Interim Report Q1 2024

Improved performance in a seasonally small quarter

Rob Kolkman, President & CEO

Alex Green, CFO

Q1 2024

Improved performance in a seasonally small quarter

Net sales

221m€

(2023: 218)

Organic net sales growth

5%

(2023: -1%)

Operational EBIT excl. PPA

-24m€

(2023: -31)

Free cash flow

-44m€

(2023: -68)

Net debt / Adj. EBITDA

2.9

(2023: 3.2)

  • Net sales grew in Learning mainly as a result of earlier ordering and stable in Media Finland
  • Operational EBIT improved driven by lower operating expenses, especially paper, in both businesses and higher sales in Learning
  • Free cash flow improved driven by higher earnings and active working capital management
  • Leverage improved to 2.9, meeting the long-term target level of below 3.0
  • Efficiency program Solar in Learning on track to reach the long-term profitability target of 23% in 2026
  • Outlook unchanged: 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
    between 160−180m€ (2023: 175).

2

Interim Report Q1 2024

LEARNING Q1 2024

Improved performance in a

seasonally small quarter

  • Net sales grew to 81m€ (2023: 76)
    • Growth in most markets with some earlier ordering most notably in the Netherlands and Belgium
    • Divestment of Stark had -4m€ impact (full year -14m€)
  • Operational EBIT excl. PPA improved to -28m€ (2023: -34)
    • Driven by higher net sales
    • Active cost management as well as lower paper and printing costs

Operational EBIT excl. PPA

m€

20.1 %

17.1 % 17.2 % 164

48

18.7 % 19.3 %

  • FY 2024 margin expected to be relatively stable vs. 2023 due to the impact of lower curriculum cycle in Spain visible in H2 2024

-34

-31

-28

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

Operational EBIT excl. PPA

Margin (12mr)

3

Interim Report Q1 2024

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
    2026 onwards

Program streams touching our key operations across countries

Realisation of Solar initiatives

Run-rate of savings in 2026

100%

Organisational optimisation

Publishing process improvement

Harmonisation of digital platforms

Other optimisations

  • Post-curriculumrenewal optimisation in Spain and Poland
  • Optimising selected other operations
  • Increasingly leveraging benefits of scale in content creation (sharing) and production (centres of excellence)
  • Reviewing publishing portfolios and plans
  • Optimising product development and maintenance through outsourcing and nearshoring mainly to Poland and Spain
  • Rightsizing support functions by optimising the overall organisational structure

80%

60%

40%

20%

0%

2024 2025 2026

Current status of the run-rate of realisation of initiatives Expected run-rate of realisation of initiatives

4

Interim Report Q1 2024

MEDIA FINLAND Q1 2024

Digital growth and lower paper

costs supported earnings

  • Net sales amounted to 140m€ (2023: 142)
    • Advertising sales were stable as growth in digital compensated for the decline in print
    • Subscription sales grew driven by good development in digital, especially Ruutu+
      ▪ Ruutu+ subscription base above 370,000
    • Impact of portfolio changes -3m€ (full year -16m€)
  • Operational EBIT excl. PPA improved to 8m€
    (2023: 5)
    • Lower paper costs driven by both price and volume development
    • Growth in digital subscription sales

Operational EBIT excl. PPA

m€

11.2 %

17

6.0 %

5.7 %

5.5 %

3.6 %

9

9

8

5

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

Operational EBIT excl. PPA

Margin

5

Interim Report Q1 2024

Outlook for 2024 (unchanged)

  • 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 decline slightly
    • The development in the economies of the Group's operating countries is expected to be relatively stable

6

Interim Report Q1 2024

Financials

Q1 2024

Operational EBIT improved,

although seasonally negative

Learning

+

Higher net sales driven by earlier ordering

+

Active cost management

+ Lower paper and printing costs

Media

+

Lower paper costs driven by both price and

Finland

volume development

+ Growth in digital subscription sales

‒ Lower external printing sales

Other &

‒

Higher personnel and technology costs

elim.

largely due to timing

➢ FY 2024 costs expected to be similar to 2023

Operational EBIT excl. PPA Q1 2024 vs. Q1 2023

m€

8

Interim Report Q1 2024

Improvement in operational and reported earnings

Key income statement related items Q1 2024

  • IACs were positive at 2m€ (2023: -2) and consisted of
    • Capital gain related to the Netwheels divestment
    • M&A integration costs
    • Only small costs related to Program Solar
  • Net financial items were relatively stable
    • FY 2024 will be impacted by the repayment of the low coupon rate 200m€ bond in March 2024
  • Result for the period follows the operational result and the lower IACs

m€

Q1 2024

Q1 2023

Operational EBIT excl. PPA

-23.7

-30.7

IACs

1.5

-2.4

PPAs

-9.2

-10.0

EBIT

-31.4

-43.1

Net financial items

-6.8

-6.5

RESULT BEFORE TAXES

-38.3

-50.6

Income taxes

10.8

10.8

RESULT FOR THE PERIOD

-27.6

-39.8

Operational EPS, €

-0.20

-0.23

EPS, €

-0.18

-0.25

9

Interim Report Q1 2024

Leverage improved

Net debt

year-on-year

m€

▪ Net debt at 694m€ clearly lower year-on-year,

Long-term

3.2

3.3

3.2

3.2

3.3

although increased from year-end 2023 due to its

target

<3.0

2.8

2.8

2.9

seasonal pattern

2.6

- Net debt / Adj. EBITDA improved to 2.9 (2023: 3.2)

- Equity ratio at 42.0% (2023: 40.6%) within the long-

term target range

▪ 200m€ bond was paid back in March 2024 with a

new 100m€ term loan and CPs

- Average interest rate of external loans 4.3%

(2023: 2.9%) in Q1 2024

663

771

838

823

757

792

691

640

694

Mar 22

Jun 22

Sep 22

Dec 22

Mar 23

Jun 23

Sep 23

Dec 23

Mar 24

Net debt

Net debt / Adjusted EBITDA

150m€ hybrid bond, issued in March 2023, is booked as equity, and excluded from net debt and net financial items.

10 Interim Report Q1 2024

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Sanoma Oyj published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 05:44:11 UTC.