Editoria e Media
Sanoma Corporation, Full-Year 2023 Result: Net sales growth and operational EBIT in 2023 driven by strong performance in Learning
Sanoma Corporation, Stock Exchange Release, 7 February 2024 at 8:30 EET
Sanoma Corporation, Full-Year 2023 Result: Net sales growth and operational EBIT in 2023 driven by strong performance in Learning
This release is a summary of Sanoma's Full-Year 2023 Result. The complete report is attached to this release and is also available at www.sanoma.com/en/investors.
Q4 2023
FY 2023
Outlook for 2024
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:
President and CEO Rob Kolkman:
”In 2023, our net sales growth and operational EBIT were driven by strong performance in Learning, while Media Finland managed to partially mitigate the impact of lower advertising demand and cost inflation on its financials. In my new role as the President and CEO of Sanoma, I am very much looking forward to working together with our great team to further strengthen our position in European K12 learning services, to deliver on our key initiatives, including Program Solar, and to continue the successful digital transformation in our media business.
In Learning, the year was characterised with strong 6% organic growth, driven by the successful second year of the LOMLOE curriculum renewal in Spain, a minor curriculum renewal in Poland and inflation mitigating price increases across our operating countries. Together, these also resulted in strong improvement of Learning's operational EBIT. The integration, sales and financial performance of our latest acquisition, the K12 learning content business in Italy, proceeded successfully and in accordance with our plans.
In October, we initiated a Learning-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. Supported by Program Solar, Learning's operational EBIT margin excl. PPA is expected to reach its long-term target level of 23% in 2026. First implementation phase of Solar has already been underway, focusing on post-curriculum optimisation especially in Spain and Poland, and the program is on track.
In-line with our expectations, net sales and operational EBIT of Media Finland decreased mainly due to lower advertising sales. The highlights of the year include clear growth in the number of digital subscriptions, mainly attributable to our SVOD service Ruutu+. Initiatives to extend and improve our customer offering led to a minor increase in the total subscription base compared to the end of 2022. Careful price increases across the portfolio during the year supported subscription sales. With continuing active cost containment, the team succeeded to partially mitigate impact of the cost and salary inflation.
During the year, we paid special attention to active working capital management in Learning, with the aim of mitigating the impact of increased seasonality of the business and improve cash conversion. The Group's free cash flow improved significantly compared to the underlying free cash flow in 2022, which excluded the one-time positive impact due to the timing of the acquisition in Italy and Germany. Our leverage improved to 2.8, being within the long-term target of below 3.0, and providing a solid basis going forward.
While we continue building the long-term strengths of both Learning and Media Finland, our three strategic focus areas in the mid-term are 1) increasing the profitability of Learning and Media Finland, 2) growing organically and through smaller in-market acquisitions in Learning, and 3) deleveraging the balance sheet.
The Board proposes a stable dividend of EUR 0.37 (2022: 0.37), corresponding to 58% of the annual free cash flow. This proposal reflects our ability to deliver solid free cash flow, and balances the capital use between the dividend, which continues to be an important part of our equity story, and the deleveraging of the balance sheet.
We have a unique sustainability profile as learning and media have a positive impact on the lives of millions of people every day. To support the purpose of our businesses, we have set ambitious targets for sustainability aspects in which we have the biggest impact, including climate and employee engagement. Our 2030 climate targets, covering both our operations and the value chain, were approved by the Science Based Targets initiative in November 2023. We were also very happy to see that the annually measured Employee Experience Index (EEI) improved to the long-term target level of 7.5 (2022: 7.3), being clearly above the European benchmark of 7.1. Both of these sustainability aspects are linked, among other targets, to the executive management's short-term incentives in 2024.
Our Outlook for 2024 indicates lower net sales compared to 2023. This is mainly due to discontinuation of low value contracts in the Dutch learning distribution business and small divestments of non-core businesses both in Learning and Media Finland announced in January 2024, while lower learning content sales after the curriculum renewal in Spain are offset by continued growth in other learning content markets. In Finland, we expect the advertising market to decline slightly. Our expectation of the Group's operational EBIT excl. PPA is a sum of a relatively stable margin in Learning and modest earnings and margin improvement in Media Finland.
I would like to extend my warmest thanks to all Sanoma employees throughout the business for their excellent work, strong commitment, and passion in supporting our customers, combined with constant internal improvement under the current operating environment. We have a great basis to continue on our strategic path, and to grow and further strengthen our positions, improve our performance, and create value for all our stakeholders. I am looking forward to a successful year 2024.”
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 153.8 million in FY 2023 (2022: 142.0).
2023 is a proposal of the Board of Directors to the AGM.
Dividend proposal
On 31 December 2023, Sanoma Corporation's distributable funds were EUR 399 million, of which profit for the year made up EUR 1 million. Including the fund for non-restricted equity of EUR 210 million, the distributable funds amounted to EUR 608 million. The Board of Directors proposes to the Annual General Meeting that:
According to its dividend policy, Sanoma aims to pay an increasing dividend, equal to 40–60% of the annual free cash flow. When proposing a dividend to the AGM, the Board of Directors looks at the general macro-economic environment, Sanoma's current and target capital structure, Sanoma's future business plans and investment needs, as well as both the previous year's cash flows and expected future cash flows affecting capital structure.
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/sanoma-full-year-result-2023.
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=10010755. 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 .
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