Sanoma Oyj · OMXHEX:SANOMA

Sanoma Oyj — Investor Presentation (November 2013)

61 slides from Sanoma Oyj's investor presentation, November 2013

  1. Slide 1: Sanoma Corporate Presentation November 2013

    Sanoma Corporate Presentation November 2013

  2. Slide 2: Market leader in chosen businesses and markets

    Market leader in chosen businesses and markets One of the leading media and Magazine publishing learning companies in Europe Newspaper publishing  #1 media company in Finland Learning Television the Netherlands and Finland Sweden Online operations  Among top 2 educational players Estonia Radio in

  3. Slide 3: Learning – leading player in Europe

    Learning – leading player in Europe #1 or #2 in markets where present Market: Sweden Market Position: #2 Sales: approx. EUR 25 m FTEs: approx. 60 Size of market: approx. EUR 90 m Market: Finland Sanoma Pro Sanoma Utbildning Market Position: #1 Sales: approx. EUR 55 m Market: Netherlands FTEs: approx

  4. Slide 4: Sanoma Redesign

    Sanoma Redesign SAN OM CMecauteaelle|

  5. Slide 5: Trends in consumer media

    Trends in consumer media Technology and weak economy driving industry change Changes in consumer behaviour Increased supply of content to consumers  Shift to screen-based devices  Aggregation models for digital platforms  New usage behaviour and occasions  Social media  Social media and sharing

  6. Slide 6: Industry in transformation – consumer media 1/2

    Industry in transformation – consumer media 1/2 Shifts in time and money Time spent across media (Finland and the Netherlands) min/day 800 CAGR 600 Online +40% 400 Linear TV -1% 200 Magazines & -9% newspapers 0 2006 2008 2010 2012 Source: SPOT tijdsbestedings onderzoek; TNS Gallup; IAB Europe. Share

  7. Slide 7: Industry in transformation – consumer media 2/2

    Industry in transformation – consumer media 2/2 Consumer media by platform  Printed media in challenging structural position Circulation market volume development (indexed) 100 – Growth in engagement and proven transformation path to digitalisation in newspapers 80 60 – New business logics in digit

  8. Slide 8: Industry in transformation – learning

    Industry in transformation – learning Learning – K12* educational market  Content market shown predictable development EMEA education text book market – Global spending on education ~6% of GDP, and growing development – Print text book market in gradual decline whereas digital EMEA textbook market

  9. Slide 9: Sanoma's starting point – consumer media 1/2

    Sanoma’s starting point – consumer media 1/2 Strong position to drive multichannel transformation in Finland and the Netherlands  Finland and the Netherlands Finland – Clear #1 in both advertising markets Sanoma #1 in newspapers Yle #1 in magazines – Strong assets in print, TV and digital Alma Medi

  10. Slide 10: Sanoma's starting point – consumer media 2/2

    Sanoma’s starting point – consumer media 2/2 Strong assets to grow digital offering – around core brands and standalone  Strong content, titles brands and communities in magazines – New business logics in digital moving forward, but still to be proven  Leading news brands and assets in Finland – G

  11. Slide 11: Sanoma's starting point – learning

    Sanoma’s starting point – learning At the forefront of transformation and well positioned to capture profitable growth #1 or #2 in all core markets Sanoma Pro Sanoma Utbildning  ~35% market share in our footprint, the 750M€ Finland Sweden Market position: #1 Market position: #2 K12* learning materi

  12. Slide 12: Sanoma's strategic choices

    Sanoma’s strategic choices Three criteria in redesigning Sanoma’s future business portfolio Improve business Reduce Restore balance mix complexity sheet health and investment capacity 12 November 2013 Corporate Presentation

  13. Slide 13: Sanoma's strategy

    Sanoma’s strategy At the core of our strategy is a renewal of our offering in consumer media and learning Strategic aspiration To be #1 in consumer media and learning in operating markets Strategic objectives Lead and grow strategic focus areas Transform and strengthen offering in the core Accelerat

  14. Slide 14: Key elements of Sanoma's strategy

    Key elements of Sanoma’s strategy Vision GET THE WORLD Strategic Win in two #1 consumer media company #1 learning company objectives segments in the Netherlands and Finland in all operating markets Lead and  Digitalise core brands to maintain #1 reach and  Expand from textbooks to services and sol

  15. Slide 15: Consumer media – speeding up transformation

    Consumer media – speeding up transformation Clarify portfolio and business focus, renew offerings, reduce costs, increase synergies and drive innovation  Platforms – planning renewal of offering Four consumer media platforms – TV, turnaround SBS and establish competitive digital offerings in non-li

  16. Slide 16: Digital consumer media portfolio

    Digital consumer media portfolio Sanoma Digital – Finland and the Netherlands Sanoma Digital unit will manage classifieds, Sanoma Baltics, Sanoma Finland and Sanoma Netherlands will manage digital digital content, and lead generation businesses assets of transformation businesses YIXX Sanoma Digital

  17. Slide 17: Basis for learning operational model

    Basis for learning operational model Expanding from textbooks to providing solutions and services  Transform and strengthen the core Offering – Focus on expanding from publishing to providing solutions and services Emerging markets Current operating which enhance learning outcomes and teaching work

  18. Slide 18: Cost savings programme planned to be extended

    Cost savings programme planned to be extended Targeting to save in total EUR 100 million  Group-wide cost savings programme Plan for the remaining cost savings communicated in 2012 programme – Targeting EUR 60 million gross  Around EUR 83 million (gross) savings  Cost savings likely to result in

  19. Slide 19: Planning blueprint of our future business structure

    Planning blueprint of our future business structure Three Strategic Business Units Sanoma Sanoma Sanoma Other Media Finland Media Netherlands Learning Sanoma Digital Sanoma Belgium Net sales EUR ~90 million Four consumer media platforms Sanoma RU&CEE TV & radio* Net sales Other operations** EUR ~330

  20. Slide 20: Environment & Outlook

    Environment & Outlook SAN OM CMecauteaelle|

  21. Slide 21: Print advertising markets remain weak

    Print advertising markets remain weak Market environment impacting financial performance  Market environment Advertising market** Change in % vs. prior year Netherlands Q1/2013 Q2/2013 Q3/2013 – Economy – subdued market conditions – Advertising – transformation from print to digital  Market enviro

  22. Slide 22: Advertising markets by category 9M/2013 vs. 9M/2012

    Advertising markets by category 9M/2013 vs. 9M/2012 Print advertising declining in all main categories, mixed development in online and TV Finland* (net development, change in %) Print Online TV Food -21 30 -9 Motor vehicles -11 -7 5 Other classified -8 32 -> 812 Real estate -14 -1 -31 Retail -24 21

  23. Slide 23: Group outlook for 2013

    Group outlook for 2013 Unchanged from the revised outlook published on 23 July 2013 In 2013, Sanoma expects that the Group’s consolidated net sales will decline more than 4% compared to 2012 and operating profit excluding non-recurring items is estimated to be below EUR 180 million. Sanoma’s outlook

  24. Slide 24: Group long-term financial targets (changed)

    Group long-term financial targets (changed) Financial targets Net debt / EBITDA* <3.5 Equity ratio 35–45% Gearing <100% Dividend per share >50% of the earnings per share excl. non-recurring items One-time investments and costs associated with transformation of business require Sanoma to pursue prude

  25. Slide 25: Financials

    Financials SAN OM CMecauteaelle|

  26. Slide 26: Quarter positively impacted by timing shifts

    Quarter positively impacted by timing shifts Q3 2013  Net sales for the Group EUR 568 million (600) – Media – continued deterioration of print advertising and circulation – News – continued deterioration of print advertising and circulation – Learning – sales decline mainly arising from market decl

  27. Slide 27: Income Statement

    Income Statement Q3 2013 Restated* Restated* Restated* EUR million 7–9/2013 7–9/2012 1–9/2013 1–9/2012 1–12/2012 Net sales 568.1 599.5 1,664.5 1,789.6 2,376.3 EBITDA excl. non-recurring items 138.4 144.1 355.4 404.3 518.1 of net sales 24.4% 24.0% 21.4% 22.6% 21.8% Amortisations related to programmin

  28. Slide 28: New strategic plans tested

    New strategic plans tested Impairment charges in Media segment  New business plans tested at the end of Q3 – WACC used in impairment testing Impairments driven by weak print advertising market and Media Netherlands Q3 2013: 6.8% overall economic development Q1 2013: 6.3% – Media Netherlands: EUR 26

  29. Slide 29: Net sales development

    Net sales development Q3 2013 EUR million 7-9/2013 7-9/2013 organic share of 2012 organic 599.5 -15.6 (%) growth net sales growth -5.8 Group -5.1 -3.3 -4.4 -5.6 568.1 Media -4.3 56.8 -5.8 News -5.9 16.3 -3.6 Learning -3.5 21.7 +8.6 Media: Advertising explained more than half of the decline. Lower ci

  30. Slide 30: EBIT excl. non-recurring items development

    EBIT excl. non-recurring items development Q3 2013 EUR million +1.3 -0.5 +0.3 -3.9 79.8 76.9 See slide 8 See slide 9 + Positively impacted by timing shift from Q4 to Q3 + Non-core operations improved profitability due to cost savings – Higher spending in digital development 7-9/2012 restated* Media

  31. Slide 31: Media – net sales and EBIT excl. non-recurring items

    Media – net sales and EBIT excl. non-recurring items Q3 2013 Net sales EUR million  Print advertising declined in all four strategic 338.1 business units -8.6 -4.9 -2.1 322.5  TV advertising sales was flat in Q3 in the Netherlands after -13% decline in H1 2013  Magazine circulation not offset by

  32. Slide 32: News – net sales and EBIT excl. non-recurring items

    News – net sales and EBIT excl. non-recurring items Q3 2013 Net sales EUR million  Sales declined due to weak print advertising market 98.3 -5.9 -1.3 +1.4 92.6  In Ilta-Sanomat digital advertising more than offset the decline in print business – digital represents more than half of total advertisi

  33. Slide 33: Free cash flow

    Free cash flow Cash flow from operations less cash CAPEX Restated* Restated* Restated* EUR million 7–9/2013 7–9/2012 1–9/2013 1–9/2012 1–12/2012 EBITDA excl. non-recurring items 138.4 144.1 355.4 409.2 523.0 TV programming costs -53.4 -45.4 -148.2 -134.4 -179.3 Prepublication costs -9.8 -8.8 -24.4 -

  34. Slide 34: Cost structure & savings programme

    Cost structure & savings programme  Gross margin – increased vs. comparable period Cost of sales split (EUR million) and Gross Margin Rolling 12 months  Fixed costs – lower in absolute terms 1400 70% Other cost of sales 1200 60%  Group-wide cost savings programme – targeting 1000 50% Purchased pr

  35. Slide 35: Seasonality between quarters visible in EBIT and cash flow

    Seasonality between quarters visible in EBIT and cash flow Net sales EBIT excl. non-recurring items Cash flow from operations (EUR million) (EUR million)* (EUR million)* 700 120 200 600 100 150 500 80 100 400 60 50 300 40 0 200 20 -50 100 0 0 -20 -100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 20

  36. Slide 36: Appendix 1: Sanoma's business units

    Appendix 1 Sanoma’s business units

  37. Slide 37: Organisational structure until the end of 2013

    Organisational structure until the end of 2013 President and CEO Harri-Pekka Kaukonen News Media Media Media Media Learning Pekka Soini Finland Netherlands Russia & CEE Belgium Jacques Eijkens Anu Nissinen Dick Molman Heike Rosener Aime van Hecke Strategy & digital Digital transformation operations

  38. Slide 38: Sanoma Media

    Sanoma Media Key figures EUR million 7–9/2013 4–6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 322.5 354.9 323.5 1,487.1 406.3 338.1 388.6 354.1 1,369.2 The Netherlands 164.7 184.6 157.2 760.4 207.2 173.5 208.1 171.6 642.0 Finland 67.5 73.7 69.6 301.7 82.2 65.4 76.7

  39. Slide 39: Sanoma Media Netherlands

    Sanoma Media Netherlands  Net sales 2012: EUR 760 million  Has an extensive portfolio with over 100 different brands in print, TV and online  Is the dominant player in the Dutch magazine market – Libelle, Margriet, LINDA., Donald Duck, Story, Veronica magazine  No 2 commercial TV player in the N

  40. Slide 40: Sanoma Media Finland

    Sanoma Media Finland  Net sales 2012: EUR 302 million  Around 40 quality titles and a readership of over 3 million – Finland’s number-one publisher of children’s and juvenile publications – Popular titles include Aku Ankka (Donald Duck), Kodin Kuvalehti, ET-lehti, Me Naiset  No 2 commercial TV pl

  41. Slide 41: Sanoma Media Belgium

    Sanoma Media Belgium  Net sales 2012: EUR 228 million  Operates in both the Dutch and French speaking markets  Market leader in women's magazines and TV titles (Libelle, TeVe-Blad, Story)  Has a number of popular internet sites in Belgium  33% of De Vijver – Free-to-air TV channels VIER and VIJ

  42. Slide 42: Sanoma Media Russia & CEE

    Sanoma Media Russia & CEE  Net sales 2012: EUR 200 million  Operates in several markets: Croatia, the Czech Republic, Hungary, Russia, Serbia and Ukraine  Publishes over 120 consumer magazines mainly targeted at women – Cosmopolitan, Men’s health, National Geographic  Online and mobile media pro

  43. Slide 43: TV – net sales and EBIT seasonality

    TV – net sales and EBIT seasonality 2010 - 2012 average for TV* Net sales split EBIT** split 13% 22% 29% 31% 39% 29% 20% 17% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes SBS Netherlands (excluding PPA amortization) and Nelonen Media Finland. **Excluding non-recurring items. 43 November 2013 Corporate Presentat

  44. Slide 44: Magazines – net sales and EBIT seasonality

    Magazines – net sales and EBIT seasonality 2010 - 2012 average for Magazines* Net sales split EBIT** split 19% 27% 24% 30% 30% 25% 24% 21% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes Dutch, Finnish, Belgium and Russian operations. **Excluding non-recurring items. 44 November 2013 Corporate Presentation

  45. Slide 45: Sanoma Media

    Sanoma Media Net sales EBIT excluding non-recurring items* EUR million EUR million 500 70 64 450 436 406 60 55 400 389 354 355 342338 50 47 350 324 311 323 40 38 300 280 32 250 30 27 25 23 24 23 200 20 150 10 100 -1 50 0 Q1 Q2 Q3 Q4 0 -10 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have

  46. Slide 46: Sanoma News

    Sanoma News Key figures EUR million 7–9/2013 4–6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 92.6 99.8 101.0 422.8 107.6 98.3 106.8 110.0 435.8 Helsingin Sanomat 50.0 53.0 56.3 224.9 57.1 52.2 56.2 59.3 238.5 Ilta-Sanomat 20.7 22.7 20.0 84.3 21.1 20.0 22.0 21.2 84.4

  47. Slide 47: Sanoma News

    Sanoma News  Net sales 2012: EUR 423 million  Finland represents 99% of the segment’s sales  Helsingin Sanomat and Ilta-Sanomat are the leading newspapers in Finland  Metro is the leading free sheet in Finland  Etelä-Saimaa, Kouvolan Sanomat and Kymen Sanomat are the leading regional papers  D

  48. Slide 48: News – net sales and EBIT seasonality

    News – net sales and EBIT seasonality 2010-2012 average for News Net sales split EBIT* split 26% 25% 24% 29% 19% 24% 25% 28% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Excluding non-recurring items. 48 November 2013 Corporate Presentation

  49. Slide 49: Sanoma News

    Sanoma News Net sales EBIT excluding non-recurring items* EUR million EUR million 120 112 112 16 108110 107 108 14 101 103 100 98 14 13 100 93 12 12 80 10 10 10 9 8 8 60 8 6 6 6 5 40 4 20 2 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have been restated due to a change in

  50. Slide 50: Sanoma Learning

    Sanoma Learning Key figures EUR million 7–9/2013 4–6/2013 1–3/2013 FY 2012 10–12/2012 7–9/2012 4–6/2012 1–3/2012 FY 2011 Net sales 123.0 103.5 45.7 312.4 35.5 127.4 111.1 38.4 290.6 Learning 123.0 103.7 45.7 306.4 35.5 127.4 109.3 34.2 256.6 Other businesses 6.5 0.0 0.0 1.8 4.6 36.1 Eliminations 0.0

  51. Slide 51: Learning – net sales and EBIT seasonality

    Learning – net sales and EBIT seasonality 2010-2012 average for learning* Net sales split EBIT** split in relative terms 13% 12% 34% 41% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 *Includes only learning business of the Learning segment. **Excluding non-recurring items. 51 November 2013 Corporate Presentation

  52. Slide 52: Sanoma Learning

    Sanoma Learning Net sales EBIT excluding non-recurring items* EUR million EUR million 140 60 127 123 47 49 50 50 120 111 110 43 104 40 36 97 31 100 30 80 20 60 10 44 46 38 39 36 0 40 -10 -6 -4 20 -20 -15 -20 -22 0 -30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 2011 2012 2013 * 2012 figures have been res

  53. Slide 53: Sanoma Learning

    Sanoma Learning  Net sales 2012: EUR 312 million  One of Europe’s largest providers of learning materials and solutions operating in Finland, Belgium, the Netherlands, Poland and Sweden  Among top 2 learning players in its all 5 operating countries  The roots of our educational publishing goes b

  54. Slide 54: Sanoma at the forefront and well positioned

    Sanoma at the forefront and well positioned Learning transformation still in infancy Sanoma at the forefront and well positioned Global textbook revenue by product type (USD million) Sanoma learning Print 30,000 business unit 53 % 25,000 Pro forma net sales 20,000 Services by type of sales 15,000 4%

  55. Slide 55: Organic expansion opportunity

    Organic expansion opportunity Total educational budget for the countries where we are present Learning materials This part of the budget will hardly grow because • Commoditization of content Addressable 1% or approx. EUR 0.75 billion • Demographic development Variable expenses (e.g. platforms, devel

  56. Slide 56: Learning net sales split (business unit)

    Learning net sales split (business unit) 2012 net sales Hungary 7% Sweden 8% Netherlands Belgium 28% 11% Finland 19% Poland 27% 56 November 2013 Corporate Presentation

  57. Slide 57: Appendix 2: About owners and coverage

    Appendix 2 About owners and coverage

  58. Slide 58: Sanoma – largest shareholders

    Sanoma – largest shareholders % of shares 31 Oct 2013 and votes 1. Jane and Aatos Erkko Foundation 23.02 23% 2. Robin Langenskiöld 7.54 3. Rafaela Seppälä 6.31 4. Antti Herlin (Holding Manutas Oy: 4.98%, 6.10 Security Trading 1.11%, personal: 0.02%) 5. Helsingin Sanomat Foundation 3.50 6. Ilmarinen

  59. Slide 59: Analyst coverage

    Analyst coverage  Carnegie Investment  Evli Bank  Inderes  Pohjola Bank Mikko Ervasti Sauli Vilén Kimmo Stenvall Matti Riikonen tel. +358 9 4766 9205 tel. +358 44 025 8908 tel. +358 10 252 4561 tel. +358 9 6187 1231 Evli.com Inderes.fi Pohjola.fi Carnegie.fi  FIM  Nordea  SEB Enskilda  Dansk

  60. Slide 60: Sanoma's IR team

    Sanoma’s IR team Mr Olli Turunen tel. +358 40 552 8907 [email protected] Ms Katariina Hed tel. +358 50 412 5120 [email protected] IR team’s joint email address: [email protected] 60 November 2013 Corporate Presentation

  61. Slide 61: 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

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