Sanoma Corporation, Half-Year Report 1 January–30 June 2024: Strong earnings improvement in both Learning and Media

Sanoma Corporation, Stock Exchange Release, 24 July 2024 at 8:30 EET

Sanoma Corporation, Half-Year Report 1 January–30 June 2024: Strong earnings improvement in both Learning and Media

This release is a summary of Sanoma’s Half-Year Report 1 January–30 June 2024. The complete report is attached to this release and is also available at www.sanoma.com/en/investors.

Q2 2024

• Net sales amounted to EUR 342 million (2023: 341). Net sales grew in Learning and were relatively stable in Media Finland. The Group’s organic net sales growth was 1% (2023: 0%).
• Operational EBIT excl. PPA increased to EUR 61 million (2023: 54). Strong earnings growth in Media Finland was also supported by an improvement in Learning.
• EBIT increased to EUR 43 million (2023: -1). Items affecting comparability (IACs) decreased to EUR -8 million (2023: -43), as Q2 2023 included an EUR 36 million booking related to VAT claims in Media Finland. Purchase price allocation adjustments and amortisations (PPAs) were EUR 9 million (2023: 11).
• Operational EPS was EUR 0.17 (2023: 0.14).
• EPS was EUR 0.14 (2023: -0.08).
• On 17 April 2024, the Annual General Meeting decided that a dividend of EUR 0.37 per share (2023: 0.37) shall be paid for 2024 in three instalments. The first instalment of EUR 0.13 was paid on 26 April, the second instalment of EUR 0.13 will be paid in September and the third instalment of EUR 0.11 in November.

H1 2024

• The Group’s net sales amounted to EUR 563 million (2023: 559). In Learning, net sales grew in most major operating markets supported by earlier ordering. In Media Finland, net sales were relatively stable. The Group’s organic net sales growth was 3% (2023: 0%), amounting to 5% in Learning and 1% in Media Finland.
• The Group’s operational EBIT excl. PPA increased to EUR 37 million (2023: 23) because of strong earnings improvement in both businesses. In Learning, earnings increased as a result of active cost management and higher net sales. Growth in digital subscription sales and lower paper costs supported earnings in Media Finland.
• EBIT increased to EUR 12 million (2023: -44). IACs decreased to EUR -7 million (2023: -46). PPAs were EUR 19 million (2023: 21).
• Operational EPS amounted to EUR -0.02 (2023: -0.09).
• EPS was EUR -0.05 (2023: -0.33).
• Free cash flow improved significantly to EUR -58 million (2023: -84), while being negative in line with the seasonal pattern of the learning business. The improvement was mainly attributable to higher earnings and lower investments.
• Net debt/Adj. EBITDA improved to 2.9 (2023: 3.3), being at the long-term target level of ‘below 3.0’.
• In January 2024, Sanoma announced two small divestments: Stark in Learning and Netwheels in Media Finland.

Outlook for 2024 (unchanged)

In 2024, Sanoma expects that the Group’s reported net sales will be EUR 1.29‒1.34 billion (2023: 1.4). The Group’s operational EBIT excl. PPA is expected to be EUR 160−180 million (2023: 175).

Regarding the operating environment, Sanoma expects that:

• The advertising market in Finland will decline slightly.
• The development in the economies of the Group’s operating countries is expected to be relatively stable.

President and CEO Rob Kolkman:

“We have had a good first half of the year with strong earnings improvement in both Learning and Media Finland. The positive impacts of active cost containment measures, lower paper prices and carefully implemented price increases seen already during the first quarter continued throughout the reporting period and resulted in around 50% improvement in both businesses’ first half operational EBIT excl. PPA compared to last year.

As a significant part of our full-year operational earnings is dependent on the outcome of the third quarter high season in Learning and the development of the Finnish advertising market in July–December, we are keeping our Outlook for 2024 unchanged.

In Learning, net sales grew in most of our major operating countries, especially Spain and the Netherlands, partially supported by earlier ordering. During the upcoming third quarter high season, we expect growth in other learning content markets to offset the expected decline in Spain resulting from the lower curriculum cycle. When adding the impact of the discontinuation of low-value Dutch distribution contracts, we continue to expect lower net sales and a stable margin for the full year 2024.

The implementation of the process and efficiency improvement program, Solar, continued to proceed according to our plans across all streams. We have, for example, established a sizable Tech hub in Poland that will bring benefits both to us and our customers in the years to come. During the first half of the year, we saw the first results of Solar initiatives taken in Spain at the end of 2023 in Learning’s personnel expenses. Supported by our increased scale and Program Solar, we are on track to reach Learning’s long-term profitability (operational EBIT margin excl. PPA) target of 23% by 2026.

In Media Finland, we have seen good development in both digital subscription and advertising sales throughout the first half of the year. Together with a lower cost base – to a great extent driven by lower paper and printing costs – this has resulted in an approx. EUR 7 million improvement in Media Finland’s operational EBIT excl. PPA. We expect this improvement to hold for the full year and July–December operational earnings to be similar to 2023. This is due to the advertising market in Finland declining slightly, a stronger prior year comparable for both advertising and subscription sales, and continuing, but lower, paper cost gains.

The significant improvement in the Group’s free cash flow was mainly attributable to higher earnings in both businesses, lower investments, active working capital management and some phasing. Our net debt and leverage improved year-on-year and Net debt / Adjusted EBITDA was below the long-term target of < 3.0. In line with the annual seasonality of the learning business, the ratio is expected to decline further during the second half of this year.

We continue to be fully focused on delivering on our strategic focus areas for 2024–2026, which are 1) increasing the profitability of Learning and Media Finland, 2) growing organically and through in-market acquisitions, and 3) deleveraging the balance sheet.

I would like to extend my warmest thanks to all our teams for delivering the good results during the first half of the year and supporting our customers in the best possible way.”

Key indicators

EUR million	Q2 2024	Q2 2023	Change	H1 2024	H1 2023	Change	FY 2023
Net sales	342.4	341.3	0%	563.3	559.1	1%	1,392.9
Operational EBITDA 1)	104.4	97.9	7%	125.6	109.6	15%	358.3
Margin 1)	30.5%	28.7%		22.3%	19.6%		25.7%
Operational EBIT excl. PPA 2)	61.0	53.7	14%	37.2	23.0	62%	175.4
Margin 2)	17.8%	15.7%		6.6%	4.1%		12.6%
EBIT	43.2	-0.5		11.8	-43.6	127%	51.7
Result for the period	24.4	-11.2	318%	-3.1	-51.0	94%	4.1
Free cash flow	-14.5	-16.0	9%	-58.2	-83.9	31%	105.1
Equity ratio 3)				37.4%	35.4%		42.5%
Net debt				729.6	792.0	-8%	639.7
Net debt / Adj. EBITDA				2.9	3.3	-12%	2.8
Operational EPS, EUR 1)	0.17	0.14	23%	-0.02	-0.09	72%	0.39
EPS, EUR	0.14	-0.08	260%	-0.05	-0.33	85%	-0.03
Free cash flow per share, EUR	-0.09	-0.10	10%	-0.36	-0.51	31%	0.64
Average number of employees (FTE)				4,852	5,116	-5%	5,119
Number of employees at the end of the period (FTE)				4,963	5,295	-6%	5,017

^{1) Excluding IACs
2) Excluding IACs and purchase price allocation adjustments and amortisations (PPAs)
3) Advances received included in the formula of equity ratio were EUR 162.8 million in H1 2024 (2023: 175.1).}

Analyst and investor conference

An analyst and investor conference will be held in English by the President and CEO Rob Kolkman 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/q2-2024.

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=50048297. 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 2023, our net sales amounted to approx. 1.4bn€ and our operational EBIT margin excl. PPA was 12.6%. Sanoma shares are listed on Nasdaq Helsinki. More information is available at sanoma.com.

Attachment

• Sanoma Half-Year Report 2024