Reuters: Global Markets: Sanoma tops third-quarter expectations, plans cost cuts

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Sanoma tops third-quarter expectations, plans cost cuts Oct 31st 2012, 10:52 By Jussi Rosendahl HELSINKI | Wed Oct 31, 2012 6:52am EDT HELSINKI (Reuters) - Finnish media company Sanoma (SAA1V.HE) posted a surprise improvement in third-quarter profit thanks to acquisitions, cost cuts and its school books division, and said it planned more savings in a "challenging" environment. The company, which publishes about 300 magazine titles in 13 European countries, posted an adjusted third quarter operating profit of 80.1 million euros, up 3 percent from a year earlier and above 74.8 million forecast in a Reuters poll of analysts. Sanoma will cut 60 million euros ($77.9 million) in costs over three years to cope with consumer media weakness, it said. Sanoma shares rose 6.4 percent to 7.31 euros by 1026 GMT in Helsinki. Investors may have been too cautious about the firm's school books and digital learning unit, one analyst said. "The learning materials were a positive surprise. It could be that the market has not fully understood its current operational strength," said Teemu Vainio from Pareto Securities. The rest of the year would be difficult as economic uncertainty weighs on advertising sales and encourages more readers to shift from paper to digital media, the company said. "As a result, the fourth quarter will be extremely challenging for us," said Chief Executive Harri-Pekka Kaukonen. Sanoma reiterated its outlook for the full year, saying adjusted earnings per share will be lower than in 2011. The company will look to divest more non-core holdings, Kaukonen said. Sanoma in recent years has been an active M&A player, selling off some assets while increasing its stake in consumer media as well as educational and digital publishing. Analysts noted Sanoma carried goodwill, a calculation of long-term business potential, of more than 2.3 billion euros as of end-September. The company will carry out goodwill testing for impairment later this year. "That is very much, more than half of their balance sheet. The risk remains they could need to write it down at some point," said Mona Grannenfelt from brokerage FIM. ($1 = 0.7705 euros) (This version of the story has been corrected to remove a typographical error in the ninth paragraph) (Editing by Ritsuko Ando and Jason Webb) Link this Share this Digg this Email Reprints

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