”We had a good start to the year. The positive impact of active cost containment measures, lower paper prices and carefully implemented price increases have enhanced performance and operational earnings in both Learning and Media Finland. I would like to warmly thank all our teams for their dedication and effort in supporting our customers in the best possible way and delivering solid results.
In Learning, the first quarter is always seasonally small, this time with some earlier ordering most notably in the Netherlands and Belgium. In Spain, the positive impact of the ending curriculum renewal was still somewhat visible in Q1, while on the full-year level the lower curriculum cycle is expected to result in lower net sales, as communicated earlier. Despite higher operational earnings in the first quarter, we continue to expect Learning’s FY 2024 operational EBIT margin excl. PPA to be relatively stable compared to 2023.
The implementation of the process and efficiency improvement program, Solar, has proceeded according to our plans across all streams. We are optimising our processes in Spain and Poland post the recent curriculum renewals and increasingly leveraging benefits of scale in content creation across our markets. The harmonisation of our digital platforms continues with the optimisation of product development and maintenance. This is implemented for example through outsourcing and nearshoring to lower cost countries.
The 2024 Sanoma Learning European Teacher Survey, which engaged nearly 10,000 teachers, shows stable and consistent value placed on high-quality learning materials throughout our markets, with 84% of the teachers agreeing that our learning materials help them in improving learning outcomes. Also, blended learning materials (i.e., a combination of printed and digital) are preferred by almost all teachers (95%), and over 90% concur that personalisation is essential for better learning outcomes.
In Media Finland, subscription sales grew because of the good development in digital. This was driven especially by the SVOD service Ruutu+, whose subscription base is now above 370,000. On the news media side, we launched IS Extra,
a subscription-based digital tabloid, in February. It has started in line with our expectations and is a good example of our customer focused initiatives. Driven by a solid performance in online and radio, our total advertising sales were stable in an overall declining market. We see volatility in the advertising markets continuing, and our expectations for the advertising demand and Media Finland’s financial performance for FY 2024 remain intact.
Our free cash flow improved mainly due to higher earnings and continued active working capital management in both businesses. We continue to expect the FY 2024 free cash flow to be similar to 2023. At the end of March, our leverage (net debt / adjusted EBITDA) and equity ratio were at their long-term target levels.
Our Outlook for 2024 and strategic focus areas remain unchanged. In the mid-term, we are working to reach the long-term profitability (operational EBIT margin excl. PPA) target of 23% by 2026 in Learning, supported by our increased scale and Program Solar, and to accelerate digitalisation and improve profitability towards the long-term target in Media Finland.”
8 May 2024
