Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (March 2024)
42 slides from Sanoma Oyj's roadshow presentation, March 2024
Slide 1: Unique sustainability profile with increasing profitability
Pictures to be changed Unique sustainability profile with increasing profitability Roadshow presentation February−March 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: 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 4: 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 5: 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 6: 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 Sc
Slide 7: 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 10.9 Scale 100-0, targets and solid ESG performance Scale CCC to AAA lower
Slide 8: 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 more than 25 million students in 12 European countries – Having a ~17% market share ▪ Teachers and schools are our primary customers – Teach
Slide 9: 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 10: 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 11: 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 12: 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 13: 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 14: We are 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 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 21: Outlook for 2024
Outlook for 2024 ▪ 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 Finland will dec
Slide 22: 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 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 acquisiti
Slide 23: 2030 growth ambition and long-term financial targets unchanged
2030 growth ambition and long-term financial targets unchanged ▪ We are aiming for the Group’s net sales to be over 2bn€ by 2030, with at least 75% coming from the learning business – Over the cycle, organic growth in-line with long-term targets in Learning and Media Finland – In Learning, focus on
Slide 24: Financials
Financials Financials
Slide 25: Net sales growth and operational EBIT driven by strong performance in Learning
FY 2023 Net sales growth and operational EBIT driven by strong performance in Learning Net sales Organic net sales Operational EBIT Operational EBIT Free cash Net debt / growth excl. PPA margin excl. PPA flow Adj. EBITDA 1,393m€ 2% 175m€ 12.6% 105m€ 2.8 (2022: 1,298) (2022: 1%) (2022: 189) (2022: 14
Slide 26: Learning: Strong net sales growth
LEARNING FY 2023 Strong net sales growth… ▪ Net sales grew by 17% to 795m€ (2022: 681) – Organic growth of 6% driven by all major learning content markets ▪ 18% growth in Spain following the successful implementation of the final phase of the LOMLOE curriculum renewal ▪ 15% growth in Poland resultin
Slide 27: Learning: led to solid earnings
LEARNING FY 2023 Operational EBIT excl. PPA …led to solid earnings m€ improvement ▪ Operational EBIT excl. PPA increased to 148m€ (2022: 132) 21.0 % 19.5 % 19.8 % 20.1 % – Successful implementation of the final phase of the 19.4 % 18.7 % LOMLOE curriculum renewal in Spain and minor 17.1 % 17.2 % 164
Slide 28: 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 29: Media Finland: Advertising had an adverse impact on net sales
MEDIA FINLAND FY 2023 Advertising had an adverse impact on net sales… ▪ Net sales declined slightly to 598m€ (2022: 618) – Advertising sales declined by 7% mostly due to newsprint and TV ▪ Digital advertising sales continued to grow ▪ Share of print advertising decreased to 8% of Media Finland’s net
Slide 30: Media Finland: resulting in lower earnings
MEDIA FINLAND FY 2023 …resulting in lower earnings Operational EBIT excl. PPA m€ ▪ Operational EBIT excl. PPA decreased to 40m€ (2022: 66) according to expectations 13.3 % – Majority of the impact from lower advertising sales – Personnel costs increased due to salary inflation and 10.5 % 11.4 % 11.2
Slide 31: Solid improvement in the underlying free cash flow
Solid improvement in the Free cash flow m€ underlying free cash flow ▪ Free cash flow in 2023 was 105m€ (2022: 112) 200 + Active working capital management in Learning + Lower taxes 150 + Lower capital expenditure ‒ Higher financing costs 100 ‒ Lower earnings in Media Finland ‒ Impact of the Italian
Slide 32: Leverage remains below the long-term target level
Leverage remains below Net debt m€ the long-term target level ▪ Net debt amounted to 640m€ and decreased both Long-term 3.2 3.3 3.2 3.2 3.3 target vs. PY and end of Q3 in-line with the annual <3.0 2.8 2.8 seasonality of Learning 2.6 – Net debt / Adj. EBITDA at 2.8 (2022: 3.2) 2.4 – Equity ratio impr
Slide 33: 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 1) ▪ To be paid in three parts following the seasonality in Sanoma’s fre
Slide 34: Appendix: Sanoma Group
Appendix: Sanoma Group
Slide 35: 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 36: 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 37: We have refinancing in place for 200m€ bond maturing in 2024
We have refinancing in place for 200m€ bond maturing in 2024 ▪ 200m€ bond maturing in March Maturity profile External debt structure* 2024 will be paid back with m€, 31 December 2023 m€, 31 December 2023 – New 100m€ term loan that was signed in October and will be drawn down in March 1 – Maturity of
Slide 38: 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 39: Largest shareholders
Largest shareholders 30 December 2023 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 21,585,000 13.2 3. Langenskiöld Robin 12,273,371 7.5 17% Private companies 4. Seppälä Rafaela 7,654,
Slide 40: 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 41: 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 42: Please contact our Investor Relations
Please contact our Investor Relations: Kaisa Uurasmaa, Head of IR & Sustainability M +358 40 560 5601 E [email protected] [email protected] www.sanoma.com