Inside Information: Sanoma Learning to reach its long-term profitability target of 23% in 2026 through new process and efficiency improvement program

Sanoma Corporation, Inside information, 26 October 2023 at 8:25 EET

Inside information: Sanoma Learning to reach its long-term profitability target of 23% in 2026 through new process and efficiency improvement program

Sanoma Corporation is launching a three-year process and efficiency improvement program "Solar” in the Learning SBU. Supported by Solar, Sanoma estimates that Learning’s operational EBIT margin excl. PPA will reach its long-term target level of 23% in 2026 (approx. 18% in FY 2023).

Annual operational efficiencies from Solar are estimated to amount to approx. EUR 55 million from 2026 onwards. Solar consists of several workstreams across the learning business and operations. Identified areas for operational and process improvements include:

• organisational optimisation post curriculum renewals especially in Spain and Poland,
• process improvements in publishing operations across learning material businesses in seven countries,
• continuing harmonisation of digital learning platforms started in 2022, and
• overhead and other optimisations across the SBU.

While the operational benefits of Solar will accrue during 2024-2026, the positive impact on Learning’s operational EBIT margin excl. PPA will become visible only in 2026, when the next major curriculum renewals in Learning’s key operating countries will be implemented. The margin improvement from Solar in 2026 will come when Learning’s net sales are expected to return to the peak levels seen in 2023. This is due to lower demand for learning content in 2024-2025 following recent curriculum renewals and continuing rationalisation of lower margin contracts and businesses.

In Q3 2023, Sanoma has already booked EUR 15 million of costs related to Solar as items affecting comparability (IACs) in Sanoma Learning’s result. In 2024, Solar-related costs booked as IACs are estimated to amount to approx. EUR 30 million. All organisational optimisation actions are subject to works council negotiations and other local legal procedures.

"During the past 4-5 years, our focus has been on growing Sanoma Learning, organically but particularly also through acquisitions. We have more than doubled the scale of the business from approx. EUR 300 million net sales with operations in five countries in 2018 to close to EUR 800 million and operations in 12 countries today. We are now launching Solar to fully benefit from our increased scale,” says Susan Duinhoven, President and CEO of Sanoma. "We see the benefits coming in gradually and being fully visible in 2026. In the coming two years, Learning’s net sales are expected to be somewhat lower due to fewer curriculum renewals in our key markets and our active discontinuation of lower margin contracts and businesses. In addition to Solar, during 2024-2026 we will also be focusing on improving our K12 offering to the students, teachers and schools, small in-market acquisitions and deleveraging our balance sheet,” she concludes.

All Sanoma’s Group and SBU-level long-term financial targets remain unchanged and are listed in the table below. Sanoma has not defined a specific timeline for reaching any of the other targets. Solar does not have an impact on Sanoma’s Outlook for 2023.

Sanoma will discuss Solar today at 11:00 EET in its analyst and investor conference related to the Q3 2023 Interim Report at Sanomatalo, 9th floor, Töölönlahdenkatu 2, Helsinki. Access to the conference takes place through Sanoma’s reception. To join the event in person, please register by phone to Anna Hopearuoho, mob. +358 50 544 3280.

The conference can be followed as a live webcast at https://sanoma.videosync.fi/q3-2023-results. 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=10010427. 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.

Sanoma’s strategic focus areas and Solar will also be discussed in the Capital Markets Day on 22 November 2023 approx. at 9:00-13:30 EET. The event will take place live in Helsinki, Finland, and can also be followed online. Invitations to the Capital Markets Day will be sent in due course. More information: www.sanoma.com/en/investors/investor-calendar-and-events/cmd-2023/  

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 2022, our net sales amounted to approx. 1.3bn€ and our operational EBIT margin excl. PPA was 14.6%. Sanoma shares are listed on Nasdaq Helsinki. More information is available at sanoma.com.