Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — Non-Deal Roadshow (March 2022)
54 slides from Sanoma Oyj's roadshow presentation, March 2022
Slide 1: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for further growth Roadshow presentation February-March 2022
Slide 2: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for ▪ We continue to grow Sanoma Learning, the leading European K12 learning further growth business ▪ We are the leading cross-media company in Finland and continue our successful digital transformation ▪ We have 300-400m€ headroom for M&A and focus on gr
Slide 3: Our two focused and leading businesses in brief
Our two focused and leading businesses in brief LEARNING MEDIA FINLAND Market leader in European K12 with strong Finland’s leading cross media company digital footprint and benefits of scale 637m€ 21.0% ~13% >20m 615m€ 11.9% ~50% 97% Net sales Oper. EBIT Market share students Net sales Oper. EBIT B2
Slide 4: We have accelerated our transformation
We have accelerated our transformation ≈ 800m€ invested More than 400m€ new, highly profitable net sales acquired Four acquisitions Two focused, Regional news Santillana, leading in K12 learning media business provider of K12 leading services in 2019 in Finland learning content businesses Iddink | I
Slide 5: Learning contributing close to 70% of Group earnings
Learning contributing close to 70% of Group earnings We have a balanced …B2C more than half of our Learning close to net sales profile with… media sales 70% of earnings Net sales by SBU Group net sales by category, % Operational EBIT excl. PPA by SBU 13% Other Non-print adv ~30% 30% 49% 51% 10% Prin
Slide 6: Learning and media have a positive impact on society
SANOMA SUSTAINABILITY STRATEGY Learning and media have a positive impact on society... 1. INCLUSIVE LEARNING 2. SUSTAINABLE MEDIA We develop inclusive learning solutions We provide trusted Finnish journalism and that help all students to reach their inspiring entertainment, now and in the future pot
Slide 7: Sanoma is a sustainable investment with solid ESG performance
…and Sanoma is a sustainable investment with solid ESG performance MSCI rating Sustainalytics risk rating CDP score ISS rating AA 9.8 B C Scale 0–100, Scale AAA – CCC Scale A – D- Scale A – D lower score = lower risk Aligned with Signatory of Science UN SDGs UN Global Based Targets Compact Sustainab
Slide 8: We continue to grow Sanoma Learning with strong focus on K12 learning services
We continue to grow Sanoma Learning with strong focus on K12 learning services… ▪ We focus on growing our K12 learning services – K12 being primary, secondary and vocational education – Learning services being blended learning content (print & digital), digital platforms for teaching and administrat
Slide 9: We are the leading European K12 player in a highly fragmented market
… and we are the leading European #1 player in a highly fragmented market #2 ▪ European K12 learning services market ‒ Fragmented market of approx. 4-5bn€ ‒ Serving a total of about 75 million students #1 #1 ▪ Our annual net sales of around 600m€ #1 represent a market share of only about 13% – Alrea
Slide 10: Strategic levers support our growth ambitions
Strategic levers support our growth ambitions Our growth levers M&A: enter new geographies 3 in K12 and expand our offering in existing markets 2-5% p.a. organic growth target Increase value per student 2 through extending offerings, Classroom as a Service Grow market share 1 by continuing to win in
Slide 11: Greater integration of products and digital services creates shift towards subscription model
Greater integration of products and digital services creates shift towards attractive subscription model Greater benefits for all through subscription State of maturity of the various countries ▪ For students: more up-to-date materials, books can be retained, notes in books improves learning impact
Slide 12: We continue to grow our learning business through M&A
We continue to grow our learning business through M&A M&A headroom ▪ We have a well-developed pipeline and a good momentum for further acquisitions 300-400m€ – Focus on K12 learning services by end of 2022 – Both learning content and digital platform businesses – Entering new geographies and expandi
Slide 13: Early closing and successful start of integration of Santillana
Early closing and successful start of integration of Santillana ▪ Acquisition of Santillana, the leading provider of learning materials, primarily textbooks, for primary and secondary education in Spain, was closed Net sales split 2020 K-12 on 31 December 2020 ~90% ▪ Net sales of 106m€ and standalon
Slide 14: Sanoma is the leading media company in Finland successful in its digital transformation
Sanoma is the leading media company in Finland successful in its digital transformation ▪ Focused media company with scale – Focus: News & feature, entertainment and B2B marketing solutions – Highly synergistic, bolt-on acquisitions could be considered ▪ Increasing share of consumer income and subsc
Slide 15: Subscriptions growing for the fourth year in a row with strong growth in digital
CASE HELSINGIN SANOMAT Subscriptions growing for the fourth year in a row with strong growth in digital +1% annual growth in HS subscription base ▪ HS total number of subscriptions over 440k ▪ Number of digital-only subscriptions nearly 150k, 400k 30% of total subscription base 35% – Already more th
Slide 16: Digital transformation increases profit contribution per incremental subscriber, but reduces net sales
Digital transformation increases profit contribution per incremental subscriber, but reduces net sales ▪ Acquiring an additional subscriber Net sales per additional … but profit contribution for digital instead of printed news will subscription1 reduces… increases1 – Generate 50% the net incremental
Slide 17: Our digital transformation is driven by a unique combination of success factors
Our digital transformation is driven by a unique combination of success factors, shared between businesses Success factors across our units Excellent digital Subscription sales B2C and B2B News & feature customer management and cross-sales of experience different products to enable easy use and buyi
Slide 18: Solid dividend for our shareholders while growing through M&A
Solid dividend for our shareholders while growing through M&A ▪ The Board proposes a dividend of 0.54€ Dividend per share (2020: 0.52) per share to be paid for 2021 € – Representing a total of approx. 88m€ ▪ To be paid in two parts – 0.27€ on 20 April (record date 11 April) – 0.27€ in November (reco
Slide 19: Two focused and leading businesses poised for further growth
Two focused and leading businesses poised for ▪ We continue to grow Sanoma Learning, the leading European K12 learning further growth business ▪ We are the leading cross-media company in Finland and continue our successful digital transformation ▪ We have 300-400m€ headroom for M&A and focus on gr
Slide 20: 2021 Financials
2021 Financials
Slide 21: FY2021: Strong growth in net sales and operational EBIT in both businesses
FY2021: Strong growth in net sales and operational EBIT in both businesses Net sales Comparable net Operational EBIT Operational EBIT Free cash Net debt / sales growth excl. PPA margin excl. PPA flow Adj. EBITDA 1,252m€ 7% 197m€ 15.8% 140m€ 2.4 (2020: 1,062) (2020: -4%) (2020: 157) (2020: 14.7%) (20
Slide 22: Successful year with strong growth in a pandemic environment
Successful year with strong growth in a pandemic environment Integration of the acquired businesses proceeded successfully ▪ Santillana in Spain ▪ Regional news media business in Finland Digitalisation continued to support business transformation ▪ In Learning, continuing positive impacts especially
Slide 23: Organic growth and Santillana acquisition drove net sales
LEARNING FY 2021 Organic growth and Santillana acquisition drove net sales… ▪ Net sales grew by 28% to 637m€ (2020: 500) – Comparable growth was 7% (2020: 5%), above our long-term target of 2-5% – Santillana contributed 101m€ ▪ Learning material sales grew across all markets, strongest growth in Pol
Slide 24: …and resulted in strong profitability improvement
LEARNING FY 2021 … and resulted in strong profitability improvement Long-term ▪ Operational EBIT excl. PPA Solid organic growth and earnings improvement financial targets grew by 40% to 134m€ m€ Margin (2020: 96) following the net 700 25% above sales growth 600 23% 20% – Majority of the improvement
Slide 25: Solid net sales growth…
MEDIA FINLAND FY 2021 Solid net sales growth… ▪ Net sales grew by 9% to 615m€ (2020: 563), organic growth 7% ▪ Solid growth in subscription sales – Number of HS subscriptions grew by 1% y-o-y, more than 70% of HS subscriptions generate digital revenues – Number of Ruutu+ subscriptions grew by 15% y-
Slide 26: …and corresponding earnings improvement
MEDIA FINLAND FY 2021 …and corresponding earnings improvement Long-term ▪ Operational EBIT excl. PPA Solid top-line and profitability development financial targets increased by 10% to 74m€ m€ Margin (2020: 67), margin stable at 700 20% 11.9% (2020: 11.8%) 600 15% 12-14% – Earnings improvement driven
Slide 27: Outlook for 2022
Outlook for 2022… ▪ In 2022, Sanoma expects that the Group’s reported net sales will be 1.25‒1.30bn€ (2021: 1.25). ▪ The Group’s operational EBIT margin excluding PPA is expected to be between 15−16% (2021: 15.8%). Regarding the operating environment Sanoma expects that: – The continuing coronavirus
Slide 28: Continued solid performance and strong pipeline of acquisition opportunities
….continued solid performance and strong pipeline of acquisition opportunities ▪ Learning market curriculum changes: Long-term targets unchanged Growth in Spain in 2022−23 expected to compensate the 2022 decline in Poland ▪ Finnish advertising market: Showing Learning continued strength similar to 2
Slide 29: Alex Green appointed as new CFO
Alex Green appointed as new CFO ▪ Alex Green will start in his position on 1 March 2022 ▪ He will be – responsible for the Group’s Finance Functions – member of Sanoma’s Executive Management Team – reporting to the President & CEO Susan Duinhoven ▪ He joins Sanoma from eBay, where he has worked as C
Slide 30: Strong earnings growth driven by organic net sales growth and acquisitions
2021: Strong earnings growth driven by solid organic net sales growth and acquisitions in both businesses Learning + Acquisition of Santillana Operational EBIT excl. PPA FY 2021 vs. FY 2020 + Organic growth across main markets, in m€ particular Poland and the Netherlands Media + Growth in B2B Finlan
Slide 31: Free cash flow improved significantly
Free cash flow improved significantly ▪ Free cash flow improved to 140m€ (2020: 95) ▪ Operational impacts Free cash flow + Improved EBITDA both in Learning and Media Finland m€ + Solid free cash flow of Santillana – Higher taxes 140 ▪ Non-operational impacts 131 + Negative free cash flow of divested
Slide 32: Leverage continued to improve
Leverage continued to improve ▪ Net debt / Adj. EBITDA was 2.4 (2020: 2.6) Net debt m€ ▪ Equity ratio was 40.6% (2020: 37.4%) 3.0 3.1 Long-term target < 3.0 2.6 2.8 ▪ Net financial expenses 2.7 2.6 2.5 2.4 – Q4 2021: Positive 1m€ (2020: -2) due to change in fair value of a liability related to earli
Slide 33: Strong progress towards our long-term financial targets
Strong progress towards our long-term financial targets GROUP Long-term target 31 Dec 2021 Net debt / adj. EBITDA below 3.0 2.4 Equity ratio 35-45% 40.6% Increasing dividend Dividend 40-60% 55% of free cash flow LEARNING FY 2021 Comparable net sales development 2-5% 7% Operational EBIT margin excl.
Slide 34: Largest shareholders
Largest shareholders 31 December 2021 Largest shareholders Holding by sector Number of shares 3% 1. Jane and Aatos Erkko Foundation 39,820,286 24.4% 19,861,800 12.1% 15% 2. Antti Herlin 16% Holding Manutas Oy: 12.10% personal: 0.02% 3. Robin Langenskiöld 12,273,371 7.5% 4. Rafaela Seppälä 10,273,370
Slide 35: Appendix: Learning
Appendix: Learning
Slide 36: In learning materials, modest market growth expected over the cycle
In learning materials, modest market growth expected over the cycle ▪ In Poland, fluctuations due to the Value of K12 publishing market* educational reform ending in 2021 120 Spain ▪ In Spain, the LOMLOE reform is 115 Poland Netherlands driving fluctuation in 2022-2023 110 ▪ Dutch market will be mod
Slide 37: Market leader in European K12 with strong digital footprint
LEARNING: Market leader in European K12 with strong digital footprint and benefits of scale ▪ Upgrading long-term profitability target to ‘above 23%’ operational EBIT margin excl. PPA ▪ Successfully executing on M&A strategy ▪ Increasing attractiveness due to conversion from single product to subscr
Slide 38: We are a focused European provider of K12 learning products and services
We are a focused European provider of K12 learning products and services 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 prod
Slide 39: We have developed as a publisher of learning materials into an integrated provider
We have developed as a publisher of learning materials into an integrated provider… Commercial contact Learning products Net sales share* Teachers Administrators & services Blended learning content 60% Material distribution 25% Digital platforms for teaching 5% Digital platforms for administration 5
Slide 40: Significant increase in usage on platforms during the corona pandemic
… with significant increase in usage on platforms supporting teachers during the corona pandemic ▪ Platforms performed well Usage of selected Sanoma Learning platforms in 2020 Magister to deal with increased Key functionalities, indexed to pre-corona period (09 2019 – 02 2020) Itslearning Itslearnin
Slide 41: Sanoma Learning has been successfully built through M&A
Sanoma Learning has been successfully built through M&A the Netherlands, Belgium, Spain Finland Spain Finland Belgium Sweden the Netherlands Spain 1999 2004 2008 2011 2016 2019 2020 the Netherlands 9 countries Poland De Boeck Belgium Spain 41 Roadshow presentation February-March 2022
Slide 42: Appendix: Media Finland
. il Appendix: Media Finland TT! at”
Slide 43: Leading media company successful in digital transformation
▪ Leading positions in news & features, entertainment and B2B marketing solutions ▪ Rapidly increasing digital subscriptions ▪ Stable net sales (+/-2%*) and improving profitability (12-14%*) MEDIA FINLAND: ▪ Important role in Finnish society: Leading media company independent journalism and successf
Slide 44: We have leading positions in news & feature, entertainment and B2B marketing solutions
We have leading positions in news & feature, entertainment and B2B marketing solutions ▪ Sustainable demand ▪ Our strong history and position #1 in domestic, ▪ Proven track record in digital independent journalism News & feature transformation ▪ Increasing consumer revenue #1 in domestic entertainme
Slide 45: In 2021, we continued to implement our digital transformation strategy
In 2021, we continued to implement our digital transformation strategy Strong digital growth Focus on core business Helsingin Sanomat (HS) 70% ▪ Combined News & Feature out of over 440k subscriptions organisation in place and include a payable digital showing strategic benefits of element (+3% YoY)
Slide 46: #1 in Finnish journalism, further strengthened by acquired regional news media
NEWS & FEATURE #1 in Finnish journalism, further strengthened by acquired regional news media Leading national and regional news media Focus on ▪ Growing digitally active subscription base ▪ Growing daily national reach 46 Roadshow presentation February-March 2022
Slide 47: Integration and synergy capture proceeding to plan
CASE REGIONAL MEDIA Integration and synergy capture proceeding to plan Background Synergy realisation ▪ On 30 April 2020, Sanoma acquired Alma Media’s on track to achieve regional news media business in Finland full run rate net synergies of Deal rationale 13m€ by 2022 ▪ Highly synergistic bolt-on a
Slide 48: We have leading positions in our selected areas
ENTERTAINMENT We have leading positions in our selected areas TV & video Radio & audio Live events Our market positions #1-2 #2 #1 48 Roadshow presentation February-March 2022
Slide 49: Increasingly stronger position also in the SME segment
B2B MARKETING SOLUTIONS Increasingly stronger position also in the SME segment SME (small and mid-size enterprise) Market share per customer segment* 2020 customers – significant potential to grow ▪ Our market share in SME is relatively low Large customers (~15% vs. over 30% in large customers) >30%
Slide 50: Long-term digital transformation of media continues
Long-term digital transformation of media continues – corona accelerating digital adoption both in B2C and B2B Finnish media market outlook Market drivers long-term ▪ Consumer willingness to pay for high-quality news, video and audio on a subscription basis is growing +19% +12% +15% ▪ Increasing int
Slide 51: Analyst coverage
Analyst coverage Carnegie Investment Bank Pia Rosqvist-Heinsalmi +358 9 6187 1232 Danske Markets Equities Panu Laitinmäki +358 10 236 4867 Inderes Petri Gostowski +358 40 821 5982 Kepler Cheuvreux Stefan Billing +46 8 723 51 48 Nordea Sami Sarkamies +358 9 5300 5176 OP Corporate Bank Kimmo Stenvall
Slide 52: Financial reporting in 2022
Financial reporting in 2022 Annual Report 2021 Week 9 (incl. Financial Statements and Report of the Board of Directors, Sustainability Report, Remuneration Report and Corporate Governance Statement) AGM 2022 Thursday 7 April Interim Report Q1 2022 Friday 29 April Half-Year Report 2022 27 July Interi
Slide 53: 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 54: 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