Editoria e Media
Sanoma Corporation, Half-Year Report January-June 2023: Net sales grew, operational EBIT supported by solid Learning performance
Sanoma Corporation, Stock Exchange Release, 26 July 2023 at 8:30 EET
Sanoma Corporation, Half-Year Report January -June 2023: Net sales grew, operational EBIT supported by solid Learning performance
This release is a summary of Sanoma's Half-Year Report January-June 2023. The complete report is attached to this release and is also available at www.sanoma.com/en/investors.
Q2 2023
H1 2023
Outlook for 2023 (unchanged)
In 2023, Sanoma expects that the Group's reported net sales will be EUR 1.35‒1.4 billion (2022: 1.3). The Group's operational EBIT excl. PPA is expected to be EUR 150−180 million (2022: 189).
Regarding the operating environment, Sanoma expects that:
President and CEO Susan Duinhoven:
”Sanoma's financial performance in the second quarter was solid. In Learning, it was positively impacted by the strong development related to the LOMLOE curriculum renewal in Spain, which we expect to continue also in the third quarter. Learning content sales grew also in the Netherlands, Finland and Belgium driven by the higher-than-usual price increases we have successfully implemented across our operating countries. The increases have been understood well by our customers, and so far we have seen them having an expected, only moderate impact on sales volumes. A good example of this is Finland, where the organic growth of the already important second quarter sales season amounted to 5%. For the full year, we expect the organic growth in Learning to be at the higher end of the long-term target of 2−5%, including the impact of optimising the Dutch distribution business by discontinuing the loss-making contracts and the positive effects of the ongoing curriculum renewal in Spain. In Italy, the integration has continued successfully according to our plans, and the first half net sales were in-line with the previous year, meeting our expectations. As the curriculum renewal cycles in Spain and Poland are coming to an end this year, we are planning to optimise our capacity and operations in those countries to better adapt to the current operating environment and the normalising demand.
In Media Finland, declining advertising sales and cost inflation continued to have an adverse impact on earnings. A slight decrease in subscription sales continued, as price increases did not fully offset the impact of the slightly lower subscription base and the divestment of Supla audiobooks in March. Our teams have continued their business development activities and brought new ideas to the market also during the first half of this year. One example of this is the launch in June of the free ad-supported streaming service Pluto TV as part of Finland's leading local AVOD streaming service Ruutu. Pluto TV offers the audience exclusively 35 new streaming channels and has been received well with more than 800,000 starts by a large number of users already during the first weeks. We are now also seeing some costs being past their peak. For example, paper prices started to decline in the market, and even though their absolute level is still high, going forward we expect to see a positive impact on our financial performance with some delay.
Our free cash flow improved significantly during the second quarter although being seasonally negative due to the nature of the learning business. We took actions to mitigate the impact of the increased seasonality resulting from our recent acquisitions, and for example introduced pre-payments more widely in the Dutch distribution business as well as focused on earlier invoicing and collections across our Learning businesses. For the full year, we still expect the underlying free cash flow, excluding the previous year's positive impact of the acquired Italian business, to remain stable. At the end of June, our leverage (net debt/Adj. EBITDA) of 3.3 was at its typical seasonal peak slightly above the long-term target level of below 3.0.
After the first half of the year, our Outlook for 2023 remains unchanged. In Learning, our teams are fully prepared for the third quarter high season, and we expect the solid development in Learning driven by Spain and the Netherlands to offset the uncertainty related to the second half advertising sales in Media Finland.
I would like to greatly thank all our employees for the agility and perseverance they have shown during the first half of the year working with our customers in adapting to higher inflation and interest rate environment. Together, we are starting the high season in Learning and the important second half of the year in Media Finland with solid confidence. We are committed to our strategy to serve our customers to the best of our abilities and we are keen to grow our K12 learning business further through organic growth and targeted acquisitions.”
Key indicators
Excluding IACs
Excluding IACs and purchase price allocation adjustments and amortisations (PPAs)
Advances received included in the formula of equity ratio were EUR 175.1 million in H1 2023 (2022: 157.7).
Analyst and investor conference
An analyst and investor conference will be held in English by the President and CEO Susan Duinhoven and CFO Alex Green at 11:00 EET at Sanomatalo, Flik Studio Eliel, 1st floor, Töölönlahdenkatu 2, Helsinki.
The conference can be followed as a live webcast at https://sanoma.videosync.fi/q2-2023-results.
Management presentation is followed by a Q&A session. Questions can be placed through the webcast chat function or by phone. To ask questions by phone, the participant is required to register at https://palvelu.flik.fi/teleconference/?id=10010426. After the registration you will receive the phone number and conference ID to access the conference. If you wish to ask a question, please press *5 on your telephone keypad to enter the queue.
An on-demand replay of the webcast will be available shortly after the conference at www.sanoma.com/en/investors.
Interview opportunities for media by Teams or by phone are available after the conference. Media representatives are asked to book interviews via Communications Manager Sanna Sandvall sanna.sandvall@sanoma.com.
Additional information
Kaisa Uurasmaa, Head of Investor Relations and Sustainability, tel. +358 40 560 5601
Sanoma
Sanoma is an innovative and agile learning and media company impacting the lives of millions every day. Our Sustainability Strategy is designed to maximise our positive 'brainprint' on society and to minimise our environmental footprint. We are committed to the UN Sustainable Development Goals and signatory to the UN Global Compact.
Our learning products and services enable teachers to develop the talents of every child to reach their full potential. We offer printed and digital learning content as well as digital learning and teaching platforms for primary, secondary and vocational education, and want to grow our business.
Our Finnish media provide independent journalism and engaging entertainment also for generations to come. Our unique cross-media position offers the widest reach and tailored marketing solutions for our business partners.
Today, we operate in twelve European countries and employ more than 5,000 professionals. In 2022, our net sales amounted to approx. 1.3bn€ and our operational EBIT margin excl. PPA was 14.6%. Sanoma shares are listed on Nasdaq Helsinki. More information is available at sanoma.com .
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