported by Solar the target of 12−14% in the long-term Operational
Slide 11: We are #1 in K12 learning services in Europe
Learning 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 – Teach
Slide 12: K12 learning services offer attractive opportunities…
Learning K12 learning services offer attractive opportunities… K12 is stable and predictable We are #1 in K12 learning services in business Europe and see benefits from scale ▪ Stable population of approx. 75 million ▪ Harmonising our digital platforms and students in Europe, corresponding to a K12
Slide 13: …while learning content sales vary driven by curriculum renewals in our major operating countries
Learning …while learning content sales vary driven by Learning curriculum renewals in our major operating countries content 75% of net sales ▪ Expected development of learning K12 publishing market values in Sanoma’s key in 2023 content sales in 2023−2026 is a operating countries indexed to 2020 fun
Slide 14: We aim to reach our long-term profitability target of 23% in 2026…
Learning We aim to reach our long-term profitability target of 23% in 2026… In 2026, net sales are expected to be stable vs. Learning’s profitability to reach the long-term 2023 with higher share of more profitable target of 23% in 2026 supported by Solar Operational EBIT margin excl. PPA, % learnin
Slide 15: … supported by Program Solar
Learning … supported by Program Solar ▪ Solar brings full benefits from the increased scale of the business Solar benefits are split between ▪ Costs related to Solar booked as IACs totalling 45m€; approx. 30m€ program streams % expected in 2024, 15m€ booked in Q3 2023 ▪ Program streams touch our key
Slide 16: We are Finland's #1 digital media company with a weekly reach of 97%
Media Finland We are Finland’s #1 digital media company with a weekly reach of 97% Strong portfolio of independent and complementing brands with substantial digital synergies News & Feature Entertainment (~2/3 of Media Finland net sales) (~1/3 of Media Finland net sales) Ad-funded journalism Linear
Slide 17: … and 900k paying digital subscriptions: increasing the value of digital for customers
Media Finland We are increasing the value of digital for our customers to prepare for digital-only future Up to 2023 In 2024−2026 Digital transformation push Increasing value of digital for our customers Subscriptions ▪ Strong digital portfolio of independent and complementary We reach 97% brands wi
Slide 18: News media subscription base has become highly digitalised
Media Finland News & Feature News media subscription Digital subscription base in news media has grown by 20pp in last 5 years base has become highly thousands of subscriptions, annual avg. 600k digitalised +1% p.a. ~5% Print ~25% 95% ▪ >95% of news media subscribers pay for a digital component ▪ Go
Slide 19: FTA balancing between profitability and growth
Media Finland Entertainment Our share of total commercial viewing has FTA balancing between decreased slightly profitability and growth Media Finland commercial share of viewing in 25−54 y/o 60% 40% ▪ Economic environment combined with overcapacity 20% and low prices has been challenging for all FTA
Slide 20: Advertising market is expected to gradually recover
Media Finland B2B Advertising market is expected to gradually recover Ad market continues to be uncertain… …but our long-term advertising sales outlook is stable Domestic measurable media market by segment, m€ ▪ Digital advertising sales Media Finland B2B 1 200 22% compensating for the media sales s
Slide 21: We have solid plans and outlook towards our long-term targets
Media Finland We have solid plans and outlook towards our long-term targets Reducing share of print advertising, Profitability to improve towards the target of B2C constantly strengthening 12−14% in the long-term Net sales, m€ Operational EBIT margin excl. PPA, % ~600 Continuous efficiency improveme
Slide 22: Three strategic focus areas to deliver increasing profitability and prepare for future growth
Three strategic focus areas to deliver increasing profitability and prepare for future growth Focus areas 2024−2026 1. Increasing profitability of Learning and Media Finland Our purpose Through learning 2. Growing organically and through and media, we have Our ambition smaller in-market acquisitions
Slide 23: Q3 2023 Financials
aici, | Q3 2023 Financials
Slide 24: Solid growth in net sales and operational EBIT in Learning
Q1−Q3 2023: Solid growth in net sales and operational EBIT in Learning Net sales Comparable net Operational EBIT Free cash Net debt / sales growth excl. PPA flow Adj. EBITDA 1,139m€ 3% 202m€ 35m€ 2.8 (2022: 1,039) (2022: 2%) (2022: 192) (2022: 48) (2022: 3.3) ▪ Solid net sales growth in Learning, bo
Slide 25: Solid organic growth and Italian acquisition increased net sales…
LEARNING Q1–Q3 2023 Solid organic growth and Italian acquisition increased net sales… ▪ Net sales grew to 695m€ (2022: 579) ▪ Organic growth of 7% driven by learning content sales, reflecting also the successful implementation of price increases – Organic growth of the learning content businesses 10
Slide 26: …and led to profitability improvement
LEARNING Q1–Q3 2023 Operational EBIT excl. PPA …and led to profitability m€ improvement ▪ Operational EBIT excl. PPA increased to 179m€ 19.8 % 19.5 % 20.1 % 19.4 % (2022: 151) 17.1 % 17.2 % 164 – Strong organic growth, largely driven by successful implementation of the price increases and earlier 12
Slide 27: Advertising sales had an adverse impact on earnings
MEDIA FINLAND Q3 2023 Operational EBIT excl. PPA Advertising sales had an adverse m€ impact on earnings ▪ Net sales declined slightly to 150m€ (2022: 155) 15.4 % – Advertising sales declined by 10% (compared to -6% in the 13.3 % market) mostly from newsprint and TV 12.5 % 24 11.7 % – Comparable subs
Slide 28: Significant earnings improvement in Learning during the high season
Q3 2023 Operational EBIT excl. PPA Q3 2023 vs. Q3 2022 Significant earnings improvement in m€ Learning during the high season Learning + Curriculum-driven growth esp. in Poland and Spain, where high season completed earlier than PY + Successfully implemented price increases across the content busine
Slide 29: Significant increase in the YTD free cash flow excl. the Italian acquisition
Significant increase in the YTD free Free cash flow m€ cash flow excl. the Italian acquisition ▪ Free cash flow for Q1−Q3 was 35m€ (2022: 48) and impacted 200 by the seasonally negative operating cash flow of the acquired Italian and German businesses 150 ▪ The underlying free cash flow* increased s
Slide 30: Leverage improved to within long-term target level of <3.0
Leverage improved to within Net debt m€ long-term target level of <3.0 ▪ Net debt decreased both vs. PY and end of Q2, Long-term target 3.2 3.3 3.2 3.2 3.3 amounting to 691m€ <3.0 2.8 – In-line with the annual seasonality of the learning 2.6 2.5 business 2.4 – Net debt / Adj. EBITDA improved to 2.8
Slide 31: Outlook for 2023
Outlook for 2023 (narrowed on 26 October 2023) ▪ In 2023, Sanoma expects that the Group’s reported net sales will be 1.38‒1.4bn€ (2022: 1.3) ▪ The Group’s operational EBIT excluding PPA is expected to be 165‒175m€ (2022: 189) ▪ Regarding the operating environment Sanoma expects that: – The advertisi
Slide 32: Appendix: Sanoma Group
Appendix: Sanoma Group
Slide 33: 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 34: Our Sustainability Strategy emphasises the positive impact of learning and media on society
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 35: Free cash flow in 2023 expected to be somewhat higher vs. underlying free cash flow of 2022
Free cash flow in 2023 expected to be somewhat higher vs. underlying free cash flow* of 2022 Key impacts on free cash flow in 2023 Active cash flow management mitigating + Improved working capital management seasonality of free cash flow m€ − Italian acquisition (due to its timing) − Higher financin
Slide 36: We have refinancing in place for 200m€ bond maturing in 2024
We have refinancing in place for 200m€ bond maturing in 2024 ▪ 200m€ bond maturing in March Maturity profile External debt structure* 2024 will be paid back with m€, 30 September 2023 m€, 30 September 2023 – New 100m€ term loan that was Extended signed in October and will be drawn to November 1 down
Slide 37: 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 38: Dividend is an important part of our equity story
Dividend is an important part Dividend per share € Yield Total dividend of our equity story 3.8% approx. at the end of 60m€ 2022 Dividend policy: 93% Sanoma aims to pay an increasing dividend, equal to 40–60% of annual free cash flow 60% When proposing a dividend to the AGM, the Board of Directors w
Slide 39: Largest shareholders
Largest shareholders 30 September 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,
Slide 40: Analyst coverage
Analyst coverage Carnegie Investment Bank Pia Rosqvist-Heinsalmi +358 9 6187 1232 Danske Markets Equities Sami Sarkamies +358 10 546 8468 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 41: 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 42: 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