Sanoma’s Interim Report 1 January – 30 September 2016: Continued Profitability Improvement

Print

Sanoma Corporation, Stock Exchange Release, 28 October 2016 at 8:30 CET+1

Third quarter

  • Net sales amounted to EUR 438.1 million (2015: 458.3).
  • Adjusted for changes in the Group structure, Sanoma’s net sales decreased by 1.5% in the quarter.
  • Operational EBIT increased by 25% to EUR 77.7 million (2015: 62.4).
  • Operating profit was EUR 75.1 million (2015: 9.8).
  • Earnings per share were EUR 0.29 (2015: -0.04).
  • Operational earnings per share were EUR 0.30 (2015: 0.24).
  • Cash flow from operations was EUR 95.8 million (2015: 70.9).
  • Items affecting comparability included in the operating profit amounted to EUR -2.6 million (2015: -52.7) and were related to restructuring expenses as well as pension plans in the Netherlands. In the previous year, items affecting comparability consisted mainly of sales gains and losses as well as restructuring expenses.

First nine months

  • Net sales amounted to EUR 1,241 million (2015: 1,307).
  • Adjusted for changes in the Group structure, Sanoma’s net sales remained stable at previous year’s level.
  • Operational EBIT was EUR 166.5 million (2015: 92.1).
  • Operating profit was EUR 219.8 million (2015: 8.2).
  • Earnings per share were EUR 0.85 (2015: -0.22).
  • Operational earnings per share were EUR 0.58 (2015: 0.22).
  • Cash flow from operations was EUR 47.6 million (2015: -43.2).
  • Items affecting comparability included in the operating profit amounted to EUR 53.3 million (2015: -83.9) and were mainly related to pension plans in the Netherlands. In the previous year, items affecting comparability consisted mainly of sales gains and losses as well as restructuring expenses.

Outlook (unchanged from the revised outlook published on 20 October 2016)

In 2016, Sanoma expects that the Group’s consolidated net sales development adjusted for structural changes will improve from last year (2015: -3.4%). The operational EBIT margin is estimated to be above 9.5%.


Key indicators (based on reported figures, not adjusted for structural changes)

 

EUR million 79/
2016
79/
2015
Change
%
1-9/
2016
1-9/
2015
Change
%
1-12/
2015
Net sales 438.1 458.3 -4.4 1,241.0 1,307.4 -5.1 1,716.7
Operational EBIT 77.7 62.4 24.5 166.5 92.1 80.8 83.7
  % of net sales 17.7 13.6   13.4 7.0   4.9
Operating profit 75.1 9.8   219.8 8.2   -123.1
Result for the period 51.3 -3.4   148.1 -26.3   -157.7
               
Cash flow from operations 95.8 70.9 35.2 47.6 -43.2   25.5
               
Capital expenditure * 7.3 12.9 -43.5 22.6 43.1 -47.5 54.7
  % of net sales 1.7 2.8   1.8 3.3   3.2
               
Return on equity (ROE), % ** 1.6 3.6   -13.6
Return on investment (ROI), % ** 4.6 9.4   -5.3
Equity ratio, %       43.7 41.2   39.5
Net gearing, %       67.9 73.5   77.8
               
Number of employees at the end of the period (FTE) 5,269 6,650 -20.8 6,116
Average number of employees (FTE) 5,437 6,935 -21.6 6,776
         
Earnings/share, EUR 0.29 -0.04   0.85 -0.22   -0.91
Cash flow from operations/share, EUR 0.59 0.44 35.6 0.29 -0.27   0.16
               
Equity/share, EUR       5.16 5.24 -1.4 4.59

 

* Including finance leases.
** Rolling 12-month period.

Sanoma presents certain financial performance measures (alternative performance measures or APMs) on a non-IFRS basis. The APMs are provided to reflect the underlying business performance and to enhance comparability from period to period. APMs should not be considered as a substitute for measures of performance in accordance with IFRS. More information is available at Sanoma.com.

 

Organic growth, %

    7–9/2016 vs. 7–9/2015 1–9/2016 vs. 1–9/2015 1–12/2015 vs. 1–12/2014
Media BeNe   -1.2 1.6 -1.4
Media Finland   0.6 0.7 -4.1
Learning   -4.1 -4.2 -4.0
Group   -1.5 0.1 -3.4

  

Susan Duinhoven, President and CEO

 “In the third quarter of the year, Sanoma continued its performance improvement as operational EBIT increased by 25% to EUR 77.7 million. The increase came from all businesses and most prominently, as in previous quarters, from the improved profitability of the Finnish media business. Organic net sales declined slightly, by 1.5%.

The seasonally important third quarter for Learning came in slightly above our expectations. Sales in Learning Finland were boosted by the new curriculum and the launch of the Bingel digital learning platform, which has already been adopted by over 1,000 schools in the first few months. Sales also grew in Belgium where the De Boeck transaction was finalised. These together offset the decline in Poland, where legislative changes continue to affect the market. However, our market share increased. Profitability in Learning continued to improve, supported by cost innovations.

In Media Finland, the first nine months have been supported by good advertising sales as we have been able to increase our market share. In the third quarter also the good development of non-print sales continued. The share of TV viewing in the third quarter rose from 31.0% in the comparable period to 37.8%. The total weekly reach of the Finnish portfolio remains at the exceptionally high level of 97%. The favourable sales development contributed to the improved profitability, while the largest impact came from efficiency improvements. The results of the Suunta programme are now starting to be visible in the results. Media Finland is continuing with the implementation of over 100 Suunta cost and process initiatives.

Also Media BeNe continued its solid performance in the third quarter. While the cross-media approach benefitted the Dutch print and online brand portfolio, its performance did not fully offset lower sales in TV. SBS viewing shares were affected by the Olympics in the third quarter. In Belgium, we launched the home & deco title vtwonen. Operational EBIT improved due to successful cost innovations.

Going forward, we expect to see uncertainty in the advertising markets to continue. The cost innovations already launched in the third quarter of 2015 are now fully visible in our results. The teams in all the businesses are continuing their great work for our customers and audiences and further innovating and improving our processes.”


January–September 2016 Interim Report webcast

The event for analysts, investors and media will be held in English by President and CEO Susan Duinhoven and CFO Kim Ignatius on 28 October 2016 at 11:00 Finnish time (9:00 am UK time) at Sanomatalo, Töölönlahdenkatu 2, Helsinki. The live webcast can be viewed on Sanoma’s website at www.sanoma.com/en/investors and on demand after the event.

Please join in 5-10 minutes prior to the start time by dialling
Finland: +358 (0)9 7479 0404 / US: +1 719 325 4746 / UK: +44 (0)20 3043 2025 / Netherlands: +31 (0)20 703 8260
Conference id: 6259323

Financial reporting 2017

Sanoma will publish its Full-Year Result for 2016 on 7 February 2017 at approx. 8:30 am Finnish time.
Interim Reports and Half-Year Report will be published in 2017:
- Interim Report January–March on 26 April 2017, at approx. 8:30
- Half-Year Financial Report January–June on 25 July 2017, at approx. 8:30
- Interim Report January–September on 25 October 2017, at approx. 8:30


Additional information
Sanoma's Investor Relations, Anna Tuominen, tel. +358 40 584 6944

Sanoma

Sanoma is a front running media and learning company impacting the lives of millions every day. We provide consumers with engaging content, offer unique marketing solutions to business partners and enable teachers to excel at developing the talents of every child.

With companies operating in Finland, the Netherlands, Belgium, Poland and Sweden, our net sales totalled EUR 1.7 billion and we employed over 6,000 professionals in 2015. The Sanoma shares are listed in Nasdaq Helsinki.

 

File: Sanoma_2016_Q3_Report.pdf