Sanoma Group considers belt-tightening measures and job cuts

Company seeks to adjust to changes in the media business culture

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The Sanoma media group may resort to personnel reductions, Sanoma Corporation President and CEO Harri-Pekka Kaukonen said in connection with the publishing of the group’s interim financial report on Wednesday.
      Kaukonen gave justification to the need for economic tightening and streamlining measures by referring to the period of change that the line of business is going through, and when it comes to the immediate future, to the negative development of advertising markets in the group’s core countries of operation, namely The Netherlands and Finland.
     
The group has already divested some workers. Kaukonen said that he “unfortunately feared” that more redundancies would follow.
      The CEO did not specify which of the group’s lines of business such cuts might relate to.
      The belt-tightening measures will be talked about in greater detail in the autumn.
      “The road of easy cuts, if such a thing even exists, has been exhausted. What we are talking about now is restructuring the operating models”, Kaukonen added.
     
In April-June the Sanoma Group’s net sales were EUR 646.5 million (2011: EUR 592.6 million), while operating profit excluding non-recurring items amounted to EUR 104.2 million (2011: EUR 65.6 million).
      In Finland, Sanoma publishes for example daily newspapers such as Helsingin Sanomat and Ilta-Sanomat as well as a range of periodicals. The group is also engaged in online business activities.
      The net sales of the Sanoma News strategic business unit, which is in charge of the group’s news segment, reached EUR 106.8 million in the second quarter of 2012.
      The operating profit without non-recurring items for the same period was EUR 5.1 million, equivalent to 4.8 per cent of  net sales.
      Such poor profitability is unacceptable, Kaukonen said.
      In Kaukonen’s view, the Sanoma News unit’s operating margin will have to become at least a double-digit figure.
     
The Helsingin Sanomat daily will take on a new format from next year, halving its size from broadsheet to tabloid as of January 8th, 2013.
      Kaukonen argued that the change would bring the printed newspaper, the main product of Helsingin Sanomat, more closely into line with today’s multichannel communication principles.
      “On the other hand, there is also the desire to renew the daily itself and to bring it closer to today’s reader”, the CEO added.
      The intention to switch to the tabloid-size format was reported by Helsingin Sanomat in late February.
      The Sanoma Group Board was meant to reach a final decision on adopting the tabloid format at the beginning of June.
     
The decision was nevertheless postponed and the group’s board only decided on the matter on Tuesday of this week.
      “Perhaps in this case announcing such a fundamental change happened slightly ahead of time”, Kaukonen said.
      According to Kaukonen, the extra timeout called in June was used to complete the final calculations and investigations into the matter, in order to ensure that the changeover could be carried out without a hitch.
      Mikael Pentikäinen, the senior editor-in-chief of Helsingin Sanomat has championed the tabloid reform cause since the beginning of his term in April 2010.
      Pentikäinen enjoys the full support of the Sanoma Group’s leaders and Board, Kaukonen noted on Wednesday.


Previously in HS International Edition:
  Helsingin Sanomat is to switch to tabloid-size format in January 2013 (1.8.2012)
  Tabloid Hesari moves prompt both fear and delight (6.3.2012)

See also:
  Sanoma Group´s Q1/2012 result weaker than expected (4.5.2012)
  Sanoma Group to divest its interest in teleoperator DNA (24.2.2012)

Links:
  Sanoma
  Sanoma Interim Report 1 January - 30 June 2012

Helsingin Sanomat