Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Q2 2017 Earnings Presentation
40 slides from Sanoma Oyj's earnings presentation, September 2017
Slide 1: Investor Presentation September 2017
Investor Presentation September 2017
Slide 2: Contents
Contents Sanoma Nowadays Q2 2017 Highlights SBS transaction Financials 2 September 2017
Slide 3: Three Segments
Three Segments Sanoma Nowadays Learning Media Media (2016 excluding SBS) Finland BeNe Net sales EUR 1,407 million EUR 280 million EUR 580 million EUR 540 million Non-print sales 38% (EUR 540 million) 54% (EUR 150 million) 42% (EUR 240 million) 27% (EUR 140 million) Operational EBIT margin Above 10%
Slide 4: Sanoma Learning
Sanoma Learning A leading learning company in Northern Europe • Leading positions in countries with some of world’s best educational systems: The Netherlands, Poland, Finland, Belgium and Sweden • Solutions that drive higher learning outcomes, engagement and efficiencies • Forerunning digital learni
Slide 5: Our methods save teachers 8 hours/week, improve learning outcomes
Our methods save teachers 8 hours/week, improve learning outcomes and engagement of students We enable learning impact*: By supporting key activities in With comprehensive the teaching and learning cycle learning solutions Learning outcomes Instruction 95% Prepare Administer Teacher guides Exe
Slide 6: Solid financial performer and a leading digital player in Northern Europe
Solid financial performer and a leading digital player in Northern European markets Key figures Composition of net sales 2016 EUR million 2016 2015 Vocational and other Net sales 283 280 Hybrid Print 13% Organic growth -2.5% -4.0% Operational EBITDA* 95 83 Non-print 47% sales K-12 % 33.7% 29.7% 54%
Slide 7: Sanoma Media Finland
Sanoma Media Finland Leading media company in Finland Leading position and strong brands in all media platforms: – Fully integrated TV business with growing viewership – Leading news player in print and online with a hybrid offering – Reaching 97% of Finns every week Unique offering and solution
Slide 8: Strong brands in all media platforms
Strong brands in all media platforms Engaging consumer oriented content #1 #2 #1 #1 #1/2 in news in television in audio in Magazines in classifieds 50% 20% 5% 20% 5% 8 September 2017
Slide 9: Improving profitability in Media Finland
Improving profitability in Media Finland Key figures Composition of net sales 2016 Other* EUR million 2016 2015 Net sales 581 573 Advertising sales Organic growth 0.7% -4.1% Non-print Operational EBITDA 143 117 sales 42% (38%) % 24.7% 20.4% Operational EBIT 50 13 Subscription sales % 8.5% 2.3% Singl
Slide 10: Sanoma Media BeNe
Sanoma Media BeNe Profitable market leader in the Netherlands and Belgium Market leader in magazine print and online domain – Sanoma’s magazines reach 7.5 million readers every month – 10 strong cross-media brands in Women, Home & Deco and Kids & Teens domains; 6 out of TOP 10 brands in the Nether
Slide 11: Creating value through strong media brands
Creating value through strong media brands International mindfulness & lifestyle brand 98% 2% #2 magazine of NL in reach 96% 4% Strong Women brand with > 1m reach 85% 15% Largest Dutch women brand 85% 16% Biggest Automotive magazine in NL 77% 24% 360 Home Deco brand 75% 25% With e-commerce, print, T
Slide 12: Solid performance
Solid performance Key figures, pro forma excl. SBS Composition of net sales, 2016 excl. SBS EUR million 2016 2015 Distribution Other * Advertising sales Net sales 544 597 Other Organic growth 1.1% 0.6% Non-print Operational EBITDA 87 76 Online sales & % 16.0% 12.8% 27% (22%) mobile Single copy Opera
Slide 13: Focus on our Strongholds
Focus on our Strongholds Businesses where we have or can reach a leading position Sanoma 2016 excl. SBS Learning: Create top line growth in existing and adjacent markets Further process improvements driving profitability and cash flow increase Learning 20% Potential for highly synergetic bolt-
Slide 14: What you can expect Sanoma to be going forward
What you can expect Sanoma to be going forward Continued Increase in Growth by Resulting in: customer focus : Profitability highly synergetic • Improved three distinct and Cash Flow bolt-on profitability businesses with through acquisitions in • Increasing cash lean Group- operational our stronghold
Slide 15: Continued Performance Improvement
Continued Performance Improvement Outlook for 2017: Net sales, adjusted for structural changes including SBS divestment, will be stable and operational EBIT margin will be above 10% In long term, we aim at: Improved profitability and cash flow Increasing dividend Equity ratio 35%–45% Leverage (net d
Slide 16: Sanoma as an investment
Sanoma as an investment: Strongholds – leading market positions Ensures competitiveness even in changing markets Stable net sales ’Build and Buy’ incl. highly synergetic bolt-on acquisitions Improved profitability Process and business improvements Strong cash flow Financial and strategic flexibility
Slide 17: Q2 2017 Highlights
Q2 2017 Highlights
Slide 18: Highlights of Q2 2017
Highlights of Q2 2017 Q2 in line with expectations: – Operational EBIT stable at EUR 78.8 million (2016: 78.6), adjusted for SBS – Improved profitability in Media Finland and the Dutch print and online portfolio – Increased costs related to creating new learning methods in Poland – Reported operat
Slide 19: Operational EBIT adjusted for SBS stable
Sanoma Q2 2017: Q2 Comparable operational EBIT, adjusted for the SBS transaction Operational EBIT EUR million 41 adjusted for SBS stable 34 25 23 Sanoma Group 21 Q2/17 Q2/16 19 EUR million Net sales 441 450 Net sales adjusted for SBS 382 388 Organic growth -2.0% 1.7% Organic growth adjusted -1.5% 2.
Slide 20: Media BeNe Q2
#1 in Digital reach #1 in Magazine reach Media BeNe Q2 (million people) (million people) Improved profitability in Dutch print and Sanoma|SBS 9,9 Libelle 1,6 online portfolio NPO Persgroep Donald Duck LINDA. 1,4 1,2 RTL Prive Marktplaats Margriet 1,0 TMG Veronica 1,0 Semilo Quest Organic net sales
Slide 21: Media Finland Q2
Nelonen TV viewing share Media Finland Q2 Commercial TV (10-44 years) Profitability continued to improve 45% 2015 2016 40% 2017 35% Organic net sales decreased by 2% 30% – Subscription sales performing well, esp. 25% increased number of subscribers paying for digital content 20% Jan Feb Mar Apr Ma
Slide 22: Learning Q2
Learning Q2 Costs to create new methods affecting results Number of users in digital learning platforms Sales increased by 3% – Strong performance in Finland – Consolidation of De Boeck in Belgium – Lower sales in the Netherlands and Q2 2017 Sweden, expected to be partially recovered vs. in Q3 Q2
Slide 23: Operational EBIT increased (H1 2017)
Sanoma H1 2017: H1 Comparable operational EBIT, adjusted for the SBS transaction Operational EBIT EUR million increased 42 39 Sanoma Group 33 EUR million H1/17 H1/16 30 30 Net sales 785 803 19 Net sales adjusted for SBS 679 691 Operational EBIT 93 89 Operational EBIT adjusted for SBS 95 85 Cash flow
Slide 24: Q2 Comparable Operational EBIT Stable, adjusted for SBS
Q2 Comparable Operational EBIT Stable, adjusted for SBS Media BeNe: + Cost innovations in print and online EUR million portfolio - Slightly lower print sales +3.5 Media + Cost innovations, e. g. in distribution -7.0 +3.2 Finland: + Growth in digital sales (+14%) 78.6 +0.4 78.8 Learning: + Improved p
Slide 25: Q2 Reported free cash flow lower due to working capital and taxes
Q2 Reported free cash flow* lower due to working capital and taxes 0 -1 -2 -5 -19 -10 2 -1 -11 >2/3 -15 related to short term -20 incentives 17 -25 -7 -30 -35 2016 Q2 EBITDA** Net working Taxes Financial TV rights Cash capex & 2017 Q2 capital items other * Free cash flow = cash flow from operations
Slide 26: Media Advertising Markets
Media Advertising Markets Preliminary estimate on Netherlands* Q1/16 Q2/16 FY/16 Q1/17 Q2/17* Magazines -8% -8% -7% -10% -12% TV +6% -2% -2% -5% -6% Online* +10% +14% +11% +7% +8% Total market* +4% +4% +3% +3% +3% Sanoma’s outlook for 2017 is based on the assumption of the advertising market Finland
Slide 27: SBS transaction
SBS transaction
Slide 28: Sanoma Divests SBS to Talpa
Sanoma Divests SBS to Talpa Closed on July 19, 2017 SBS is #3 free-to-air TV business in the Dutch market with four TV channels (SBS 6, NET 5, SBS 9 and Veronica) Sanoma received a net cash consideration of EUR 237 million for its 67% stake and 100% ownership of the TV guide business Veronica Ui
Slide 29: Sanoma post SBS transaction
More balanced composition of net sales Sanoma Group net sales 2016 excl. SBS post SBS transaction 100 % 90 % 14% 14% Improved financial and strategic flexibility 80 % 17% 20% to grow and create value in stronghold 70 % businesses 60 % 23% – Reduced leverage with Net debt / adj. EBITDA 27% to decre
Slide 30: Financial impacts of the SBS transaction
Impact of the SBS transaction on net result Financial impacts of the SBS transaction In accordance with IFRS5, all assets and liabilities relating to SBS were classified as held -287 -286 -286 for sale resulting in a non-cash capital loss of -308 EUR -308 million -425 Total impact on net result
Slide 31: Financials
Financials
Slide 32: Reported Income Statement
Reported Income Statement EUR million 4–6/2017 4–6/2016 1-6/2017 1–6/2016 1–12/2016 Net sales 441.4 449.7 785.2 802.8 1,639.1 Operational EBITDA 148.0 153.0 230.4 226.4 452.4 Operational EBIT 81.7 86.9 93.1 88.8 167.9 Items affecting comparability -4.2 54.8 -431.4 56.0 28.7 Operating profit 77.6 141
Slide 33: Continuous profitability improvement through cost innovation
Reported operational fixed costs, EUR million Continuous profitability % of net sales improvement through 800 700 48% 55 53 51 cost innovation 600 500 44% 49 47 400 45 300 43 41 Continuous profitability improvement 200 39 100 through process and cost innovation 0 37 35 2015 2016 Discontinuing un
Slide 34: Deleveraging continues
Deleveraging continues 1200 7 6 1000 5 Net debt/EBITDA adjusted* 3.6 times 800 (2016: 3.8) 4 600 Net debt: EUR 847 million (2016: 855) 3 950 930 864 847 The divestment of SBS will improve the 400 825 802 845 852 801 823 855 766 786 leverage ratio going forward 2 Continued improvement of cash
Slide 35: Lower Financing Costs
Debt structure as of 30 June 2017, EUR 897 million Lower Financing Costs 19 2 200 EUR 200 million of Bond 2017 repaid in March, using commercial paper and bank financing 351 Net financial items YTD EUR -11.0 million (2016: -17.7) 50 Average interest rate during H1 down to 2.0% (2016: 2.8%) 75
Slide 36: Sanoma – Largest Shareholders
Sanoma – Largest Shareholders % of shares 30 June 2017 and votes 24,5 % 1. Jane and Aatos Erkko Foundation 24.46 2. Antti Herlin 11.49 (Holding Manutas Oy: 11.47%, personal: 0.02%) 3. Robin Langenskiöld 7.54 4. Rafaela Seppälä 6.31 46,7 % 5. Helsingin Sanomat Foundation 3.50 6. Ilmarinen Mutual Pens
Slide 37: Analyst Coverage
Analyst Coverage Carnegie Handelsbanken Nordea Investment Bank Capital Markets Sami Sarkamies Matti Riikonen Rasmus Engberg tel. +358 9 165 59928 tel. +358 9 6187 1231 tel. +46 8 701 5116 Nordea.com/markets Carnegie.fi Handelsbanken.com/ capitalmarkets Pohjola Danske Markets Kimmo Stenvall Equities
Slide 38: Sanoma's Investor Relations
Sanoma’s Investor Relations Mr Anssi Imppola tel. +358 40 832 0128 anssi.imppola@sanoma.com 38 September 2017
Slide 39: sqnomd
sqnomd
Slide 40: 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