Sanoma (SAA1V) Q2 2024 earnings summary

Executive summary

• Strong earnings improvement in both Learning and Media Finland segments in H1 2024, with operational EBIT excl. PPA rising to EUR 37 million from EUR 23 million year-over-year and net sales up to EUR 563 million, driven by growth in the Netherlands and Spain.

• Cost containment, lower paper prices, and price increases supported profitability; free cash flow improved significantly but remained negative due to seasonality.

• The Solar efficiency program in Learning is progressing ahead of schedule, targeting EUR 55 million annual savings by 2026 and supporting margin stability.

• The company maintains its full-year outlook, citing significant H2 seasonality and uncertainties in advertising and curriculum cycles.

• Balance sheet deleveraging continued, with net debt/adj. EBITDA improving to 2.9 from 3.3.

Financial highlights

• Q2 2024 net sales reached EUR 342 million (Q2 2023: EUR 341 million); operational EBIT excl. PPA was EUR 61 million (Q2 2023: EUR 54 million).

• H1 2024 operational EBIT excl. PPA was EUR 37 million (H1 2023: EUR 23 million); result for the period improved to EUR -3 million from EUR -51 million.

• Learning net sales grew 3% (5% organically), with content sales up in the Netherlands, Spain, and Poland, partially offset by declines in Finland and Belgium.

• Media Finland subscription sales grew 6% year-over-year, with digital and TV advertising offsetting print declines.

• Free cash flow improved to EUR -58 million from EUR -84 million, driven by higher earnings and lower investments.

Outlook and guidance

• Full-year guidance remains unchanged due to expected H2 seasonality, especially in Learning (school year start) and Media (advertising market volatility).

• 2024 net sales expected at EUR 1.29–1.34 billion (2023: 1.4 billion); operational EBIT excl. PPA at EUR 160–180 million (2023: 175 million).

• Profit improvement in Media Finland is expected to persist, but H2 profit is forecasted to be similar to last year due to tougher comparables and a slightly declining advertising market.

• Learning margins are expected to remain stable for the full year despite headwinds from Spain's lower curriculum and discontinued Dutch contracts.

• Free cash flow for 2024 is expected to be similar to 2023, with stronger improvements anticipated in 2025 and 2026 as Solar-related costs subside.