CEO's review

President and CEO Susan Duinhoven:

25 July 2019

“We are satisfied with the continued good performance of Sanoma as a Group as well as all SBUs during the first half of 2019.

In Learning, H1 net sales were on the previous year’s level. There are no major curriculum renewals ongoing in our operating markets this year, and thus the markets are expected to remain more or less flat compared to 2018. We are currently well-positioned for the third-quarter high season, which has in the past years increased its importance due to optimisation in the supply chain and growing share of digital learning materials. We are also looking forward to closing the acquisition of Iddink by the end of Q3 2019. Our business development program “High Five” proceeded according to our plan, and we expect its benefits to focus even more to the second half of the year.

In Media Finland, net sales and earnings grew in the second quarter mainly as a result of earlier acquisitions, notably Rockfest, Finland’s largest rock and metal music festival, and the Finnish News Agency STT acquired a year ago. In addition, advertising sales developed positively partially due to parliamentary elections held in April and EU elections held in May. We are happy that both the number of subscriptions and subscription sales of Ruutu+ and Helsingin Sanomat continued to grow. Earnings development was not at the same level with the topline growth. This was mainly due to the fact that, as part of the deal structure, Rockfest did not contribute positively to our earnings yet this year, and STT had a break-even result.

Despite our good performance in the first half of the year, the underlying operating environment in the media business, especially in Finland, was relatively demanding, and we don’t expect it to change remarkably during the rest of the year.

In Media Netherlands, the impact of divestments we have made during the past nine months – LINDA. magazine, Head Office content marketing operations in Belgium, and Home Deco e-commerce operations – was clearly visible in our reported net sales and operational EBIT. At the same time, development of the underlying business was stable and met our expectations. Our online news site had another strong quarter, both in usage and sales. During the first half of the year, revenues of grew by 16%. Circulation sales continued to be impacted by the increase in the VAT of magazines, which came into force on 1 January. Net sales of the data-driven marketing and cashback service Scoupy were below the previous year’s level due to changes we have made in its product portfolio. We proceeded successfully with active cost containment, which mitigated the impact of lower net sales on profitability.

We keep our Outlook for 2019 unchanged. We remain focused on capturing good opportunities to grow our business, including synergetic bolt-on acquisitions, and aim for an increasing dividend.”