Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (December 2024)
58 slides from Sanoma Oyj's roadshow presentation, December 2024
Slide 1: Unique sustainability profile with increasing profitability
Pictures to be changed Unique sustainability profile with increasing profitability Roadshow presentation November–December 2024 1 Roadshow presentation November–December 2024
Slide 2: Sanoma at a glance
Sanoma A leading European K12 learning company #1 digital cross-media company in Finland at a glance ▪ Size doubled in the past five years ▪ Leading Finnish media brands in resulting from M&A and organic growth News & feature, Entertainment and Net sales ▪ Serving approx. 25 million students B2B mar
Slide 3: We are a leading European K12 learning service company
We are a leading European K12 learning service company ▪ We focus on K12, which is primary, secondary and vocational education (ie. 6−18 year-olds) – Supporting about 25 million students across Europe – Having a ~17% market share ▪ Teachers and schools are our primary customers – Teachers are key de
Slide 4: We are Finland's #1 digital media company with a weekly reach of 97%
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 TV and Radio L
Slide 5: Since 2018, we have more than doubled Learning's net sales
Since 2018, 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
Slide 6: 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 Mid-term focus areas: 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 S
Slide 7: We are taking actions to improve margins in both Learning and Media Finland
1. We are taking actions to improve margins 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 EBIT margin excl. PPA, % Operatio
Slide 8: Strong portfolio with organic growth opportunities in both Learning and Media Finland
2. Strong portfolio with organic growth opportunities in both Learning and Media Finland Growing share of higher margin Accelerating growth in digital learning content business subscription and advertising sales Learning net sales 2023, m€ Media Finland net sales 2023, m€ 2−5%* +/-2%* 800 800 ▪ Grow
Slide 9: Deleveraging will be central to our near-term capital allocation
3. 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
Slide 10: Dividend is an important part of our equity story
Dividend is an important part Dividend per share € of our equity story ▪ A dividend of 0.37€ (2022: 0.37) per share paid for 2023 – Representing a total of approx. 60m€ – Pay-out of 58% of underlying FCF ▪ Paid in three parts following the seasonality in free cash flow generation – 0.13€ in April 60
Slide 11: 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 10.4 Scale 100-0, targets and solid ESG performance Scale CCC to AAA lower
Slide 12: We have an ambitious strategy for sustainable profitable growth
Sanoma as an investment: We have an ambitious strategy for sustainable profitable growth ▪ Increasing profitability of Learning and Media Finland – Learning achieving its long-term profitability target of 23% by 2026, supported by our increased scale – Accelerating digitalisation and improving profi
Slide 13: Our learning business
Our learning business
Slide 14: 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 15: Learning content sales vary driven by curriculum renewals
Learning …while learning content sales vary driven by Learning curriculum renewals in our major operating countries content 74% 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 16: Different blended offerings reflect the different stages of our markets
Learning Blended Different blended offerings reflect the different learning is the stages of our markets… preferred solution for teachers Print Different levels of blended learning Digital Print book with Print book with Print and digital fully blended digital version digital version and exercise pl
Slide 17: With our blended offering, we are leading the way across all our markets
…and with our blended offering, we are leading the way in across all 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
Slide 18: Generative AI brings opportunities and will change our way of working
Learning Generative AI brings opportunities and will change our way of working… Hyper- personalisation Saving time for teachers Supporting different Automated pupils’ needs and Insights and New skills and generation of preferences time-savers for ways to teach / More efficient core content teachers
Slide 19: Teachers also see opportunities in AI
…and teachers also see opportunities in AI Key insights Teachers would use materials generated by AI when edited and reviewed by publishers We conducted a survey among more than 7,600 Teachers are cautiously beginning to implement AI, but they have teachers to gain concerns about its influence in ed
Slide 20: 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 21: 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€; 22m€ booked program streams % in 2023, approximately similar amount expected in 2024 ▪ Program streams
Slide 22: Steps to improve the performance of our distribution businesses
Learning We continue to take steps to improve the performance of our distribution businesses ▪ Distribution businesses are an integral part of our overall learning services offering ▪ We expect the Dutch market continue to be challenging and we are taking actions to improve our financial performance
Slide 23: Key market features in our major learning content countries
Key market features in our major learning content countries (as of 2023) Annual spend per Sanoma market K12 student Public spend on Level of digitalisation Funding student Total annual spend position in learning population K12 as % of GDP mechanism primary/secondary content ▪ Primary via public subs
Slide 24: Our media business
Our media business
Slide 25: Increasing the value of digital for our 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 26: 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 27: Transformation away from 7-day hybrid improves B2C contribution
Media Finland News & Feature Transformation away from 7-day hybrid B2C contribution of Helsingin Sanomat (HS) subscription types improves B2C contribution 2023 ▪ Currently price paid by customer contributes relatively similar irrespective of the product – Customer pays for the printing and logistics
Slide 28: Stable subscription development after the corona driven peak
Media Finland Case Helsingin Sanomat Stable subscription development after the corona driven peak ▪ HS total number of subscriptions approx. 420k HS subscription base development ▪ Number of digital-only subscriptions over 170k, approx. 40% of total subscription base 400k – Approx. 85% of all subscr
Slide 29: 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 30: 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 21% compensating for the sales split i
Slide 31: 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, % 598m€ Continuous efficiency improvem
Slide 32: AI presents significant opportunities without compromising trusted journalism
Media Finland AI presents significant opportunities without 10+ years experience compromising our foremost priorities of of using AI e.g., in segmentation, content trusted journalism personalisation, and forecasting ad Example use-case: audience reach Editorial Code written Multiple ongoing by AI Ge
Slide 33: Financials Q1–Q3 2024
Financials Q1–Q3 2024
Slide 34: Solid quarter delivering improved operational EBIT for the first nine months
Q1–Q3 2024 Solid quarter delivering improved operational EBIT for the first nine months Net sales Organic net sales Operational EBIT Free cash Net debt / development excl. PPA flow Adj. EBITDA 1,103m€ -2% 207m€ 77m€ 2.4 (2023: 1,139) (2023: 3%) (2023: 202) (2023: 35) (2023: 2.8) ▪ Net sales in both
Slide 35: Learning: Lower net sales in line with earlier indications
LEARNING Q1–Q3 2024 Lower net sales in line with earlier indications ▪ Net sales amounted to 668m€ (2023: 695) – In Q3, net sales declined by 21m€ in Spain (-18m€ in Q1–Q3) driven by the ending of the LOMLOE curriculum renewal – This was offset by growth in other learning content markets, in particu
Slide 36: Learning: Stable operational EBIT
LEARNING Q1–Q3 2024 Operational EBIT excl. PPA Stable operational EBIT m€ ▪ Operational EBIT excl. PPA amounted to 178m€ (2023: 179) 20.1 % 19.3 % 19.4 % 19.1 % – Net sales decrease in Spain 18.7 % 17.1 % 17.2 % 164 – Lower paper costs and price increases in other 155 learning content markets suppor
Slide 37: Efficiency program Solar in Learning on track
Efficiency program Solar in Learning on track ▪ Program Solar, launched in October 2023, aims to operational efficiencies amounting to approx. 55m€ annual operational EBIT from Realisation of Solar initiatives 2026 onwards Run-rate of savings in 2026 Program streams touching our key operations acros
Slide 38: Media Finland: Lower net sales attributable to events timing and divestments
MEDIA FINLAND Q3 2024 Lower net sales attributable to events timing and divestments ▪ Net sales were 144m€ (2023: 150) ▪ Subscription sales grew by 4% – Good development in Ruutu+ – Continued solid performance in the digital news & feature subscriptions ▪ Advertising sales stable with growth in digi
Slide 39: Media Finland: Solid quarterly earnings
MEDIA FINLAND Q3 2024 Operational EBIT excl. PPA Solid quarterly earnings m€ ▪ Operational EBIT excl. PPA improved to 18m€ (2023: 17) – Continued growth in digital subscription sales 12.2 % 11.2 % more than offsetting the decline in print – Growth in digital advertising sales offsetting the 9.0 % 18
Slide 40: Operational earnings impacted by Learning net sales
Q3 2024 Operational EBIT excl. PPA Q3 2024 vs. Q3 2023 Operational earnings impacted m€ by Learning net sales Learning + Growth in learning content sales esp. in the Netherlands and Poland + Lower paper costs – Lower sales in Spain Media + Growth in digital subscription and Finland advertising sales
Slide 41: Improved operational EPS in Q1–Q3, impairment and Solar costs booked in Q3
Improved operational EPS in Q1–Q3, impairment and Solar costs booked in Q3 ▪ Q3 IACs increased to -44m€ Key income statement related items (2023: -22) and consisted of m€ Q3 2024 Q3 2023 Q1–Q3 2024 Q1–Q3 2023 – 27m€ impairment linked to the future Operational EBIT excl. PPA 170.0 179.4 207.3 202.4 r
Slide 42: Strong improvement in free cash flow
Strong improvement in free Free cash flow m€ cash flow ▪ Free cash flow improved to 77m€ (2023: 35) 200 in Q1–Q3 + Higher operational results mainly in Media Finland 150 + Active working capital management across the business + Lower investments in prepublication costs partly driven 100 by Solar + L
Slide 43: Good progress in deleveraging the balance sheet
Good progress in Net debt m€ deleveraging the balance sheet 3.3 3.2 3.2 3.3 Long-term ▪ Net debt significantly lower vs. previous year target 2.9 2.9 <3.0 2.8 2.8 and end of June 2.4 ▪ Net debt / Adj. EBITDA improved to 2.4 (2023: 2.8), below the long-term target of < 3.0 ▪ Equity ratio at 40.8% (20
Slide 44: Refinancing improved the maturity of external debt
Refinancing improved the Maturity profile of external debt m€, 30 September 2024 maturity of external debt ▪ 150m€ Social Bond issued on 5 September – Maturity 3 years – Fixed interest rate 4.000% – Issue price 99.872% 100 – Funds used to finance or refinance expenditures, incl. improving access to
Slide 45: Outlook for 2024
Outlook for 2024 (narrowed on 31 October) ▪ In 2024, Sanoma expects that the Group’s reported net sales will be 1.32‒1.34bn€ (2023: 1.4) ▪ The Group’s operational EBIT excluding PPA is expected to be 170‒180m€ (2023: 175) ▪ Regarding the operating environment Sanoma expects that: – The advertising m
Slide 46: Key factors influencing 2024 performance
Key factors influencing 2024 performance Expected 2024 Long-term targets Learning financial impact y-o-y for SBUs unchanged ▪ Comparable net sales impacted by ▪ Organic growth − Lower cycle in Spain mitigated by growth in other learning content businesses ▪ Lower reported net 2−5% − Discontinuation
Slide 47: Appendix
Appendix
Slide 48: 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 48 Roadshow presentation November–December 2024
Slide 49: Sanoma in 2023
Sanoma in 2023 Learning Media Finland Net sales 795m€ Net sales 598m€ NET SALES Non-print 48% Non-print 54% 1,393m€ Margin 18.7% Margin 6.7% NON-PRINT SALES 51% Net sales, m€ Net sales, m€ Netherlands Subscription OPERATIONAL EBIT MARGIN Spain 12.6% Non-print advertising Poland Italy Print advertisi
Slide 50: Unchanged long-term targets in both businesses
Unchanged long-term targets in both businesses… In Learning, M&A has accelerated our In Media Finland, financial performance temporarily transformation impacted by uncertain operating environment 25% 700 20% 800 600 15% 20% 500 10% 600 15% 400 5% 400 300 0% 10% 200 -5% 200 134 132 148 5% 76 96 100 6
Slide 51: Good progress towards ambitious long-term targets of the Group
…and good progress towards ambitious long-term targets of the Group Our key long-term financial and sustainability targets (FY 2023 in brackets) Net debt / Equity Increasing Adj. EBITDA ratio dividend < 3.0 35−45% 40−60% (2.8) (42.5%) of free cash flow (58%) Employee Experience Management Annual Sco
Slide 52: Our Sustainability Strategy is designed to maximise our positive impact
Our Sustainability Strategy is designed to maximise our positive impact and minimise negative impacts Trustworthy data tive impact o Valued people si Po DE&I Target: Continuous f development Target: Employee programme Engagement Index (EEI) privacy and security training for Privacy by above 7.5 Desi
Slide 53: Group debt portfolio Q3 2024
Group debt portfolio Q3 2024 External debt structure 1) Maturity profile of external debt m€, 30 September 2024 m€, 30 September 2024 600 37 100 100 400 150 249 536m€ 1) 200 31 269 199 50 150 0 2024 2025 2026 2027 Term Loan 2022 Social Bond Term Loan 2022 RCF (fully unused) Term Loan 2023 Commercial
Slide 54: 150m€ hybrid bond was issued in March 2023
150m€ hybrid bond was issued in March 2023 ▪ 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
Slide 55: Largest shareholders
Largest shareholders 30 September 2024 Largest shareholders Holding by sector Number of % of Shareholders shares shares 1. Jane and Aatos Erkko Foundation 39,820,286 24.35 3% 13% 2. Holding Manutas Oy 21,870,000 13.37 Private companies 3. Langenskiöld Robin 12,273,371 7.50 17% 4. Seppälä Rafaela 7,6
Slide 56: 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 Joona Harja
Slide 57: 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 58: 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