Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Investor Day (December 2019)
75 slides from Sanoma Oyj's investor day presentation, Dec 18, 2019
Slide 1: Two strong businesses ready for growth
Two strong businesses ready for growth Analyst and Investor Update 2019 18 December 2019, Helsinki
Slide 2: Agenda
Agenda 9:15 Welcome Sanoma Group: CEO Susan Duinhoven Two strong businesses ready for growth CFO & COO Markus Holm Q&A Coffee and break-out sessions Media Finland: CEO Susan Duinhoven Stable net sales and improving profitability CFO & COO Markus Holm Q&A Coffee and break-out sessions Learning: CEO S
Slide 3: Sanoma Executive Management Team
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 Media Netherlands Learning (as of 1 Jan 2020) 3 Analyst and Investor Update 2019
Slide 4: Two strong businesses ready for growth
Two strong businesses ready for growth CEO Susan Duinhoven
Slide 5: Two strong businesses, focus on growth and dividends
Solid net sales and profitability Sanoma Learning Growing business with strong digital SANOMA AS AN INVESTMENT: footprint and benefits of scale Two strong businesses, Sanoma Media Finland focus on growth and Leading cross-media offering with stable dividends net sales and improving profitability M&A
Slide 6: Transforming Sanoma
Transforming Sanoma M&A headroom Finnish media business since 1889 of 400m€ Building European Building festival Acquisition of learning business and events business Iddink since 1999 in Finland Balanced portfolio Growth 2017-2018 2019 with two opportunities strong SBUs with solid M&A Divestment of S
Slide 7: Both learning and media have an important role in society
Both learning and media have an important role in society Learning Media Our modern learning methods and platforms Journalistic content supports freedom of speech support teachers in developing the full potential of and independent information gathering every student Local entertainment contri
Slide 8: We have a well-balanced business portfolio with 55% of earnings from the learning business
We have a well-balanced business portfolio with 55% of earnings from the learning business Learning and subscription more than half of net sales *… … and majority of profitability * 8% Other Non-print 18% advertising 45% Learning 6% Print advertising 55% Learning 4% 4% Single copy 19% Subscription 5
Slide 9: A growing European-based education company
A growing European-based education company… ≈ 300m€ ≈ 500m€ net sales * 10m 15m students & teachers Operations in 5 10 European countries European Champion in blended learning solutions, platforms and educational services 9 Analyst and Investor Update 2019 * LTM Q3 2019 Including Iddink, Essener, it
Slide 10: …with an organic growth ambition and strong profitability
…with an organic growth ambition and strong profitability Sanoma Learning New long-term target Organic growth with curriculum changes and Net sales increasing digitalisation 2-5% New geographies and expanding technology and EBIT margin target Comparable net service offering sales growth XX % S
Slide 11: Media Finland, the leading cross media company
Media Finland, the leading cross media company… Strong, independent 12.8% media for oper. EBIT generations excl. PPA * 1,800 employees to come 580m€ 50% 97% non-print weekly reach net sales * 11 Analyst and Investor Update 2019 * LTM Q3 2019
Slide 12: …with stable net sales and improving profitability
…with stable net sales and improving profitability Sanoma Media Finland New long-term target Stable revenue in a transforming media market +/- 2% Net sales Growth esp. in news and entertainment subscriptions, Comparable net radio and events sales growth Profitability Increased profitability th
Slide 13: M&A headroom of 400 m€ with solid pipelines in both businesses
M&A headroom of 400 m€ with solid pipelines in both businesses Headroom for acquisitions M&A focus areas Using our scale and capabilities in learning design, technology and services to Learning Enter new geographies Solid M&A Expand offering in existing markets pipelines in 400 both businesses;
Slide 14: Growing dividend supported by good profitability and solid cash flow
Growing dividend supported by good profitability and solid cash flow Dividend per share € Sanoma aims to pay an increasing dividend, equal to 40–60% of annual free cash flow 60% Dividend yield 40% 4.8% 0.20 0.10 0.20 0.35 0.45 0.76 0.63 0.77 0.14 -0.18 as of 30 Nov 2019 2014 2015 2016 2017 2018 Free
Slide 15: Two strong businesses, focus on growth and dividends
Solid net sales and profitability Sanoma Learning Growing business with strong digital SANOMA AS AN INVESTMENT: footprint and benefits of scale Two strong businesses, Sanoma Media Finland focus on growth and Leading cross-media offering with stable dividends net sales and improving profitability M&A
Slide 16: … with a positive impact on the lives of millions of people every day
… with a positive impact on the lives of millions of people every day
Slide 17: Solid cash flow and balance sheet enable growth through M&A and growing dividend
Solid cash flow and balance sheet enable growth through M&A and growing dividend CFO & COO Markus Holm
Slide 18: Solid cash flow and balance sheet enable growth through M&A
New long-term net sales and profitability targets for SBUs Solid cash flow and Solid cash flow balance sheet enable growth through M&A 400m€ headroom for M&A and growing dividend Growing dividend 18 Analyst and Investor Update 2019
Slide 19: A growing European-based education company and the leading cross-media company in Finland
A growing European-based education company and the leading cross-media company in Finland Sanoma Learning Net sales ≈ 1,050m€ * Oper. EBIT excl. PPA ≈ 150m€ * A growing European-based learning company offering blended learning solutions, platforms and educational services Learning Learning 45% 55% S
Slide 20: We have launched new long-term targets on growth and profitability for the SBUs
We have launched new long-term targets on growth and profitability for the SBUs… Learning New long-term targets Comparable net sales growth 2-5% Operational EBIT margin excl. PPA 20-22% Sanoma Media Finland Comparable net sales growth +/-2% Operational EBIT margin excl. PPA 12-14% 20 Analyst and Inv
Slide 21: … while our earlier long-term financial targets remain unchanged
… while our earlier long-term financial targets remain unchanged Key ratios Long-term target 30 Sep 2019 PF 30 Sep 2019 * Net debt / adj. EBITDA < 2.5 2.8 1.6 Temporarily Equity ratio 35-45% 33.8% below the long- term target level Increasing dividend Dividend payout 40-60% 58% of free cash flow (201
Slide 22: Our leverage will significantly improve with the divestment of Media Netherlands
Our leverage will significantly improve with the divestment of Media Netherlands… Enterprise value (EV) 460m€ Net debt m€ Divestment proceeds will be used to reduce debt Net debt decreases to 346m€ Long-term target < 2.5 (pro forma 30 Sep 19) 1.6 Leverage decreases to 1.6 (pro forma 30 Sep 19)
Slide 23: … and equity ratio is expected to return to the target level in 2020
… and equity ratio is expected to return to the target level in 2020 A non-cash capital loss of Equity ratio approx. 110m€ related to the 50% divestment of Sanoma Media Netherlands to be booked in 40% Q4 2019 Equity ratio is expected to 30% temporarily reduce below the long-term target level of
Slide 24: Growing dividend supported by good profitability and solid cash flow
Growing dividend supported by good profitability and solid cash flow Sanoma aims to pay an increasing dividend, Dividend per share € equal to 40–60% of annual free cash flow Dividend for 2019 will be determined based on free cash flow from both continuing and 60% discontinued operations 40% We
Slide 25: Key financial impacts of Media Netherlands divestment
Key financial impacts of Media Netherlands divestment Divestment of Media Netherlands was announced on 10 December EV 460m€, EV / EBITDA multiple 6.5 Net sales 360m€ and operational EBIT excl. PPA 70m€ (LTM Q3 2019) Leading Dutch and Belgian magazines (incl. Libelle, Donald Duck, vtwonen) and
Slide 26: Key assumptions on 2019-2020 financials
Key assumptions on 2019-2020 financials Total goodwill in consolidated balance sheet expected to reduce to approx. 450m€ (pro forma 30 Sep 19) as result of – The divestment of Sanoma Media Netherlands – The purchase price allocation of the acquired Iddink assets Learning to account approx. 80% a
Slide 27: Solid free cash flow development is expected to continue
Solid free cash flow development is expected to continue Free cash flow has been stable… … and is expected to be on a good level in 2020 m€ 150 100 Lower financial expenses 50 Capex Mid-term ambition Profit for cash conversion 0 improvement 60-70% in Learning Divestment of (2019: approx. 55%) -50 Sa
Slide 28: M&A headroom of 400 m€ with solid pipelines in both businesses
M&A headroom of 400 m€ with solid pipelines in both businesses Headroom for acquisitions M&A focus areas Using our scale and capabilities in learning design, technology and services to Learning Enter new geographies Solid M&A Expand offering in existing markets pipelines in 400 both businesses;
Slide 29: Two strong businesses, focus on growth and dividends
Solid net sales and profitability Sanoma Learning Growing business with strong digital SANOMA AS AN INVESTMENT: footprint and benefits of scale Two strong businesses, Sanoma Media Finland focus on growth and Leading cross-media offering with stable dividends net sales and improving profitability M&A
Slide 30: Media Finland: Stable net sales and improving profitability
Media Finland: Stable net sales and improving profitability
Slide 31: Stable net sales and improving profitability
Stable net sales Improving profitability Solid positions in news & feature, entertainment and B2B marketing solutions Simplified organization Important role in society: independent journalism and MEDIA FINLAND: local entertainment Stable net sales and improving profitability 31 Analyst and Investor
Slide 32: We are the leading cross media company in Finland
We are the leading cross media company in Finland Strong, independent media for generations 12.8% oper. EBIT to come excl. PPA * 1,800 employees 580m€ 50% 97% net sales * non-print weekly reach 32 Analyst and Investor Update 2019 * LTM Q3 2019
Slide 33: Changing consumer behavior drives growth in subscription media
Changing consumer behavior drives growth in subscription media Increasing Time available Live Video-on- Sub- events Free-time and ease of Demand scription news access drives demand for FTA TV entertainment Audio-on- Magazines Willingness to pay for demand high-quality news, video and audio on a
Slide 34: 75% of our advertising is non-print and digital is growing
75% of our advertising is non-print and digital is growing Our exposure to print advertising … and we are growing in online advertising amounts only to approx. 60m€… 5% Other Sanoma -1.5% * +3% -14% +9% -2% 22% News print 26% News digital Market 0% * +7% -8% +3% -3% 47% Entertainment Radio Print Onl
Slide 35: We have simplified our organization into three core businesses
We have simplified our organization into three core businesses Sustainable demand Our strong history and position Leading in domestic, Our proven track record in independent journalism News & feature successful digital transformation Growing market Leading entertainment Unique combination
Slide 36: Combining News & Feature attracts new subscribers
Combining News & Feature attracts new subscribers… Leading news brands Strong feature brands Focus on Growing digitally active subscription base + Growing the daily national reach 36 Analyst and Investor Update 2019
Slide 37: Helsingin Sanomat subscription base growing for third consecutive year
…Helsingin Sanomat subscription base growing for third consecutive year Number of digital-only subscriptions at HS now Growth in HS subscription base 1-2% annually above 100k 400k Appealing digital experience has attracted also younger subscribers 33% Easy availability of the digital product has
Slide 38: Digital transformation reduces net sales but increases contribution per incremental subscriber
Digital transformation reduces net sales but increases contribution per incremental subscriber Acquiring an additional subscriber Net sales per additional … but contribution increases * for digital instead of printed news subscription * reduces… will Indexed – Generate half the net incremental 150
Slide 39: Ilta-Sanomat has stable net sales through increasing digital advertising
Ilta-Sanomat has stable net sales through increasing digital advertising Digitalisation has increased the Net sales split print vs. digital 42m reach significantly site visits a week – strong growth – Reaches the whole of Finland and in 2019 often audiences who don’t currently subscribe to news –
Slide 40: In entertainment, we focus on growing the VOD subscription business, radio and events
In entertainment, we focus on growing the VOD subscription business, radio and events Unique Build on our mass unique total reach in portfolio… B2B …and our Attractive and VOD and growing events audio success markets 40 Analyst and Investor Update 2019
Slide 41: Leading positions in three key areas of entertainment
Leading positions in three key areas of entertainment Live TV & video Radio & audio events Our market positions #1-2 #1 #1 41 Analyst and Investor Update 2019
Slide 42: Our Total TV strategy enables us to flexibly follow the consumer
Our Total TV strategy enables us to flexibly follow the consumer from linear TV to VOD… Monetizing content investments across platforms Combining reach and targeting opportunities across FTA and VOD for advertisers FTA TV advertising prices still on a low level − Finnish advertising prices 1/3
Slide 43: Strong growth in Ruutu+ SVOD business
… which has led to strong growth in Ruutu+ SVOD business Total number of Ruutu+ subscriptions 265k Y-o-y growth 25% 43 Analyst and Investor Update 2019
Slide 44: Strong growth in Supla and radio
In 2019, strong growth in the use of Supla, our audio-on- demand service… ….as well as in radio National reach ∼90% with three channels: +70% SuomiPop, Loop and Rock growth yoy Recently strengthened our position in regional radio by acquiring ‒ Aito Radio – regional reach of 80% across Finland 2
Slide 45: We have strengthened our position in live events
We have strengthened our position in live events Built through acquisitions in 2018-2019 – NCD with 30 events in 2017, Tikkurila Festival in 2018 and RockFest in 2019 Net sales 35m€, improved profitability (YTD Q3 2019) 450k visitors in Solid portfolio with 23 festivals and 7 concerts 2019 H
Slide 46: Benefits of our full range entertainment portfolio
Benefits of our full range entertainment portfolio Live TV & video Radio & audio events Content formats, e.g. The Voice of Finland and The Best Singers (Vain Elämää) Appealing to the local artists In-house marketing power Generating unique consumer insight 46 Analyst and Investor Update 2019
Slide 47: Financials
Financials 47 Analyst and Investor Update 2019
Slide 48: Leading cross-media offering with stable net sales and improving profitability
Leading cross-media offering with stable net sales and improving profitability Sanoma Media Finland Long-term target Stable revenue in a transforming media market +/- 2% Net sales Growth esp. in news and entertainment subscriptions, Comparable net radio and events sales growth Profitability In
Slide 49: Our profitability has improved while net sales have been stable
Our profitability has improved while net sales have been stable Net sales Operational EBIT excl. PPA m€ m€ 12.5 % 12.8 % 11.9 % 72 74 570 579 577 66 2017 2018 LTM Q3 19 2017 * 2018 LTM Q3 19 Net sales Oper. EBIT excl. PPA Margin * 2017 Operational EBIT 49 Analyst and Investor Update 2019
Slide 50: 75% of advertising sales is non-print
75% of advertising sales is non-print News & feature ≈ 290m€ Entertainment ≈ 170m€ Total advertising sales ≈ 250m€ * B2B print 20% B2B digi 20% B2B 70% 75% Non-print B2C 60% B2C 30% Print 25% Profitability in comparison to above below above SBU average * Incl. magazines and classifieds in addition t
Slide 51: Profitability improvement through digitalization and simplification
Profitability improvement through digitalization and simplification Transformation to digital subscriptions More simple business, organization and IT Move from infrastructure print to digital advertising 51 Analyst and Investor Update 2019
Slide 52: Stable net sales and improving profitability
Stable net sales Improving profitability Solid positions in news & feature, entertainment and B2B marketing solutions Simplified organization Important role in society: independent journalism and MEDIA FINLAND: local entertainment Stable net sales and improving profitability 52 Analyst and Investor
Slide 53: Learning: Growing business with strong digital footprint and benefits of scale
Learning: Growing business with strong digital footprint and benefits of scale
Slide 54: Growing business with strong digital footprint and benefits of scale
Growing net sales and solid profitability Leading market positions in digitally advanced markets Excellent materials, methods and digital platforms supporting teachers and pupils Readiness for further M&A growth Positive impact on society by better LEARNING: learning outcomes Growing business with s
Slide 55: We focus on learning services for K12
We focus on learning services for K12 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 services Content: materials and metho
Slide 56: We have grown from a publisher into an integrated provider of learning services
We have grown from a publisher into an integrated provider of learning services… Commercial contact Net sales * 480m€ Teachers Administrators Learning services Content: blended materials and methods 55% Material distribution 30% Digital platforms for teaching 5% .me Digital platforms for administrat
Slide 57: … and grown our customer base by 50% to about 15 million students
… and grown our customer base Germany & France 16.7 mn students by 50% to about Spain 6.4 mn students 15 million students Poland 4.7 mn students Netherlands 2.8 mn students Belgium 2.0 mn students Creation of blended materials and methods Digital platforms for teaching Sweden 1.8 mn students Digital
Slide 58: In 2019, we have invested 300m€ and extended our footprint through acquisitions
In 2019, we have invested 300m€ and extended our footprint significantly through acquisitions Norway, France, Germany, Netherlands Poland Belgium Finland Sweden Spain Denmark Creation of blended learning materials and Sanoma Malmberg Nowa Era Van In Sanoma Pro methods Utbildning Essener Material dis
Slide 59: Itslearning expands our footprint in digital platforms in Europe
Itslearning expands our footprint in digital platforms in Europe Itslearning is an international provider of cloud-based digital platform for teaching, founded in Norway in 1999 Net sales 30m€ in 2018 200 employees, 1/3 working in ed tech Currently operations in Norway, Denmark, Netherlands,
Slide 60: Iddink has broadened our opportunities for growth
Iddink has broadened our opportunities for growth Net sales 142m€ and operational EBIT excl. PPA 20m€ in 2018 Iddink provides learning services both for secondary and vocational education – Distribution of printed and digital learning materials and methods with strong rental book sales – Digital
Slide 61: Our direct access to school administrators enables us to extend our service offering
Our direct access to school administrators enables us to grow by extending our service offering Expanding to “Classroom as a Service” Typical expenditure of a school especially in the Netherlands for each K12 pupil * Currently, majority of our net sales comes from Learning materials and methods **
Slide 62: The core of our business continues to build on high-quality learning methods
The core of our business continues to build on high-quality learning methods as efficiency tools for teaching 92% 83% 8hrs/week Of teachers say our methods improve learning outcomes * improve student engagement* create better efficiency for teachers 62 Analyst and Investor Update 2019 * Based on 534
Slide 63: Long-term learning method market stable, but significant growth in Polish and Dutch markets
Long-term learning method market stable, but significant growth in the Polish and Dutch markets in 2020-2021 The Polish market grows as Market value*, indexed to 2019 In 2020 three out of the eight grades 1.25 of all Primary schools will exchange their textbooks to updated methods, and in 1.20 202
Slide 64: Growth by capturing market share in learning materials and methods
Growth by capturing market share in learning materials and methods Due to our recent market share increase we will Our market share in learning materials benefit even more from the market growth in the incl. Poland, the Netherlands, Finland, Belgium and Sweden coming years 40.5% 39.2% Increasing
Slide 65: Increasing attractiveness of K12 learning services with conversion to subscription model
Increasing attractiveness of K12 learning services with conversion from single product to subscription model Successfully introduced in the Dutch market From… …to Benefits for all the traditional model each a subscription model with annual fee per For students, more up-to- product sold separately
Slide 66: Sanoma Learning has been successfully built through M&A to approximately 500m€ business
Sanoma Learning has been successfully built through M&A to approximately 500m€ business… Tammi (Sanoma Pro) Iddink Finland the Netherlands, Sanoma Belgium, Spain WSOY Van In Sanoma Utbildning Essener Finland Belgium Sweden the Netherlands 1999 2004 2008 2011 2016 2019 Malmberg Nowa Era De Boeck ITS
Slide 67: … and we now again have the financial strength to continue to grow through M&A
… and we now again have the financial strength to continue to grow through M&A Using our scale and capabilities in learning design, technology and services – To enter new geographies in K12 – To expand our offering in existing markets With the “High Five” business development program we have ach
Slide 68: Financials
Financials
Slide 69: Growing business with strong base and benefits of scale
Growing business with strong base and benefits of scale Sanoma Learning New long-term targets Organic growth with curriculum changes and Net sales increasing digitalisation 2-5% New geographies and expanding technology and EBIT margin target Comparable net service offering sales growth XX % St
Slide 70: Net sales expected to be close to 500m€ in 2020
Net sales expected to be close to 500m€ in 2020 Net sales m€ 500 Other acquisitions With curriculum renewals and H5 400 benefits, oper. EBIT Iddink * margin excl. PPA is 300 expected to be around 20% already in 2020 200 100 0 LTM Q3 2019 M&A growth Organic growth est. 2020 * incl. organic growth 70
Slide 71: Financial impacts of recent acquisitions in 2019-2020
Financial impacts of recent acquisitions in 2019-2020 Iddink itslearning In total, annual PPAs for Iddink expected to Operating in 9 countries with net sales of 30m€ amount to approx. 10m€ (unaudited) in 2018 and profitability around break-even – At closing, Iddink’s stand-alone PPAs Turnaroun
Slide 72: High Five has brought significant cost benefits and scalability for M&A
High Five has brought significant cost benefits and scalability for M&A Procurement and supply Creation of chain: Savings on paper, materials and print, services etc. methods: Process harmonisation & Technology: optimising content Common procurement Common investments & Finance: centralized Process
Slide 73: Growing business with strong digital footprint and benefits of scale
Growing net sales and solid profitability Leading market positions in digitally advanced markets Excellent materials, methods and digital platforms supporting teachers and pupils Readiness for further M&A growth Positive impact on society by better LEARNING: learning outcomes Growing business with s
Slide 74: 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 75: 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