Sanoma Oyj · OMXHEX:SANOMA

Sanoma Oyj — Q2 2013 Earnings Presentation

35 slides from Sanoma Oyj's earnings presentation, Aug 1, 2013

  1. Slide 1: Q2 2013 Interim Report

    Q2 2013 Interim Report Harri-Pekka Kaukonen, President and CEO Kim Ignatius, CFO 1 August 2013

  2. Slide 2: Learning solid – structural changes accelerating in media

    Learning solid – structural changes accelerating in media Q2 2013  Net sales for the Group EUR 591 million (647) – Learning – solid performance impacted by timing shift in sales recognition between quarters – Media – continued deterioration of advertising markets and circulation – News – continued

  3. Slide 3: Advertising markets under severe pressure

    Advertising markets under severe pressure Market environment impacting financial performance  Market environment Advertising market** Change in % vs. prior year Netherlands Q1/2013 Q2/2013 – Economy – subdued market conditions and likelihood of clearly improving environment low Magazines -17 -17 TV

  4. Slide 4: Advertising markets by category H1/2013 vs. H1/2012

    Advertising markets by category H1/2013 vs. H1/2012 Print advertising declining in all main categories, mixed development in online and TV Finland* (net development, change in %) Print Online TV Food -23 32 -12 Motor vehicles -14 -8 2 Other classified -8 33 -> 735 Real estate -12 -1 -53 <- Retail -2

  5. Slide 5: Group outlook for 2013

    Group outlook for 2013 Unchanged from the revised outlook published on 23 July 2013 In 2013, Sanoma expects that the Group’s consolidated net sales will decline more than 4% compared to 2012 and operating profit excluding non-recurring items is estimated to be below EUR 180 million. Sanoma’s outlook

  6. Slide 6: Digital transformation in making

    Digital transformation in making Transformation of main media operations Growth and transformation in Learning News Learning  #1 in Finland  Leading learning player in 6 countries  Growth in engagement  Sanoma at the forefront of gradual  Proven transformation path to digitalisation in newspape

  7. Slide 7: Redesign of consumer media operations

    Redesign of consumer media operations Will change the financial profile of the Group and may affect asset valuations  Strategic choices to enhance focus  Product and service portfolios  Cost efficiency, incl. operational structures  Planning commenced – next update at Q3 publication  Investment

  8. Slide 8: Financials

    Financials Kim Ignatius, CFO

  9. Slide 9: Income Statement

    Income Statement Q2 2013 Restated* Restated* Restated* EUR million 4–6/2013 4–6/2012 1–6/2013 1–6/2012 1–12/2012 Net sales 591.2 646.5 1,096.4 1,190.1 2,376.3 EBITDA excl. non-recurring items 141.1 177.0 217.0 260.2 518.1 of net sales 23.9% 27.4% 19.8% 21.9% 21.8% Amortisations related to programmin

  10. Slide 10: Net sales development

    Net sales development Q2 2013 4-6/2013 4-6/2013 organic share of 2012 organic EUR million (%) growth net sales growth Group -9.3 -3.3 646.5 -33.7 Media -9.7 60.0 -5.8 -7.0 -7.6 -7.0 591.2 News -6.5 16.9 -3.6 Learning -6.6 17.5 +8.6 Media: Advertising adversely affected net sales, especially in the N

  11. Slide 11: EBIT excl. non-recurring items development

    EBIT excl. non-recurring items development Q2 2013 EUR million 103.8 -22.7 +1.0 -11.0 -3.1 68.0 See slide 12 See slide 13 – Higher spending in digital + Solid underlying performance development – In the Netherlands a timing shift in – Lower net sales not fully sales recognition from Q2 to Q1 compens

  12. Slide 12: Media – net sales and EBIT excl. non-recurring items

    Media – net sales and EBIT excl. non-recurring items Q2 2013 Net sales EUR million 388.6 -20.0  Sales declined mainly due to weak -9.8 advertising market -3.9 354.9 – ¾ of decline in advertising explained by weak advertising market in the Netherlands  Decline in magazine circulation not offset by

  13. Slide 13: News – net sales and EBIT excl. non-recurring items

    News – net sales and EBIT excl. non-recurring items Q2 2013 Net sales EUR million 106.8 -7.7  Sales declined mainly due to weak print -0.6 +1.3 99.8 advertising market  In Ilta-Sanomat online advertising more than off-set the decline in print advertising 4-6/2012 Advertising Circulation Other 4-6/

  14. Slide 14: Non-recurring items

    Non-recurring items Q2 2013  Restructuring expenses – approx. EUR 7 million related to cost savings programme  Netherlands – approx. EUR 6 million tax-deductible impairment of intangible assets related to equestrian sports magazines  Belgium – approx. EUR 11 million tax-deductible impairment of i

  15. Slide 15: Free cash flow

    Free cash flow Cash flow from operations less cash CAPEX Restated* Restated* Restated* EUR million 4–6/2013 4–6/2012 1-6/2013 1-6/2012 1–12/2012 EBITDA excl. non-recurring items 141.1 178.3 217.0 265.2 523.0 TV programming costs -34.7 -40.3 -94.8 -89.0 -179.3 Prepublication costs -8.1 -7.4 -14.6 -13

  16. Slide 16: Savings target & cost structure

    Savings target & cost structure  Gross margin – at the level of comparable period Cost of sales split (EUR million) and Gross Margin Rolling 12 months  Fixed costs – lower in absolute terms 1400 70% Other cost of sales  Group-wide cost savings programme – targeting 1200 60% Purchased printing 100

  17. Slide 17: Capital structure

    Capital structure 30 June 2013  Funding secured for the coming years Net debt / EBITDA adjusted 5.0 – Diversification of funding through sale and leaseback 4.3 4.1 arrangements under consideration <3.5 3.6 2.8  Q2 is seasonally the weakest for the balance sheet 2.5 2.0  Net debt EUR 1,418 million

  18. Slide 18: Seasonality between quarters visible in EBIT and cash flow

    Seasonality between quarters visible in EBIT and cash flow Net sales (EUR million) EBIT excl. non-recurring items (EUR million)* Cash flow from operations (EUR million)* 700 120 200 600 100 150 500 80 100 400 60 50 300 40 0 200 20 -50 100 0 0 -20 -100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 20

  19. Slide 19: Q&A

    Q&A ERM aReMiKe] get the world

  20. Slide 20: Sanoma's business units

    Appendix 1 – Sanoma’s business units

  21. Slide 21: Sanoma Media

    Sanoma Media Key figures EUR million 4–6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 354.9 323.5 1,487.1 406.3 338.1 388.6 354.1 1,369.2 The Netherlands 184.6 157.2 760.4 207.2 173.5 208.1 171.6 642.0 Finland 73.7 69.6 301.7 82.2 65.4 76.7 77.4 309.7 Russia & CEE 43

  22. Slide 22: TV – net sales and EBIT seasonality

    TV – net sales and EBIT seasonality 2010-2012 average for TV* Net sales split EBIT** split 13% 22% 29% 31% 39% 29% 20% 17% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes SBS Netherlands (excluding PPA amortization) and Nelonen Media Finland. **Excluding non-recurring items. 22 1 August 2013 Interim Report Q2 201

  23. Slide 23: Magazines – net sales and EBIT seasonality

    Magazines – net sales and EBIT seasonality 2010-2012 average for Magazines* Net sales split EBIT** split 19% 27% 24% 30% 30% 25% 24% 21% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes Dutch, Finnish, Belgium and Russian operations. **Excluding non-recurring items. 23 1 August 2013 Interim Report Q2 2013

  24. Slide 24: Sanoma Media

    Sanoma Media Net sales EBIT excluding non-recurring items* EUR million EUR million 500 70 64 450 436 406 60 55 400 389 354 355 342338 50 47 350 324 311 40 38 300 280 32 250 30 27 25 23 23 200 20 150 10 100 -1 50 0 Q1 Q2 Q3 Q4 0 -10 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have been r

  25. Slide 25: Sanoma News

    Sanoma News Key figures EUR million 4-6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 99.8 101.0 422.8 107.6 98.3 106.8 110.0 435.8 Helsingin Sanomat 53.0 56.3 224.9 57.1 52.2 56.2 59.3 238.5 Ilta-Sanomat 22.7 20.0 84.3 21.1 20.0 22.0 21.2 84.4 Other businesses 24.1 2

  26. Slide 26: News – net sales and EBIT seasonality

    News – net sales and EBIT seasonality 2010-2012 average for News Net sales split EBIT* split 26% 25% 24% 29% 19% 24% 25% 28% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Excluding non-recurring items. 26 1 August 2013 Interim Report Q2 2013

  27. Slide 27: Sanoma News

    Sanoma News Net sales EBIT excluding non-recurring items* EUR million EUR million 115 16 112 112 14 110 14 13 110 12 108 108 12 107 10 10 105 10 9 103 8 101 8 100 6 6 100 98 6 5 4 95 2 90 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have been restated due to a change in IAS

  28. Slide 28: Sanoma Learning

    Sanoma Learning Key figures EUR million 4-6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 103.5 45.7 312.4 35.5 127.4 111.1 38.4 290.6 Learning 103.7 45.7 306.4 35.5 127.4 109.3 34.2 256.6 Other businesses 6.5 0.0 0.0 1.8 4.6 36.1 Eliminations -0.2 0.0 -0.5 0.0 0.0 0.

  29. Slide 29: Learning – net sales and EBIT seasonality

    Learning – net sales and EBIT seasonality 2010-2012 average for learning* Net sales split EBIT** split in relative terms 13% 12% 34% 41% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes only learning business of the Learning segment. **Excluding non-recurring items. 29 1 August 2013 Interim Report Q2 2013

  30. Slide 30: Sanoma Learning

    Sanoma Learning Net sales EBIT excluding non-recurring items* EUR million EUR million 140 60 127 47 49 50 120 111 110 43 104 40 36 97 31 100 30 80 20 60 10 44 46 38 39 36 0 40 -10 -6 -4 20 -20 -15 -20 -22 0 -30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have been restated d

  31. Slide 31: About owners and coverage

    Appendix 2 – About owners and coverage

  32. Slide 32: Sanoma – largest shareholders

    Sanoma – largest shareholders % of shares 30 June 2013 and votes 1. Jane and Aatos Erkko Foundation 23.02 23% 2. Robin Langenskiöld 7.54 3. Rafaela Seppälä 6.31 4. Antti Herlin (Holding Manutas Oy: 4.98%, 6.10 Security Trading 1.11%, personal: 0.02%) 5. Helsingin Sanomat Foundation 3.50 6. Ilmarinen

  33. Slide 33: Analyst coverage

    Analyst coverage  Carnegie Investment  Deutsche Bank  Handelsbanken  Pareto Securities Bank Mark Braley Capital Markets Teemu Vainio Matti Riikonen tel. +44 207 545 9904 Mikael Doepel tel. +358 9 8866 6038 tel. +358 9 6187 1231 Db.com tel. +358 10 444 2450 Paretosec.com Carnegie.fi  Evli Bank H

  34. Slide 34: Sanoma's IR team

    Sanoma’s IR team  Mr Martti Yrjö-Koskinen tel. +358 40 684 4643 martti.yrjo-koskinen@sanoma.com  Mr Olli Turunen tel. +358 40 552 8907 olli.turunen@sanoma.com  Ms Katariina Hed tel. +358 50 412 5120 katariina.hed@sanoma.com IR team’s joint email address: ir@sanoma.com 34 1 August 2013 Interim Rep

  35. Slide 35: Important notice

    Important notice 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

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