Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (June 2024)
44 slides from Sanoma Oyj's roadshow presentation, June 2024
Slide 1: Unique sustainability profile with increasing profitability
Pictures to be changed Unique sustainability profile with increasing profitability Roadshow presentation May-June 2024
Slide 2: 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 ▪ We are a leading European K12 learning company serving 25 million students – Focusing on stable and resilient K12 market (ie. 6−18 year-olds) with high barriers to entry #1 – Teachers and schools are our primary
Slide 3: We have more than doubled Learning's net sales, creating a leading European K12 learning business
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 Pearson Ger
Slide 4: 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 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 Solar ▪ In Media Finlan
Slide 5: Sanoma's learning and media businesses have a unique sustainability profile
Sanoma’s learning and media businesses have a unique sustainability profile MSCI Sustainalytics A unique positive impact with… 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
Slide 6: We are #1 in K12 learning services in Europe
Learning 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 about 25 million students across Europe – Having a ~17% market share ▪ Teachers and schools are our primary customers – Teachers are key dec
Slide 7: 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 8: …while 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 9: 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 10: … 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 11: We are Finland's #1 digital media company with a weekly reach of 97%
Media Finland 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
Slide 12: … and 900k paying for digital subscriptions
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 13: 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 14: 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 15: 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 16: We have 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 17: 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 69
Slide 18: Deleveraging will be central to our near-term capital allocation
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 all
Slide 19: The Board proposes a dividend of 0.37€ per share
The Board proposes a Dividend per share € dividend of 0.37€ per share ▪ The Board proposes a dividend of 0.37€ (2022: 0.37) per share to be paid for 2023 – Representing a total of approx. 60m€ – Pay-out of 58% of underlying FCF ▪ To be paid in three parts following the seasonality in Sanoma’s free c
Slide 20: Three strategic focus areas to deliver increasing profitability and prepare for future growth
Summary Three strategic focus areas to deliver increasing profitability and prepare for future growth Focus areas in 2024−2026 1. Increasing profitability of Learning and Media Finland Our purpose Through learning 2. Growing organically and through and media, we have Our ambition smaller in-market a
Slide 21: Key takeaways
Key takeaways ▪ Aiming for the Group’s net sales to be over 2bn€ by 2030, with at least 75% coming from the learning business – Continued focus on M&A in Learning ▪ Learning achieving its long-term profitability target of 23% by 2026, supported by our increased scale ▪ Dividend continues to be an im
Slide 22: Financials
Financials
Slide 23: Improved performance in a seasonally small quarter
Q1 2024 Improved performance in a seasonally small quarter Net sales Organic net sales Operational EBIT Free cash Net debt / growth excl. PPA flow Adj. EBITDA 221m€ 5% -24m€ -44m€ 2.9 (2023: 218) (2023: -1%) (2023: -31) (2023: -68) (2023: 3.2) ▪ Net sales grew in Learning mainly as a result of earli
Slide 24: Learning: Improved performance in a seasonally small quarter
LEARNING Q1 2024 Operational EBIT excl. PPA Improved performance in a m€ seasonally small quarter ▪ Net sales grew to 81m€ (2023: 76) – Growth in most markets with some earlier ordering 20.1 % most notably in the Netherlands and Belgium 18.7 % 19.3 % – Divestment of Stark had -4m€ impact (full year
Slide 25: 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 26: Media Finland: Digital growth and lower paper costs supported earnings
MEDIA FINLAND Q1 2024 Operational EBIT excl. PPA Digital growth and lower paper m€ costs supported earnings ▪ Net sales amounted to 140m€ (2023: 142) – Advertising sales were stable as growth in digital compensated for the decline in print 11.2 % – Subscription sales grew driven by good development
Slide 27: Operational EBIT improved, although seasonally negative
Q1 2024 Operational EBIT excl. PPA Q1 2024 vs. Q1 2023 Operational EBIT improved, m€ although seasonally negative Learning + Higher net sales driven by earlier ordering + Active cost management + Lower paper and printing costs Media + Lower paper costs driven by both price and Finland volume develop
Slide 28: Improvement in operational and reported earnings
Improvement in operational Key income statement related items Q1 2024 and reported earnings ▪ IACs were positive at 2m€ (2023: -2) and consisted of m€ Q1 2024 Q1 2023 – Capital gain related to the Netwheels divestment Operational EBIT excl. PPA -23.7 -30.7 IACs 1.5 -2.4 – M&A integration costs PPAs
Slide 29: Leverage improved year-on-year
Leverage improved Net debt m€ year-on-year ▪ Net debt at 694m€ clearly lower year-on-year, Long-term 3.2 3.3 3.2 3.2 3.3 target although increased from year-end 2023 due to its <3.0 2.9 2.8 2.8 seasonal pattern 2.6 – Net debt / Adj. EBITDA improved to 2.9 (2023: 3.2) – Equity ratio at 42.0% (2023: 4
Slide 30: Free cash flow improved due to active working capital management
Free cash flow improved due Free cash flow m€ to active working capital management 200 ▪ Free cash flow improved to -44m€ (2023: -68) although being seasonally negative 150 + Higher operational results + Active working capital management 100 + Lower investments ‒ Higher interests paid 50 0 ➢ FY 2024
Slide 31: 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 32: Outlook for 2024 (unchanged)
Outlook for 2024 (unchanged) ▪ In 2024, Sanoma expects that the Group’s reported net sales will be 1.29‒1.34bn€ (2023: 1.4) ▪ The Group’s operational EBIT excluding PPA is expected to be 160‒180m€ (2023: 175) ▪ Regarding the operating environment Sanoma expects that: – The advertising market in Finl
Slide 33: Appendix
Appendix
Slide 34: 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 35: We are making good progress towards our ambitious long-term targets
We are making good progress towards our ambitious long-term targets 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 36: Our Sustainability Strategy is designed to maximise our positive impact and minimise negative impacts
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 37: Generative AI brings opportunities and new ways of working
Generative AI brings opportunities and new ways of working ▪ AI helps us become more efficient e.g. in editorial processes both in learning and media ▪ We have established clear guidelines and processes for the ethical use of AI In media, editorial use without compromising our In learning, many pote
Slide 38: 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 subs
Slide 39: Group debt portfolio in Q1 2024
Group debt portfolio in Q1 2024 ▪ 200m€ bond was paid back in Maturity profile External debt structure* March 2024 with a new 100m€ term m€, 31 March 2024 m€, 31 March 2024 loan and CPs ▪ In addition, maturity of the 300m€ Revolving Credit Facility was 109 extended to November 2026 100 249 300 100 5
Slide 40: 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 41: Largest shareholders
Largest shareholders 31 March 2024 Largest shareholders Holding by sector Number of % of Shareholders shares shares 1. Jane and Aatos Erkko Foundation 39,820,286 24.35 3% 12% 2. Holding Manutas Oy 21,870,000 13.37 Private companies 3. Langenskiöld Robin 12,273,371 7.50 17% 4. Seppälä Rafaela 7,654,7
Slide 42: 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 Kimmo Stenv
Slide 43: 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 44: 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