Editoria e Media
Sanoma Corporation, Interim Report 1 January‒30 September 2023: Solid growth in net sales and operational EBIT in Learning
Sanoma Corporation, Stock Exchange Release, 26 October 2023 at 8:30 EET
Sanoma Corporation, Interim Report 1 January‒30 September 2023: Solid growth in net sales and operational EBIT in Learning
This release is a summary of Sanoma's Interim Report 1 January‒30 September 2023. The complete report is attached to this release and is also available at www.sanoma.com/en/investors.
Q3 2023
Q1-Q3 2023
Outlook for 2023 (narrowed)
In 2023, Sanoma expects that the Group's reported net sales will be EUR 1.38‒1.4 billion (2022: 1.3). The Group's operational EBIT excl. PPA is expected to be EUR 165−175 million (2022: 189).
Regarding the operating environment, Sanoma expects that:
Previous outlook (given 10 February)
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:
”Our performance during the third quarter high season in Learning was solid. The successful second year of the LOMLOE curriculum renewal in Spain, a minor curriculum renewal in Poland and the successful implementation of the inflation mitigating price increases across our operating countries led to strong 7% organic growth for the whole Learning SBU and 10% for the learning content business in January−September. In Spain, the growth in the final phase of the LOMLOE curriculum renewal included some shift from 2024, and the third quarter sales were further accelerated by a much earlier sales cycle compared to the previous year. In the Netherlands, solid growth in learning content sales was offset by the planned discontinuation of loss-making distribution contracts. In Italy, both the integration and the high season sales and financial performance proceeded successfully and in accordance with our plans.
In Learning, we have initiated a segment-wide process and efficiency improvement programme, named 'Solar', to ensure that we use the benefits from our increased scale and the best practices from our recent acquisitions in an optimal way. First implementation phase of Solar is already underway with focus on the post-curriculum optimisation especially in Spain and Poland. Supported by Program Solar, Learning's operational EBIT margin excl. PPA is expected to reach its long-term target level in 2026.
In Media Finland, comparable subscription sales grew modestly as a result of price increases, while the subscription base declined slightly. The team continued to launch good initiatives to extend our customer offering across the business. Cooperation with Elisa, started in September, is an example of a joint initiative of two strong Finnish players to enhance the local VOD content. It is further enhancing Ruutu's offering and strengthening its position as the go-to local VOD service. In the challenging operating environment, decline in advertising demand continued, and had an expected adverse impact on Media Finland's earnings.
Higher comparable sales in Learning and active working capital management across the businesses had a sizable positive impact on our free cash flow, while it was adversely impacted by the acquired Italian business, which has a seasonally negative operating cash flow during the first three quarters of the year. For the full year 2023, we expect the free cash flow excluding the acquired Italian and German businesses to be somewhat higher compared to 2022, and thus better than earlier indicated.
Our leverage improved compared to the end of June 2023, and at 2.8 was within our long-term target of below 3.0. The improvement was in line with the annual seasonality of the learning business, supported by the hybrid bond issued in March. In October, we announced the signing of an EUR 100 million term loan that, in conjunction with our existing funding facilities, will be used to repay the EUR 200 million bond in March 2024. In the current interest rate environment, we consider this as the most flexible and efficient option to refinance the bond. We have also extended the maturity of our EUR 300 million Revolving Credit Facility by one year to November 2026. We are pleased with the wide variety of options for this refinancing offered by our relationship banks, indicating their solid support to our K12 learning services growth strategy.
With our solid performance during the first nine months and the high season in Learning mostly behind us, we are now in a position to narrow the range of our Outlook for 2023 to the upper end of the original range. The advertising market in Finland remains challenging with relatively low visibility, but thanks to the strong performance of our teams in implementing successful mitigation actions, we expect Media Finland's full year earnings to meet the expectations indicated earlier. Together, Program Solar in Learning and continuing optimisations in Media Finland will be the centre of our success in the coming 2−3 years, combined with small in-market acquisitions and deleveraging of the balance sheet.
I would like to extend my warmest thanks to all Sanoma employees for their great work in supporting our customers, creating unique and impactful content as well as constantly improving our ways of working, thus ensuring solid financial performance under the current complex economic environment.”
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 174.1 million in Q1-Q3 2023 (2022: 164.2).
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, 9th floor, Töölönlahdenkatu 2, Helsinki. Access to the investor conference takes place through Sanoma's reception.
The conference can be followed as a live webcast at https://sanoma.videosync.fi/q3-2023-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 http://palvelu.flik.fi/teleconference/?id=10010427. 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 Director Marcus Wiklund marcus.wiklund@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 .
Attachment
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti