Sanoma Corp Unsp/Adr

Good morning everyone and welcome to Sanoma's third quarter 2026 results presentation. My name is Kaisa Urasma. I'm heading investor relations and sustainability at Sanoma. We saw strong growth in our adjusted operating profit and have narrowed our earnings outlook for the full year to the higher end of the original range. And today, the President and CEO Rob Kolkman and CFO Alex Green will tell you more about the results. After their presentation, we will host a Q&A session. We will first take questions from the audience here at Sanoma House. Please use the microphone. We will then hand over to the telephone line. And you can also use the chat function in the webcast platform. After the event, a recording of the presentation and the Q&A session will be available on our website. With this, I would like to invite Rob on stage, please.

Thank you, Kajsa. And good morning, everyone. It is my pleasure to present the Q3 results to you this morning. Really strong growth in our adjusted operating profit, which is also reflected if you think about our year-on-year growth that you see here. So with the updated guidance to the higher end, we see the profit to grow between 14% and 20% this year. So really that's a step change that we have been indicating. And as usual, what I would like to do is say a few words about the business overall and then zoom in on learning and media respectively before handing over to Alex for more on the financials. So overall, we saw our net sales being stable. In learning, that meant strong growth in content and platform sales, especially in Poland. And I'll touch on that, of course, more in a minute. In Media Finland, we very much saw the digital transformation to continue and we saw the net sales decreasing mainly due to the lower advertising sales. Our adjusted operating profit, as indicated, grew strongly, driven by learning, driven by the higher learning content sales in those largest markets, but also now benefiting from this increased scale, therefore improved cost efficiencies. And also another good strong quarter in Media Finland with improvement there, driven also by Pia Kalsa and the team continuing doing a really good job on the cost containment as well. Free cash flow, Alex will touch on that a little bit more in a minute, but we expect that to grow moderately for the full year, as we've been indicating also in the previous quarters. The deleveraging, as always is the case around this time of year, has now resumed in quarter three. And as a reminder, the leverage is above last year's level, mainly due to the repayment of the hybrid bond with normal debt and also the Vis and Vivas acquisition. Our net sales narrowing of the outlook is between 1.30 and 1.32 billion euros, and as indicated, our adjusted operating profit now to the higher end of our guidance, 215 to 225, really indicating that step change in our growth. Let me now zoom in on learning first. Results like this and growth like this, of course, come with a lot of hard work and a lot of new things we continuously bring to market. More than 60 new learning methods have been published, and the sales have gone, of course, now really through quarter three mainly. Poland, standout performance there, really strong growth. Educational reform, we really further strengthen our position in the market in Poland with a lot of new products coming to market there as well with a combination of print digital learning experiences, also some virtual reality there. So really modern new methods that we bring to market in a big market for us that is Poland. The Netherlands continues to be a successful market for us with continuous growth. Partly also zooming in on the new Dutch curriculum, the changes there. Maths is a good example of that. And we also saw in the Netherlands an other improvement, further increase in our market penetration. And then we also saw the launch of Sana, our common brand for AI teacher assistant across seven of our markets in Europe. So the one solution that we then roll out across our markets and really combining that trusted content, the pedagogical expertise to help teachers save time and also increasingly be able to do personalized learning. And that is co-created, as always, with teachers in the schools. So about 1,500 teachers participated in this specific sort of getting Sana ready for the market. Let's now see what that means on the numbers for learning. So strong growth in the content and platforms, especially in Poland. The net sales was 667 compared to 658 last year. 25% growth in Poland. That renewed offering being really well received, as I indicated, by teachers, but also supported by increased government textbook funding. So a really strong performance there in the Polish market. In Spain, we did see some late government funding decisions and that ultimately resulted in teachers changing less of the materials than we originally anticipated. So what that effectively means is that they continue with, let's say, the old books in the classroom more than we thought some time ago. We also see in Spain that the sales cycle continued into October. So we also see some continued sales there in October. And the strong growth that you see here year on year is mainly driven by Vis and Vivas. However, for the full year, because of the things that I've indicated, we also expect still the mid single digit revenue growth organically in Spain as well. There's also solid growth in learning content sales in the Netherlands continuing on the back of what I just mentioned on a really good solid performance and new products we bring to market there too. So we see that as a market where the teachers really do appreciate, continue to appreciate what we of course offer there and are high quality. In Italy, this is now the year before the curriculum renewal there, so we do see some higher share of secondhand market. Always very difficult to indicate exactly how much that will be, but you do see some effect here of teachers waiting before they go for new materials next year. So that means more secondhand market. What we also see, and that's always very difficult to predict in a market like ours, is a more digital sales mix in the Netherlands and Belgium. So in other words, more blended learning solutions, more digital solutions that teachers are choosing to use from us. And that, of course, means in a pure revenue recognition point that that is more spread out over the school year. So from quarter three, more into quarter four and early next year even as well. So that's fundamentally what we see there. So strong position, strong growth, but more of a digital sales mix. And then last but not least, which very much is in line with what of course all of you know, we also now see the planned discontinuation of the low value Dutch distribution contracts materializing in quarter three to the order of magnitude of about 40 million, which we've set all along. And that strong growth underlying, of course, means that our strong earnings improvement is there too. 200 million versus 183 last year, driven by that higher sales in the largest market, particularly, of course, Poland and Spain. We also see now the benefits of the increased scale becoming visible with the net sales growth. So really also the margin improvement that you see here, that step change is happening. And we really see this being well on track to be then clearly above 23% for the full year. And that is also with further improved operational efficiencies really benefiting there as well from higher volumes as well. Let me now zoom in on media. In media, we saw another quarter of adjusted earnings improvement. Sales were a couple of million up. Fundamentally, the digital transformation is, of course, continuing here. So that means, if you look at it from our perspective, it is the stable subscription sales, but within that, it's growth in Route 2+, it's growth in the digital news media subscriptions, and that is continuing to offset the decline in print. On advertising, we see the lower advertising really driven by TV and print. We do see some positive signs, of course, in the market overall getting more towards stable. But that, of course, remains to be an uncertainty for us as well going into quarter four. The thing to highlight here as well is really strong events sales for Q3 as well. So higher event sales, higher number of festival visitors, also a few individual concerts that really performed well. It's in line with what I said at the Q2 results, but even a little bit stronger there too. Overall, that's very good to see. All this then leads to an improved adjusted operating profit, 22 million versus 20. So higher sales, the improved performance of events year on year. And of course, then the rest continues as well, including the lower paper printing distribution and also lower fixed costs on the back of PR Carlsen and the team continuing to do this really great job on the cost containment. And there are some higher TV programming costs, but that's mainly a timing factor. also resulting in continued improvement in our margins. Let me now say a few words on the narrowed outlook. So on the top line between 1.30 and 1.32 billion euros is the narrowing we've done there. Of course, very much reflecting where we now are in the year with the learning main quarter behind us and also more visibility on media group. adjusted operating profit to be at the higher end of our original guidance, so the 215 to the 225, really indicating that step change in growth that we've been highlighting, of course, before. And then the assumptions, of course, they remain the same, but have now largely, you can see them after nine months, so the demand for learning content will increase, driven by those curriculum renewals in some of the group's operating markets. And you've seen that happening, particularly also, of course, in Poland, and the advertising market in Finland be relatively stable. As always, the key uncertainties for us that remain in Q4 is on the learning side. How will the sales season exactly finish? And that includes then, of course, the exact level of returns, particularly in markets like Spain and Italy. That's always the case. That's always a difficult one to exactly predict. So that can be a positive or a negative within this guidance. And the same, of course, applies for the advertising market in Finland. Where will that exactly end up in quarter four? Again, that will then determine the higher or the lower end of the guidance. So with that said, let me now hand over to Alex to talk more through the financials and then we'll come back for the Q&A.

Thank you, Rob, and good to be here with you again today. Let's start, as usual, with the Q3 profit earnings chart. So as you see here, a roughly 10% increase in profit overall, which you actually see as a percentage in both Media Finland and Learning. But in absolute terms, obviously, the vast majority coming from the learning business and following through with the higher learning content sales, especially in Poland and Spain. And as we've talked through over over quite a period, that increase in volume with the benefits of the scale and the improved operation efficiency is driving higher profitability. In Media Finland, as you saw in the earlier slide, so the higher results from the events with both higher sales and improved performance has driven the growth along with the great cost management that's been done in that team and this offsetting the lower advertising sales and the timing of the TV programming, as Rob mentioned. So all in all, a good step change in profitability here in Q3. Earnings per share increased significantly with that adjusted operating profit flowing through. also restructuring provision and then if you look down at the financial items you can see that although the average interest rates on external loans is relatively stable we do see an increase in in cost here with the higher levels of debt which I will talk through in the in a couple of slides time As you say here, the free cash flow. So overall, again, as Rob says, we expect we continue to expect a moderate increase year on year. So absolutely no, no change there. And as indicated earlier, we would be lower than than last year. But you can see here on the slide on the bottom right there, you know, we've gone cash net positive with the free cash flow matching to 43. So you see on that lower slide that large chunk of cash comes in in Q3. And you can see there the results coming in in the EBITDA and then the working capital negative as a lot of that learning growth is going to be collected in Q4. That's why we see more of it coming in in the back end of the year. You see also the impact of the investments, which is partially due to the TV programming spend timing between years. But overall, as I said, on track for the the increase, the moderate increase versus 2025. And here we also highlight the second installment of the dividend paid and also when the third installment will be paid. So looking at leverage, so firstly, we are deleveraging versus the sort of seasonal peak in June with the positive cash flow sort of pulling us down to 2.7. So in absolute levels of debt terms, we're at 716 versus the 536 last year. So three reasons for that. So one is the repayment of the hybrid bond as the debt goes, part of that debt moves to normal. Normal Loans, also the acquisitions of not just Vistans Vives also Fluent VE and also we've extended some of our leases here in Finland to do with the Sanomatalo building and also our printing plant so having had good extensions to those leases that increases the lease liability debt as well as the right of use assets on the other side of the balance sheets that's just purely a balance sheet adjustment but that does increase the debt However, as we go into the end of the year with the positive cash flow that I've just been talking about with the collections, that number of 2.7 will come below the target, continuing that trend to be lower than the 2.5 at the end of the year. And then finally, here, we continue to be very grateful for the recognition we're getting for our ESG progress. Sustainability continues to be a key factor for all of us at Salimber, and we're delighted to see that we're seeing that recognition. And with that, I will invite my colleagues back on stage for the Q&A.