Amsterdam, 6 November 2009 – In the first nine months of 2009 the net sales and operating profit of Sanoma Magazines (part of media group Sanoma - listed on the NASDAQ OMX Helsinki, SAA1V) have decreased. However, Sanoma Magazines’ strong brands have been able to outperform market developments in key markets. At the same time, efficiency improvements are becoming visible: Sanoma Magazines’ EBIT excluding non-recurring items developed clearly better in the third quarter than in the two previous quarters.


Net Sales Development

Sanoma Magazines’ net sales in January–September amounted to €804.2 (907.9) million, 11.4% less than in the comparable period. The general economic situation affected in particular advertising sales in all operating countries. Net sales adjusted for changes in the Group structure were down by 12.2%. From July–September, net sales decreased by 12.5% to €266.1 (304.0) million.

Netherlands

Sanoma Magazines Netherlands’ strong brands outperformed advertising market development both in print and online. New assets contributed to Sanoma Magazines Netherlands’ online advertising growth of over 7%. Sanoma Magazines Netherlands also improved its market position in the readers’ market. Its circulation revenues were almost at the comparable period’s level, even though some titles have been discontinued during the year. Subscription sales in particular developed positively. Sanoma Magazines Netherlands has decided to simplify its organisational structure and will combine all printed products under Sanoma Uitgevers and all online operations under Sanoma Digital Netherlands. This enables Sanoma Magazines Netherlands to better respond to the needs of consumers and advertisers, share knowledge internally and improve efficiency.

Belgium

Sanoma Magazines Belgium outperformed market development on the readers’ market. Circulation sales remained stable, with subscription sales even growing. In line with market developments, advertising sales were below the comparable period. Sanoma Magazines Belgium is redesigning its organisation to be able to better use the opportunities in the changing media environment.

Central and Eastern Europe

The economic downturn has affected Sanoma Magazines International’s sales strongly. The reported net sales were also clearly affected by the negative translation effects of especially Russian Rouble and Hungarian Forint. Advertising sales decreased in all countries, especially in Russia, Hungary and Ukraine. Sanoma Magazines International reacted quickly to changing market conditions at the beginning of the year and discontinued a number of unprofitable magazine titles, which also lowered advertising sales, in particular in the Czech Republic. Circulation sales were clearly below the comparable period. This is also partly attributable to the reduced number of magazines published and, in some cases, the number of issues. The publication frequency of various titles has been adjusted in order to save costs. Sanoma Magazines International has improved its market share in Romania and is now the leading magazine publisher in the country. In Hungary, the company’s leading position in the online market was further strengthened through the acquisition of the comparison site Olcsobbat.hu in September.

Finland

Sanoma Magazines Finland’s circulation sales held up well but advertising sales were down from the comparable period. Sanoma Magazines Finland outperformed the market development both in advertising and the readers’ market and has increased its market shares. In particular key titles like the women’s weekly Me Naiset and the glossy Gloria together with its brand extensions have increased their readership. In addition, the custom publishing operations of Sanoma Magazines Finland have gained new customers and improved their market share.

Operating Profit Development

In January–September, Sanoma Magazines’ operating profit excluding non-recurring items was €75.0 (102.8) million, a decrease of 27.1% from the comparable period. Decreasing advertising sales affected results in all businesses, in particular in Sanoma Magazines International and also in Sanoma Magazines Netherlands. Operating profit improved slightly in Finland.

Non-recurring items totalled €-6.1 (23.5) million and were related to restructuring in Sanoma Magazines Belgium and the direct marketing organisation in the Netherlands. In the comparable period, operating profit was improved by a €23.5 million non-recurring gain from the divestment of movie distributor R.C.V. Entertainment. Operating profit for the first nine months amounted to €68.9 (126.3) million.

Sanoma Magazines has initiated several programmes to improve the profitability of its business units. These contingency plans executed in all markets are becoming more visible. In July–September, Sanoma Magazines’ operating profit excluding non-recurring items developed clearly better than in the two previous quarters and totalled €27.9 (31.6) million, 11.6% less than in the comparable period.


Outlook

Sanoma Magazines continues to develop its magazine portfolio and invest in strengthening its market positions, with a special focus on its key titles in each operating country. Sanoma Magazines wants to become stronger in digital media, and can do so by leveraging its existing assets. The growth in digital operations will be speeded up by organisational changes. At the same time Sanoma Magazines continues to strongly focus on improving efficiency and saving costs.

In 2009, Sanoma Magazines’ net sales are expected to decrease and it is estimated that operating profit excluding non-recurring items will be clearly below the previous year’s level.