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SanomaWSOY Profit Falls on Lower Newsstand Sales

2008.08.12
 
July 31 (Bloomberg) -- SanomaWSOY Oyj, the Nordic region's largest publicly traded media company, said second-quarter profit fell 33 percent on lower tabloid sales and because it had gains from selling land and a Dutch magazine title a year earlier.
Net income slipped to 64.4 million euros ($101 million) from 95.8 million euros a year earlier, the Helsinki-based company said today in a statement. Revenue advanced 3.4 percent to 769.8 million euros. Analysts in a Bloomberg survey had predicted profit of 72 million euros on sales of 774 million euros.
SanomaWSOY cut its 2008 sales growth outlook today after earnings were dented by lower tabloid and free newspaper sales in Finland. Smaller rival Alma Media Oyj said last week the Finnish tabloid market dropped 6.7 percent in the first half. SanomaWSOY has introduced titles in eastern Europe and Russia and started television and radio channels in Finland, while print advertising sales have slowed in its home market.
``The slowdown of economic growth, however, had impacts on the newspaper business and kiosk operations,'' Chief Executive Officer Hannu Syrjaenen said in the statement. The company has intensified earlier announced cost savings measures, he said.
SanomaWSOY shares rose 0.3 percent to 13.95 euros in Helsinki. Before today, the stock had dropped 29 percent this year, valuing the company at 2.26 billion euros. That compares with a 27 percent decline in the Dow Jones Stoxx 600 Media Supersector Index.
Slowing Growth
Full-year sales will rise at a slower rate than the 6.7 percent achieved in 2007, SanomaWSOY said, lowering its previous prediction of growth in line with last year. It reiterated operating profit will rise from 303.5 million euros, excluding one-time items.
Second-quarter profit was 40 cents a share, down from 57 cents a year earlier. Operating profit excluding one-time items fell 1.8 percent to 97 million euros.
Operating profit decreased at the company's Sanoma newsprint unit and at Rautakirja, which operates movie theaters and a kiosk chain, as higher transportation costs hampered earnings. The company blamed timing issues for the decline in profit at its Education and Books unit.
Earnings at SanomaWSOY's magazines business rose, helped by sales growth in eastern Europe and Russia. Finnish unit SWelcom, which includes radio, television and Internet offerings, boosted profit on new channels and increased demand for pay-TV and broadband subscriptions.
``We should not be too pessimistic, there is still growth,'' Syrjaenen said on a conference call.
Aatos Erkko, among the richest people in Finland, is SanomaWSOY's biggest shareholder, with a stake of about 23 percent. The company's publications, which range from Finland's biggest newspaper to the Slovenian version of Playboy magazine, have more than 40 million readers and its operations date back to the 19th century.
The company will start using the name Sanoma Oyj in the second half of this year.
 

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