Sanoma Oyj · OMXHEX:SANOMA
Sanoma Oyj — FY2023 Earnings Presentation
36 slides from Sanoma Oyj's earnings presentation, Jul 18, 2024
Slide 1: Full-Year Result 2023
Full-Year Result 2023: Net sales growth and operational EBIT driven by strong performance in Learning Rob Kolkman, President & CEO Alex Green, CFO
Slide 2: FY 2023: Net sales growth and operational EBIT driven by 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 3: 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 4: …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 5: 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 6: 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 7: …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 8: 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 9: 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 10: 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 11: 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 Our purpose Through learning and media, we have 2. Growing organically and through smaller in-market acquisitions a positive im
Slide 12: 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 13: Financials
Financials Financials
Slide 14: Increased seasonality due to larger Learning business
Q4 2023 Operational EBIT excl. PPA Q4 2023 vs. Q4 2022 Increased seasonality due to m€ larger Learning business Learning − Normalised phasing between Q3 and Q4 compared to delayed deliveries in Spain and the Netherlands in 2022 + Different sales mix in Poland with larger share of higher margin sales
Slide 15: 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 16: 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 17: Refinancing in place for 200m€ bond maturing in March 2024
Refinancing in place for 200m€ Maturity profile of external debt m€, 31 December 2023 bond maturing in March 2024 ▪ 200m€ bond maturing in March 2024 will be paid back with – New 100m€ term loan that was signed in October and 100 will be drawn down in March – Maturity of the term loan is 12 months +
Slide 18: Q&A
Q&A Q&A
Slide 19: Financial reporting in 2024
Financial reporting in 2024 Annual Report 2023 week 10 AGM 2024 17 April Interim Report Q1 2024 8 May Half-Year Report 2024 24 July Interim Report Q3 2024 31 October 19 Full-Year Result 2023
Slide 20: Appendix
Appendix
Slide 21: 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 22: Group key figures Q4 2023
Group key figures Q4 2023 m€ Q4 2023 Q4 2022 Q4 2023 Q4 2022 Net sales 253.4 259.5 Average number of employees (FTE) 5,119 5,018 Operational EBITDA 27.8 45.3 Number of employees at the end of 5,017 5,079 margin 11.0% 17.4% the period (FTE) Operational EBIT excl. PPA -27.0 -2.3 margin -10.7% -0.9% EB
Slide 23: Group key figures FY 2023
Group key figures FY 2023 m€ FY 2023 FY 2022 FY 2023 FY 2022 Net sales 1,392.9 1,298.3 Average number of employees (FTE) 5,119 5,018 Operational EBITDA 358.3 355.4 Number of employees at the end of 5,017 5,079 margin 25.7% 27.4% the period (FTE) Operational EBIT excl. PPA 175.4 189.3 margin 12.6% 14
Slide 24: Learning: Quarterly key figures
Learning: Quarterly key figures m€ FY 23 FY 22 Q4 23 Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 Q1 22 Net sales 795.2 681.0 100.4 430.4 188.0 76.3 101.6 360.3 149.8 69.3 Operational EBITDA 237.6 212.8 -5.5 186.4 69.5 -12.9 4.8 150.7 58.6 -1.3 Operational EBIT excl. PPA 148.4 131.8 -30.6 164.3 48.3 -33.5 -1
Slide 25: Media Finland: Quarterly key figures
Media Finland: Quarterly key figures m€ FY 23 FY 22 Q4 23 Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 Q2 22 Q1 22 Net sales 597.8 618.1 153.1 149.9 153.4 141.5 158.0 154.8 163.7 141.6 Operational EBITDA 132.4 150.2 38.6 35.9 31.3 26.6 41.7 39.2 38.8 30.7 Operational EBIT excl. PPA 39.8 65.8 9.2 16.8 8.7 5.1 18.1
Slide 26: Finnish advertising market development 1/2
Finnish advertising market development 1/2 Finnish measured media advertising markets FY 23 Q4 23 Q3 23 Q2 23 Q1 23 FY 22 Q4 22 Q3 22 Q2 22 Q1 22 Newspapers -13% -13% -14% -11% -7% -7% -13% -7% -12% 0% Magazines -15% -14% -17% -22% -6% -11% -20% -5% -5% -14% TV -4% -6% -5% -4% -1% -3% -5% -4% -1% -2
Slide 27: Finnish advertising market development 2/2
Finnish advertising market development 2/2 Share of media advertising groups and development in 2023 (change % vs 2022) Newspaper (-13%) 6% 3% 12% Freesheets (-6%) 2% 3% Magazines (-14%) TV (-4%) 1,336m€ 16% Radio (-2%) Online incl. search and 53% 5% social media (+0%) Movies (+26%) Outdoor (+9%) Fa
Slide 28: Learning’s profitability to reach its long-term target of 23% in 2026 through program Solar
Learning’s profitability to reach its long-term target of 23% in 2026 through program Solar ▪ Program “Solar” aims to streamline Learning operations and processes – Brings full benefits from the increased scale of the Learning business Full margin potential will be ▪ Operational efficiencies amounti
Slide 29: Learning content sales vary driven by curriculum renewals in our major operating countries
Learning content sales vary driven by curriculum Learning 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 2024−2026 is a operating countries indexed to 2020 function of changes
Slide 30: Estimated amortisations of acquired intangible assets (PPA) of the Group
Estimated amortisations of acquired intangible assets (PPA) of the Group ▪ Acquired subsidiaries are consolidated using the Estimated amortisations of acquired intangible assets (PPA) 2023−2027 acquisition method, whereby the cost is allocated m€ to the acquired assets and liabilities assumed at the
Slide 31: We have a well-balanced debt portfolio
We have a well-balanced debt portfolio External debt structure 1) Maturity profile 2024–2026 m€, 31 December 2023 m€, 31 December 2023 800 1 600 100 200 400 250 300 551m€ 1) 100 200 200 200 0 50 2024 2025 2026 100 Bond Term Loan 2020 Term Loan 2022 Term Loan 2020 Bond Other loans Term Loan 2022 RCF
Slide 32: 150m€ hybrid bond was issued in March
150m€ hybrid bond was issued in March ▪ The bond seen as the best way to strengthen the balance sheet and 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 33: 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 34: 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 35: 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 36: Please contact our Investor Relations
Please contact our Investor Relations: Kaisa Uurasmaa, Head of IR & Sustainability +358 40 560 5601 | [email protected] [email protected] | www.sanoma.com