”In 2023, our net sales growth and operational EBIT were driven by strong performance in Learning, while Media Finland managed to partially mitigate the impact of lower advertising demand and cost inflation on its financials. In my new role as the President and CEO of Sanoma, I am very much looking forward to working together with our great team to further strengthen our position in European K12 learning services, to deliver on our key initiatives, including Program Solar, and to continue the successful digital transformation in our media business.  

In Learning, the year was characterised with strong 6% organic growth, driven by the successful second year of the LOMLOE curriculum renewal in Spain, a minor curriculum renewal in Poland and inflation mitigating price increases across our operating countries. Together, these also resulted in strong improvement of Learning’s operational EBIT. The integration, sales and financial performance of our latest acquisition, the K12 learning content business in Italy, proceeded successfully and in accordance with our plans.

In October, we initiated a Learning-wide process and efficiency improvement programme, named Solar, to ensure that we use the benefits from our increased scale and the best practices from our recent acquisitions in an optimal way. Supported by Program Solar, Learning’s operational EBIT margin excl. PPA is expected to reach its long-term target level of 23% in 2026. First implementation phase of Solar has already been underway, focusing on post-curriculum optimisation especially in Spain and Poland, and the program is on track.

In-line with our expectations, net sales and operational EBIT of Media Finland decreased mainly due to lower advertising sales. The highlights of the year include clear growth in the number of digital subscriptions, mainly attributable to our SVOD service Ruutu+. Initiatives to extend and improve our customer offering led to a minor increase in the total subscription base compared to the end of 2022. Careful price increases across the portfolio during the year supported subscription sales. With continuing active cost containment, the team succeeded to partially mitigate impact of the cost and salary inflation.

During the year, we paid special attention to active working capital management in Learning, with the aim of mitigating the impact of increased seasonality of the business and improve cash conversion. The Group’s free cash flow improved significantly compared to the underlying free cash flow in 2022, which excluded the one-time positive impact due to the timing of the acquisition in Italy and Germany. Our leverage improved to 2.8, being within the long-term target of below 3.0, and providing a solid basis going forward.

While we continue building the long-term strengths of both Learning and Media Finland, our three strategic focus areas in the mid-term are 1) increasing the profitability of Learning and Media Finland, 2) growing organically and through smaller in-market acquisitions in Learning, and 3) deleveraging the balance sheet. 

The Board proposes a stable dividend of EUR 0.37 (2022: 0.37), corresponding to 58% of the annual free cash flow. This proposal reflects our ability to deliver solid free cash flow, and balances the capital use between the dividend, which continues to be an important part of our equity story, and the deleveraging of the balance sheet.  

We have a unique sustainability profile as learning and media have a positive impact on the lives of millions of people every day. To support the purpose of our businesses, we have set ambitious targets for sustainability aspects in which we have the biggest impact, including climate and employee engagement. Our 2030 climate targets, covering both our operations and the value chain, were approved by the Science Based Targets initiative in November 2023. We were also very happy to see that the annually measured Employee Experience Index (EEI) improved to the long-term target level of 7.5 (2022: 7.3), being clearly above the European benchmark of 7.1. Both of these sustainability aspects are linked, among other targets, to the executive management’s short-term incentives in 2024. 

Our Outlook for 2024 indicates lower net sales compared to 2023. This is mainly due to discontinuation of low value contracts in the Dutch learning distribution business and small divestments of non-core businesses both in Learning and Media Finland announced in January 2024, while lower learning content sales after the curriculum renewal in Spain are offset by continued growth in other learning content markets. In Finland, we expect the advertising market to decline slightly. Our expectation of the Group’s operational EBIT excl. PPA is a sum of a relatively stable margin in Learning and modest earnings and margin improvement in Media Finland.

I would like to extend my warmest thanks to all Sanoma employees throughout the business for their excellent work, strong commitment, and passion in supporting our customers, combined with constant internal improvement under the current operating environment. We have a great basis to continue on our strategic path, and to grow and further strengthen our positions, improve our performance, and create value for all our stakeholders. I am looking forward to a successful year 2024.”

7 February 2024