Sanoma Corporation, Stock Exchange Release, 31 October 2013 at 9:00 CET+1
Third quarter
- Net sales amounted to EUR 568.1 million (2012: 599.5).
- Adjusted for changes in the Group structure, Sanoma’s net sales decreased by 5.1%.
- Operating profit excluding non-recurring items was EUR 76.9 million (2012: 79.8).
- Non-recurring items included in the operating profit amounted to EUR -316.6 million (2012: -18.3) mainly related to non-cash impairment charges of goodwill and intangible assets, restructuring expenses as well as sales gains and losses.
- Earnings per share were EUR -1.61 (2012: 0.23).
- Earnings per share excluding non-recurring items were EUR 0.29 (2012: 0.30).
- Cash flow from operations was EUR 110.6 million (2012: 86.9).
- Outlook (unchanged): In 2013, Sanoma expects that the Group’s consolidated net sales will decline more than 4% compared to 2012 and operating profit excluding non-recurring items is estimated to be below EUR 180 million.
- Long-term financial targets (changed): Sanoma’s long-term financial targets are a net debt to EBITDA ratio below 3.5, an equity ratio within 35% to 45% and gearing of less than 100%. Sanoma conducts an active dividend policy and primarily pays out over half of Group’s result excl. non-recurring items for the period in dividends. One-time investments and costs associated with the transformation of its business require Sanoma to pursue a prudent dividend policy in the near-term implying lower than historical dividend payout.
First nine months
- Net sales amounted to EUR 1,664.5 million (2012: 1,789.6).
- Adjusted for changes in the Group structure, Sanoma’s net sales decreased by 7.1%.
- Operating profit excluding non-recurring items was EUR 141.9 million (2012: 199.2).
- Non-recurring items included in the operating profit amounted to EUR -384.8 million (2012: -24.0) mainly related to non-cash impairment charges of goodwill and intangible assets, restructuring expenses as well as sales gains and losses.
- Earnings per share were EUR -1.72 (2012: 0.94).
- Earnings per share excluding non-recurring items were EUR 0.52 (2012: 0.69).
- Cash flow from operations was EUR 50.4 million (2012: 83.8).
Key indicators*
| Restated | Restated | Restated | |||||
| 7–9/ | 7–9/ | Change | 1–9/ | 1–9/ | Change | 1–12/ | |
| EUR million | 2013 | 2012 | % | 2013 | 2012 | % | 2012 |
| Net sales | 568.1 | 599.5 | -5.2 | 1,664.5 | 1,789.6 | -7.0 | 2,376.3 |
| Operating profit excluding non-recurring items | 76.9 | 79.8 | -3.6 | 141.9 | 199.2 | -28.8 | 231.0 |
| % of net sales | 13.5 | 13.3 | 8.5 | 11.1 | 9.7 | ||
| Operating profit | -239.6 | 61.5 | -242.9 | 175.2 | 181.0 | ||
| Result for the period from continuing operations | -265.5 | 38.8 | -294.3 | 79.5 | 69.9 | ||
| Result for the period **** | -265.5 | 38.1 | -294.3 | 158.6 | 149.0 | ||
| Capital expenditure ** | 48.0 | 38.0 | 26.2 | 59.5 | |||
| % of net sales | 2.9 | 2.1 | 2.5 | ||||
| Return on equity (ROE), % ***/**** | -20.4 | 12.0 | 9.7 | ||||
| Return on investment (ROI), % ***/**** | -7.8 | 9.8 | 8.3 | ||||
| Equity ratio, % **** | 34.1 | 40.5 | 41.3 | ||||
| Net gearing, % **** | 109.1 | 87.2 | 78.7 | ||||
| Number of employees at the end of the period (FTE) | 9,884 | 10,590 | -6.7 | 10,381 | |||
| Average number of employees (FTE) | 10,205 | 10,901 | -6.4 | 10,804 | |||
| Earnings/share, EUR, continuing operations | -1.61 | 0.23 | -1.72 | 0.46 | 0.39 | ||
| Earnings/share, EUR **** | -1.61 | 0.23 | -1.72 | 0.94 | 0.88 | ||
| Cash flow from operations/share, EUR **** | 0.68 | 0.53 | 27.3 | 0.31 | 0.51 | -38.8 | 1.18 |
| Equity/share, EUR **** | 5.44 | 7.96 | -31.6 | 7.82 |
* Comparable figures have been restated due to a change in IAS19 ‘Employee benefits’. The revised standard eliminates the possibility of using the corridor approach in recognising the actuarial gains and losses from defined benefit plans. The revised IAS 19 standard requires the actuarial gains and losses to be recognised immediately in the statement of other comprehensive income. For 2012, the restated total equity has decreased by EUR 52.0 million to EUR 1,576.6 million and the restated operating profit excluding non-recurring items has decreased by EUR 1.3 million to EUR 231.0 million.
** Including finance leases.
*** Rolling 12-month period.
**** Includes continuing and discontinued operations.
Harri-Pekka Kaukonen, President and CEO
Third quarter
”The economic environment remained weak during the quarter and as a result our net sales continued to decline. Due to cost measures we were able to compensate most of this decline. The third quarter performance was positively impacted by timing shifts and therefore the Group outlook for 2013 remains unchanged.”
Sanoma Redesign – planning the largest transformation in the company’s history
“New technologies are fundamentally changing the behaviour of media consumers. Consequently advertisers are following consumers. This implies a rapid increase in advertising in digital channels that enable targeting, measuring and performance-based pricing.
We are responding by planning to redesign our consumer media operations and focus our business towards more structurally attractive markets and transform it towards digital services. We will focus on two strong business pillars: leading multichannel consumer media assets with growing digital media presence in Finland and the Netherlands; and uniquely positioned Learning assets in a number of chosen markets. Our consumer media assets in Russia & CEE and Belgium are under strategic review.
As of 1 January 2014, Sanoma will consist of three strategic business units: Sanoma Media Netherlands, Sanoma Media Finland and Sanoma Learning. Within consumer media, we will establish a new unit, Sanoma Digital, to create critical mass for speeding up the growth of digital services and developing our digital competences, as well as to accelerate the commercialisation of our innovations.
In order to implement our strategy, we plan to change our operational model and organisation. Our aim is to complete this transformation without compromising our financial performance for extended periods of time. We plan to achieve this by focusing our business portfolio and by targeting significant additional cost savings.
We are planning to extend our ongoing EUR 60 million gross cost savings programme by EUR 40 million (gross), aiming to save a total of EUR 100 million (gross). The full impact of the planned targeted savings is expected to realise by the end of 2016.
The contemplated cost savings are likely to result in redundancies, including today’s announcements regarding the contemplated changes to Helsingin Sanomat business unit (which includes Helsingin Sanomat, Nelonen news and Metro) and Dutch magazine operations. Redundancies are unfortunate but are likely to be unavoidable in order for Sanoma to be able to invest and develop in innovation and growth also in the future.
We will initiate co-operation negotiations in accordance with local laws and regulations, and make the final decisions based on the outcome of these negotiations.
One-time investments and costs associated with the transformation of its business require Sanoma to pursue a prudent dividend policy in the near-term implying lower than historical dividend payout.
All in all, we are launching a plan regarding the largest transformation in Sanoma’s history. We will have to make tough choices to finance the investments needed to enable future growth, and to seize all opportunities in the businesses that we are focusing on.”
Group outlook for 2013 (unchanged from the revised outlook published on 23 July 2013)
In 2013, Sanoma expects that the Group’s consolidated net sales will decline more than 4% compared to 2012 and operating profit excluding non-recurring items is estimated to be below EUR 180 million.
Sanoma’s outlook is based on the assumptions that the European economic environment remains under pressure and adversely impacts advertising markets in Sanoma’s main operating countries. The likelihood of clearly improving market conditions in the second half of the year is estimated to be low.
January–September 2013 Interim Report webcast
The event for investors and analysts will be held in English by President and CEO Harri-Pekka Kaukonen and CFO Kim Ignatius today at 11:00 Finnish time (9:00 UK time) at Nelonen studio, Sanomatalo, Töölönlahdenkatu 2, Helsinki. The webcast can be viewed on Sanoma’s website at www.sanoma.com/en/investors.
Please join by dialling
Finland +358 (0)9 2313 9201 / Netherlands +31 (0)20 7965 008 / UK +44 (0)20 7162 0077 / US +1 334 323 6201
Access code 937503
Financial reporting 2014
Sanoma will publish its Full-Year Result for 2013 on 7 February 2014 approx. at 8:30 am Finnish time.
Interim Reports in 2014 will be published on quarterly basis:
— Interim Report January-March on 30 April 2014, approx. at 8:30
— Interim Report January-June on 25 July 2014, approx. at 8:30
— Interim Report January-September on 29 October 2014, approx. at 8:30.
Additional information
Sanoma's Investor Relations, Martti Yrjö-Koskinen, tel. +358 40 684 4643 or ir@sanoma.com
Sanoma.com
Get the world. Sanoma helps people access and understand the world. Sanoma is a front runner in consumer media and learning in Europe. We employ around 10,000 professionals in more than 10 countries. In 2012, the Group’s net sales totalled EUR 2.4 billion. Sanoma’s share is listed on the NASDAQ OMX Helsinki.