Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (March 2023)
55 slides from Sanoma Oyj's roadshow presentation, March 2023
Slide 1: Leading K12 learning company capturing further growth in an attractive global market
Pictures to be changed Leading K12 learning company capturing further growth in an attractive global market March 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: … based on a well-balanced portfolio with clear long-term targets
… 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)) Emission Employee Experience Management reductions of Index gender balance -4.2% >7.5 50/50 in line with SBTi by 2030 by 2030 by 2030 (S
Slide 5: Sanoma is one of the global leaders in K12 education
Sanoma is one of the global leaders #1 in K12 education #2 ▪ 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 single-digi
Slide 6: 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 7: …and are leading the way in consolidating the market
…and are leading the way in consolidating the market ▪ K12 is a stable and resilient market – Stable population of approx. 75 million students in Europe, corresponding to a market size of 4−5bn€ – Public spending on education is increasing, spend per student varies between countries – Significant fr
Slide 8: In Learning, we have a successful track record and ambitious plan for profitable growth
In Learning, 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 lar
Slide 9: 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 fluc
Slide 10: Sanoma acquired Pearson's K12 learning business in Italy
Sanoma acquired Pearson’s K12 learning business in Italy as of 31 August 2022 ▪ Sanoma entered Italy, one of the largest K12 learning services markets in Europe – Pearson is the 3rd largest publisher in the Italian market with a market share of 15%, focused on secondary education – Number of student
Slide 11: We are Finland's #1 cross-media company...
We 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: …delivering solid, stable earnings and cash flow
…delivering solid, stable earnings and cash flow 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 1.4 million subscriptions in total 600 15% – ~60% pay for digital component 50
Slide 13: 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 14: Growing through M&A while paying an increasing dividend
Growing through M&A while paying an increasing dividend € Solid balance sheet Growing dividend with Investing in further supporting M&A an attractive yield digital growth ▪ Implementing our ▪ Our policy is to pay an ▪ Harmonising and clear growth strategy increasing dividend, developing our digital
Slide 15: 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 16: We are on track for our strategic growth ambition for 2030
We are on track for our strategic growth ambition for 2030 ▪ We are aiming for the Group’s net sales to be over 2bn€ by 2030, with at least 75% coming from the learning business – Organic growth in-line with long-term targets in Learning and Media Finland – In Learning, focus on in-market acquisitio
Slide 17: 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 18: 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 19: FY 2022 Financials
FY 2022 Financials
Slide 20: Net sales continued to grow and operational EBIT was affected by inflation
FY 2022 Net sales continued to grow and operational EBIT was affected by inflation Net sales Organic net sales Operational EBIT Operational EBIT Free cash Net debt / growth excl. PPA margin excl. PPA flow Adj. EBITDA 1,298m€ 1% 189m€ 14.6% 112m€ 3.2 (2021: 1,252) (2021: 7%) (2021: 197) (2021: 15.8%)
Slide 21: Solid underlying performance in both businesses in a challenging environment
FY 2022 Solid underlying performance in both businesses in a challenging environment We strengthened our position as one of the global leaders in K12 education ▪ The acquired Italian and German business had a positive earnings and cash flow contribution ▪ In Spain, solid net sales growth and perform
Slide 22: Learning: net sales grew driven by the acquisition in Italy and organic growth
LEARNING FY 2022 Net sales grew driven by the acquisition in Italy and organic growth in learning content sales… ▪ Net sales grew to 681m€ (2021: 637) – The acquired Italian and German business made a 37m€ contribution to the net sales growth for September-December – Comparable net sales growth was
Slide 23: …while earnings were stable
LEARNING FY 2022 Operational EBIT excl. PPA …while earnings were stable m€ ▪ Operational EBIT excl. PPA was 132m€ (2021: 134) 22.2 % – The acquired Italian business had 5m€ positive impact 21.0 % 21.0 % on earnings as indicated at closing 19.8 % 19.5 % 19.4 % 18.5 % – Earnings in the learning conten
Slide 24: Media Finland: Net sales remained stable…
MEDIA FINLAND FY 2022 Net sales remained stable… ▪ Net sales amounted to 618m€ (2021: 615) – Total advertising sales declined ▪ Digital and radio advertising sales grew ▪ Print and TV advertising sales declined – Subscription sales were stable ▪ Digital subscription sales continued to grow while pri
Slide 25: …earnings impacted by lower advertising sales and higher paper costs
MEDIA FINLAND FY 2022 Operational EBIT excl. PPA …earnings impacted by lower m€ advertising sales and higher paper costs 15.4 % 13.3 % ▪ Operational EBIT excl. PPA declined to 66m€ 12.5 % 24 11.7 % 11.4 % (2021: 74) 10.5 % 21 – Advertising sales declined, while sales of lower 19 19 18 margin events
Slide 26: Free cash flow was lower in 2022
Free cash flow was lower Free cash flow 2022 m€ in 2022 325 ▪ Free cash flow from the underlying business in 2022 significantly lower due to significant investments made ▪ Large positive contribution from the working capital of the Italian business due to – Timing of the acquisition near the end of
Slide 27: The Board proposes a reduced dividend of 0.37€
The Board proposes a Dividend per share € reduced dividend of 0.37€ ▪ The Board proposes 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 – Representing a total of approx. 60m€ – Pay-out of 93% of underl
Slide 28: In 2023, we continue building the long-term strengths of our businesses
In 2023, we continue building the long-term strengths of our businesses Expected 2023 Long-term targets Learning financial impact for SBUs unchanged ▪ Organic growth driven by the continued implementation of the new curriculum in ▪ Organic growth ▪ Organic growth Spain and Poland returning to growth
Slide 29: Outlook for 2023
Outlook for 2023 ▪ 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 operating coun
Slide 30: Net debt and leverage increased with the acquisition in Italy and Germany
Net debt and leverage Net debt m€ increased with the acquisition in Italy and Germany Long-term 3.1 3.2 3.3 3.2 target < 3.0 ▪ Net debt / Adj. EBITDA was 3.2 (2021: 2.4), above the 2.8 long-term target of <3.0 2.6 2.6 ▪ Interest-bearing net debt totalled 823m€ (2021: 616) 2.5 2.4 ▪ Equity ratio was
Slide 31: The Italian business had a significant positive impact on free cash flow in 2022
The Italian business had a Free cash flow 2022 m€ significant positive impact on free cash flow in 2022 due to 325 timing of the acquisition… − Significantly lower underlying free cash flow due to − Lower EBITDA incl. transaction and integration costs of recent acquisitions − Higher investments in l
Slide 32: … while 2023 free cash flow expected to decline temporarily
… while 2023 free cash flow Free cash flow m€ expected to decline temporarily 200 ▪ Key items impacting the 2023 free cash flow 150 + Improved working capital – Lower EBITDA in Media Finland 100 – Integration project costs of the Italian business – Continued investments in business development 50 an
Slide 33: Appendix: Sanoma Learning
Appendix: Sanoma Learning
Slide 34: 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 pro
Slide 35: …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 Ge
Slide 36: Our wide footprint in learning content enables us to scale our 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 37: 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 1
Slide 38: The acquired Pearson business has a strong position in Italy
LEARNING: ACQUISITION OF PEARSON ITALY & GERMANY Focus on secondary education The acquired Pearson business has Net sales, m€, 2021 a strong position in Italy 11% 3%5% Primary 25% Lower secondary ▪ 3rd largest publisher in a fragmented K12 learning material market in Italy with a market share of 15%
Slide 39: Large Italian K12 learning material market provides significant potential for digitalisation
LEARNING: ACQUISITION OF PEARSON ITALY & GERMANY Total addressable market in Italy Large Italian K12 learning material m€ 768 768 748 742 market provides significant 701 722 potential for digitalisation ▪ Overall Italian K12 learning material market was estimated at above 750m€ in 2021, making it on
Slide 40: Appendix: Sanoma Media Finland
Appendix: Sanoma Media Finland
Slide 41: We have leading positions in news & feature, entertainment and B2B marketing solutions
MEDIA FINLAND 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 domest
Slide 42: Our digital transformation is driven by a unique combination of success factors
MEDIA FINLAND 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 eas
Slide 43: #1 in independent Finnish journalism
MEDIA FINLAND: NEWS & FEATURE #1 in independent Finnish journalism Leading national and regional news media Focus on ▪ Growing digitally active subscription base ▪ Growing daily national reach 43 Roadshow presentation March 2023
Slide 44: Digital transformation increases profit contribution per incremental subscriber, but reduces net sales
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) In
Slide 45: Stable subscription development after the corona driven peak
MEDIA FINLAND: CASE HELSINGIN SANOMAT Stable subscription development after the corona driven peak HS subscription base development ▪ HS total number of subscriptions over 430k ▪ Number of digital-only subscriptions over 160k, 400k approx. 40% of total subscription base ~15% – Approximately 85% of a
Slide 46: We have leading positions in key segments
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 – Growth driven by increa
Slide 47: Appendix: Sanoma Group
Appendix: Sanoma Group
Slide 48: 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 49: 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 50: We have a well-balanced debt portfolio
We have a well-balanced debt portfolio External debt structure 1) Maturity profile 2023–2026 m€, 31 December 2022 m€, 31 December 2022 400 70 5 150 250 200 300 200 700m€ 1) 200 200 50 0 25 175 2023 2024 2025 2026 Term loan 2022 Term loan 2020 Bond Term Loan 2022 Bond Commercial papers Other loans Te
Slide 51: Largest shareholders
Largest shareholders 28 February 2022 Largest shareholders Holding by sector Number of % of Shareholders shares shares 3% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4 15% Antti Herlin 15% 2. 19,816,800 12.1 Holding Manutas Oy: 12.10%, personal: 0.02% 3. Langenskiöld Robin 12,273,371 7.5 4. Sep
Slide 52: 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 Nordea Sanna Perälä +358 40 779 0845 OP Corporate Bank Kimmo Stenvall +358 10 252 4561 SEB Maria Wikström +358 9 6162 868
Slide 53: Financial reporting in 2023
Financial reporting in 2023 Interim Report Q1 2023 4 May Half-Year Report 2023 26 July Interim Report Q3 2023 26 October AGM 2023 19 April Annual Report 2022 was published on 6 March 2023 53 Roadshow presentation March 2023
Slide 54: 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 55: 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