The companies merging into Sanoma-WSOY Oyj, i.e. Werner Söderström Oyj - WSOY, Sanoma Corporation, Helsinki Media Company Oy and Oy Devarda Ab, which is a shareholder in the two last-mentioned companies, have today published a supplement to the listing particulars as of 12 June 1998.
The listing particulars are completed with the following information: 1998 financial statements of the merging companies, Sanoma-WSOY Oyj's pro forma financial statements 1998 and auditors' report on the pro forma financial statements, report by the boards of directors of the merging companies on events after the financial statements with significant effects on the companies financial position and report by the board of directors of Sanoma-WSOY Oyj on the outlook for 1999 as well as 2000. Outlook for 1999 and 2000 is enclosed to this release.
The listing particulars and the supplement are available as of 29 April 1999 at the Helsinki Stock Exchange, the premises of Sanoma-WSOY Oyj (Korkeavuorenkatu 32, Helsinki) and OKOBANK Oyj's branches offering securities services.
The merger to Sanoma-WSOY Oyj will enter into force on 1 May 1999. Trading in the shares of the new company at the Helsinki Exchanges will start on 3 May 1999 at 10.00 a.m.
Additional information: Mr. Aarno Heinonen, Vice President; tel. +358 9 122 2000 or +358 400 408 938.
WERNER SÖDERSTRÖM OYJ - WSOY
DISTRIBUTION: HEX Helsinki Stock Exchange, principal media
REPORT BY THE BOARD OF DIRECTORS OF SANOMA-WSOY OYJ ON THE OUTLOOK FOR THE PRESENT AND THE NEXT FINANCIAL PERIODS
Outlook for 1999
When the merger is implemented, the business operations of Sanoma Corporation (hereafter Sanoma), Helsinki Media Company Oy (HMC) and Werner Söderström Oyj - WSOY (WSOY) will be transferred to the Sanoma-WSOY Oyj's new wholly-owned subsidiaries of the same names. The new independent subsidiaries will continue carrying out the business operations of their predecessors in their current extent. In connection with the merger, a considerable portion of the group's real estate, equity portfolio and other financial assets will be transferred to the parent company. So the earnings and balance sheet data for the subsidiaries are not entirely comparable with figures for previous years.
Confidence in continued economic growth is strong even though growth is slowing. The pace of growth in exports is also slowing down, but domestic demand remains good. Inflation pressures are negligible, and consumers' purchasing power continues to grow. The performance of the communications industry reflects general domestic economic trends. Uncertainty about the future is increasing as some industries have had to resort to job cuts and layoffs. The instability of some crucial export sectors is also fuelling the uncertainty faced by the communications industry.
Sanoma's consolidated net sales will grow and profitability is estimated to remain good even though growth in the advertising sales of Helsingin Sanomat is slowing and circulation is declining slightly due to fewer discount-priced promotional offers. The advertising sales of Ilta=Sanomat are expected to grow and the circulation to stay at the current level. Taloussanomat will continue to grow vigorously.
HMC's net sales are expected to remain on the previous year's level even though printing operations have been transferred to an associated company. Most of the growth in net sales will come from Nelonen's TV operations, which will grow clearly faster than the market. Start-up costs continue to weigh on HMC earnings, which nevertheless will improve slightly on the previous year.
WSOY will increase its investment both in conventional book publishing and in new media. The companies acquired for the group will continue to be developed and growth opportunities and objectives clarified. The arrangements of the associated companies and the organization of operations within the SanomaWSOY Group will mean a slight decline in the net sales of WSOY. Profitability will remain good and the company's market positions will stay strong.
Rautakirja expects its net sales to grow with the trend of the economy and the operating profit is forecast to stay at the previous year's level, which was good.
Implementing the merger and creating a functional group structure are among the main tasks for the current year at the SanomaWSOY Group. The long-established business operations will continue in their current extent within the group's autonomous corporations. At the same time, the group and its subsidiaries will explore opportunities for expansion from a new perspective. Sanoma-WSOY Oyj's net sales in 1999 will grow about 10 percent. Extraordinary sales gains will decline considerably. Owing to investment in business operations, the operating profit will decline, but profit before extraordinary items is estimated to grow slightly.
Outlook for 2000
The degree of solvency of Sanoma-WSOY Oyj is high and its market positions are strong. The group seeks with persistency, devotion and an analytical approach prospects for profitable expansion. The target is to exceed the organic growth of net sales in the business by developing own business activities and acquiring new companies.
The natural growth in present business areas and markets is limited, although the development in the new media area is fast. SanomaWSOY is a major operator also in these new fields. In addition, the future expansion of the group will probably be directed geographically to new areas as well as to business close to the present operations
Profitability might temporarily slightly decrease due to fluctuations in the economic situation and investments in expansion projects. On the long-term profitability is, however, expected to improve.