Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sanoma Oyj (STU:SNQB, Financial) reported a solid third quarter with improved operational EBIT for the first nine months.
- Free cash flow has significantly improved, driven by operational efficiencies and the Solar program.
- The company has successfully deleveraged its balance sheet, reducing leverage to 2.4, below the long-term target of 3.0.
- Digital subscriptions and advertising sales in Media Finland have shown growth, offsetting declines in print.
- Sanoma Oyj (STU:SNQB) issued a EUR150 million social bond, marking a significant achievement in the Finnish market.
Negative Points
- Net sales in Spain declined due to the end of the curriculum cycle, impacting profitability.
- The discontinuation of low-value distribution contracts in the Netherlands and Belgium resulted in a EUR28 million impact.
- An impairment of EUR27 million was recorded due to the discontinuation of low-value contracts.
- The advertising market in Finland remains challenging, with no signs of improvement.
- The company faces uncertainties in the learning business, particularly with returns in Spain and Italy.
Q & A Highlights
Q: Regarding the distribution contract, was the EUR28 million impact for Q3 or for the whole year?
A: That was the EUR28 million impact for Q3. Most of that business comes in during Q3, so it's similar to the full year.
Q: How much of a decline should we expect in low-value contracts for the next years?
A: We expect some low-value contracts to stop, with a similar amount of decline in '25 as seen this year, maybe slightly lower. These contracts are around breakeven, so the impact is more on the top line than the bottom line.
Q: Can you clarify the EUR27 million impairment? How much value is still left on the balance sheet?
A: Overall, we have over EUR1.5 billion in goodwill and intangible assets. The EUR27 million impairment is related to another intangible asset, specifically linked to the Iddink business.
Q: Sales in the Netherlands and Poland have been strong. Is this due to price increases or volume?
A: There is a small volume impact and pricing. In the Netherlands, we see continuous growth due to a strong market position. In Poland, there's a curriculum phase impact, but the majority of growth is in the Netherlands.
Q: Why is the EUR27 million impairment being done now and not earlier?
A: The impairment is related to an intangible asset depreciated over time. We review this annually, and the updated strategic plan this year provided the information needed for the impairment calculation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
