ANORA GROUP OYJ Q1 2024
Interim Report
JANUARY-MARCH 2024 7 May 2024
About this report
Anora Group Plc was formed when the merger of Altia and Arcus was completed on 1 September 2021.
The figures in brackets refer to the comparison period, i.e., the same period in the previous year, unless otherwise stated.
This interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS) and IAS 34 Interim Financial Reporting as approved by the EU. The figures in the report are unaudited. A reconciliation of alternative key ratios to IFRS figures is presented in appendix 1.
Content:
• | Share | ||
• | • | Outlook for 2024 | |
• | Market environment | • Contacts and conference call details | |
• | Financial review | • Financial statements and notes |
- Sustainability
Financial Statement Release | January-December 2023 | 14 February 2023 | 1
BUSINESS REVIEW
Anora's Interim Report January-March 2024
Comparable EBITDA improved in Q1 due to higher gross margin and cost reduction
Q1 2024 in brief
- Net sales were EUR 146.9 (159.5) million, down by 7.9%.
- Comparable EBITDA was EUR 8.9 (7.9) million, or 6.1% (5.0%) of net sales, up by 12.1%.
- EBITDA was 7.8 (6.9) million, or 5.3% (4.3%) of net sales, up by 12.9%.
- Net cash flow from operating activities was EUR -44.6 (3.6) million.
- Earnings per share was EUR-0.03(-0.08).
Key figures
EUR million | Q1 24 | Q1 23 | Change | 2023 |
Net sales | 146.9 | 159.5 | -7.9% | 726.5 |
Comparable EBITDA | 8.9 | 7.9 | 12.1% | 68.2 |
% of net sales | 6.1 | 5.0 | 9.4 | |
EBITDA | 7.8 | 6.9 | 12.9% | 67.5 |
Comparable operating result | 2.0 | -0.7 | 34.8 | |
% of net sales | 1.3 | -0.4 | 4.8 | |
Operating result | 0.8 | -1.7 | -31.3 | |
Result for the period | -2.2 | -5.6 | -39.9 | |
Earnings per share, EUR | -0.03 | -0.08 | -0.59 | |
Net cash flow from operating activities | -44.6 | 3.6 | 135.3 | |
Net working capital | -31.7 | 53.7 | -79.2 | |
Net debt/comparable EBITDA, rolling 12 months | 2.6 | 4.0 | 2.0 | |
Personnel end of period | 1,220 | 1,284 | -5.0% | 1,219 |
Guidance
In 2024, Anora's comparable EBITDA is expected to be EUR 75-85 million (2023: EUR 68.2 million).
Short-term risks and uncertainties, including volatility in currencies, price elasticity, such as risks related to significant price increases, and the big seasonal impact of the last quarter of the year have been discussed in the risk section of this report.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 2
BUSINESS REVIEW
CEO Jacek Pastuszka:
"During the first quarter, we continued with our intensified focus on improving the profitability of our Wine and Spirits segments and on strengthening our cash position and balance sheet. This has been accomplished both by increasing the share of margin accretive businesses and by price increases and cost reductions initiated already last year. Also lower raw material prices and currency hedging supported our performance during the period.
As a result, our comparable EBITDA grew by 12.1 percent, and amounted to EUR 8.9 (7.9) million or 6.1 percent of net sales in the first quarter. Both Wine and Spirits segments delivered notable EBITDA growth and significant margin enhancements. The performance of our Spirits segment continues its positive development of 2023, with comparable EBITDA up by over 17 percent and gross margin up by 240bps from the previous year. We are also satisfied with the continued turnaround in the profitability of the Wine segment following the challenges of last year, underscored by its gross margin improvement of 270bps. The performance of
Industrial was a drag on the overall Group results, due to lower production volumes and price erosion in side-product sales.
Net sales in the first quarter declined by 7.9 percent to EUR 146.9 million, mainly due to a decrease in Wine and Industrial net sales. In Spirits, all our four Nordic markets delivered net sales growth in Q1, whereas the performance of our international sales was weaker, partly due to the harbour strike in Finland that disrupted export deliveries with limited gross profit effect. Important to note, the early Easter impact was marginal due to fewer delivery days in March. In the Industrial segment, net sales were negatively impacted by lower sales prices due to the lower price of barley combined with reduced production volumes.
Overall, the monopoly markets showed a stable environment, albeit shoppers are still trading down and volumes are eroding slowly. Against this backdrop, our lower-mainstream wine and spirit offerings saw good growth in sales, demonstrating the breadth and flexibility of our product portfolio. Also, our own wine brands continue gaining momentum following the actions taken in the second half of 2023. In this market environment, our gross margin improved, while our gross profit was EUR 1.0 million (-1.6%) lower due to lower net sales.
Our efforts to reduce leverage also progressed well. At the end of the quarter our cash balance was high, supported by lower working capital due to inventory reduction and the Larsen divestment. Our cash and cash equivalents reached EUR
165.8 million. This resulted in lower net debt of EUR 176.6 million, while our net interest-bearing debt / comparable EBITDA ratio was 2.6x.
At the end of last year, we left our science-based emission reduction targets to be validated by the Science Based Targets initiative. This continues our ambitious sustainability work as the forerunners of the industry.
Looking ahead to the balance of 2024, we remain committed to our near-term actions to halt profitability decline through active mix and revenue management and to strengthen our cash position and balance sheet via reduced working capital and improved inventory turns. We are also intensifying our efforts to restore organic net sales growth in the Wine and Spirits business by investing in focused commercial agenda built around the largest brands and partnerships.
I am convinced that our current effective measures to markedly strengthen the Group's financial fundamentals will allow us to get back on track in delivering on Anora's long-term targets and strategy."
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 3
BUSINESS REVIEW
Business Review
Anora has three reportable segments: Wine, Spirits, and Industrial.
Wine segment
The Wine segment develops, markets and sells Anora's own wine brands as well as partner wines to customers in the Nordic monopoly markets and Denmark. Wine segment in Denmark also include contract manufacturing and logistics services on behalf of other group companies. During 2023 the Group initiated a Center of Excellence program in order to improve production efficiency, which mean that contract manufacturing for wine will be concentrated in Globus Wine in Denmark during the years to come.
Spirits segment
The Spirits segment develops, markets and sells both Anora's own spirits brands and partner brands to customers in Finland, Sweden, Norway, Estonia, Latvia, Denmark, and Germany. The Spirits segment also includes global duty free and travel retail sales and exports to markets not listed here.
Industrial segment
The Industrial segment comprises Anora's industrial business - industrial products and services, the logistics company Vectura, and internal supply chain operations. Of the total net sales of the Industrial segment, approximately 40-60 per cent is typically internal sales.
Seasonality
There are substantial seasonal fluctuations in the consumption of alcoholic beverages impacting the net sales and cash flow of Anora. The company typically generates large amounts of its revenue and cash flow during the fourth quarter of the year, whereas the first quarter of the year is significantly lower. In addition, excise taxes related to the high season at the end of the year are paid in Q1, resulting in large cash outflows. Also, the timing of Easter fluctuating between Q1 and Q2 impacts quarterly sales and profitability.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 4
BUSINESS REVIEW
Anora Group
Q1 24 | Q1 23 | Change,% | 2023 | ||||
Net sales (external), EUR million | 146.9 | 159.5 | -7.9% | 726.5 | |||
Gross profit, EUR million | 63.6 | 64.6 | -1.6% | 305.4 | |||
Gross margin, % of net sales | 43.3 | 40.5 | 42.0 | ||||
Comparable EBITDA, EUR million | 8.9 | 7.9 | 12.1% | 68.2 | |||
Comparable EBITDA margin, % of net sales | 6.1 | 5.0 | 9.4 | ||||
Group net sales
In Q1, Anora Group's net sales were EUR 146.9 million. Net sales were 7.9% below the Q1 2023 net sales (EUR 159.5 million).
Net sales declined mainly due to a decrease in Wine and Industrial net sales. In Spirits, all the four Nordic markets delivered net sales growth in Q1, whereas the performance of international sales was weaker, partly due to the harbour strike in Finland that disrupted export deliveries with limited gross profit effect.
In the Industrial segment, the net sales was negatively impacted by lower sales prices due to the lower price of barley combined with lower production volumes.
The consolidated income statement includes the income statement of the divested business of Larsen until 29 September 2023.
Profitability
In Q1, Anora Group's comparable EBITDA was higher than last year and amounted to EUR 8.9 (7.9) million or 6.1% (5.0%) of net sales. Results were visible from the cost cuts and price increases made last year, supported by lower raw material prices and more stabilised currencies. Gross margin improved, while the gross profit was EUR 1.0 million (-1.6%) lower due to lower net sales.
The Spirits segment continued to improve its performance. Especially the Global Travel Retail performed extremely well compared to last year. The Wine segment also continued to improve its performance following the challenges of last year.
The performance of the Industrial segment was negatively impacted by lower volume and price erosion due to barley value based side product sales.
Items affecting comparability have been presented in appendix 1.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 5
BUSINESS REVIEW
Q1 NET SALES (EXTERNAL), EUR MILLION | Q1 COMPARABLE EBITDA, EUR MILLION |
Q1 NET SALES (EXTERNAL), EUR MILLION | Q1 COMPARABLE EBITDA, EUR MILLION | |||||||||
Industrial | Anora Group total | 8.9 | ||||||||
33.3 | Wine | |||||||||
66.6 | Wine | 2.6 | ||||||||
Spirits | 6.8 | |||||||||
Spirits | Industrial | 0.8 | ||||||||
Group and allocations | -1.3 | |||||||||
47.0 | ||||||||||
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 6
BUSINESS REVIEW
Wine
Q1 24 | Q1 23 | Change,% | 2023 | |
Net sales, EUR million | 66.6 | 73.3 | -9.1% | 334.3 |
Gross profit, EUR million | 20.2 | 20.2 | 0.0% | 89.9 |
Gross margin, % of net sales | 30.3 | 27.6 | 26.9 | |
Comparable EBITDA, EUR million | 2.6 | 1.2 | 119.9% | 12.4 |
Comparable EBITDA margin, % of net sales | 4.0 | 1.6 | 3.7 | |
Net sales
In Q1 2024, net sales in the Wine segment decreased by 9.1% to EUR 66.6 (73.3) million compared to last year due to Francois Lurton resignation in Sweden in March 2023 and discontinuation of low margin third party filling contracts in Denmark. The impact of exchange rate fluctuation was not significant on net sales due to hedging.
In Norway, net sales increased by 3.4% despite small decline in volumes. The overall wine monopoly market volumes declined by 1.3% for the period.
In Finland, net sales increased by 2.7% due to price increases and new listings. The overall wine monopoly market grew by 0.7% for the period in Finland due to Easter.
In Denmark Anora continued to increase its market share significantly, and strengthened its position as the leading wine company in Denmark. Net sales was impacted by discontinuation of low margin filling contracts.
In Sweden, Anora's net sales declined by 14.9% mainly due to the partner loss mentioned above. The overall wine monopoly market volumes grew by 0.9% in Sweden due to Easter.
Profitability
In Q1, the comparable EBITDA increased to EUR 2.6 (1.2) million, or 4.0% (1.6%) of net sales, due to price increases, improved gross margins and lower operating expenses.
Especially own wines contributed positively. Gross margin improved, while the gross profit remained stable.
In Sweden, the implemented price increases impacted gross profit and comparable EBITDA positively despite the lower net sales. In Norway, price increases delivered positively to the gross profit and comparable EBITDA. In Finland, the gross profit developed positively due to price increases and new listings. Also in Denmark the gross profit improved.
Events and new products
During the period, Anora has had succesful launches, including with its important partner, AdVini, whose wine Laroche Pinot Noir Pouch was a successful launch in the customer order range at Vinmonopolet in Norway. In Sweden, Anora won two tender wins with the South African wine house Arniston Bay together with its partner AdVini. The white wine is in a sustainable frugal bottle (paper bottle with BIB inside), and will be the first one in Systembolaget. In Finland Anora started to work with new big partners Pasqua and Gisselbrecht. Also, the two new launches for the leading US white wine brand Kung Fu Girl exceeded expectations by directly gaining allocation to over 70 stores.
The market share comments are based on value data. Internal net sales, see page 25.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 7
BUSINESS REVIEW
Spirits
Q1 24 | Q1 23 | Change,% | 2023 | ||||||
Net sales, EUR million | 47.0 | 48.9 | -3.3% | 237,0 | |||||
Gross profit, EUR million | 20.7 | 20.3 | 1.8% | 99.7 | |||||
Gross margin, % of net sales | 44.0 | 41.6 | 42.1 | ||||||
Comparable EBITDA, EUR million | 6.8 | 5.8 | 17.3% | 40.3 | |||||
Comparable EBITDA margin, % of net sales | 14.5 | 12.0 | 17.0 | ||||||
Net sales
In Q1 2024, net sales of the Spirits segment decreased by 3.3% from the previous year and amounted to EUR 47.0 (48.9) million. In the Spirits segment, all four Nordic markets delivered net sales growth in Q1, whereas the performance of the international sales was weaker, partly due to the harbour strike in Finland that disrupted export deliveries with limited gross profit effect. The impact of exchange rate fluctuation was not significant on net sales due to hedging.
International sales represented 32.3% of the Spirits segment net sales. Koskenkorva net sales grew from the previous year and represented over 15% of the total Spirits sales.
In Sweden, net sales increased by 6.8%. Anora's market share increased slightly in a growing market, especially in gin and rum categories, while enjoying a strong position in the vodka category.
In Norway, net sales increased by 1.0%. Anora's market share was flat in a declining market, with somewhat weaker demand for aquavits.
In Finland net sales increased by 1.2%, driven by price increases in all channels. Anora's market share increased slightly in a declining market.
In the international markets, net sales declined due to a drop in travel retail, as instead of travelling abroad, the Norwegians preferred travelling to Sweden due to weaker home currency. Net sales still continued to increase in Denmark and was up by 6.1%.
Profitability
In Q1, the comparable EBITDA of Spirits increased to EUR 6.8 (5.8) million, or 14.5% (12.0%) of net sales. The improvement of comparable EBITDA was mainly due to the price increases and additional cost control. The impacts of the price increases in the monopolies implemented as of September became clearly visible. Global Travel Retail performed extremely well compared to last year despite the drop in net sales.
Both gross margin and gross profit improved.
Events
Anora Spirits started the year with several new innovations. O.P. Anderson Dill and Explorer Organic Vodka in Sweden market were met with great consumer acceptance. In Finland Anora launched Leijona Namu Raspberry Sour, Leijona Bangkok Pineapple, Koskenkorva Tropical Spirit Drink and Corona Spanish Brandy. Koskenkorva Strawberry liqueur and Passionfruit Caipiroska were the novelties launched in the Baltics and Global Travel Retail. The Finnish grocery retail portfolio got two new ready-to-drink additions from Koskenkorva
- Koskenkorva Pure Peach Raspberry and Koskenkorva Vichy Strawberry & Kiwi.
Koskenkorva brand attended the annual Bartenders Choice Awards, further strengthening the brand recognition in the Nordic restaurant sceneLinie on the other hand was the main sponsor of Bocus D'Or generating significant PR in Norway. Linie was also featured in Broadway in the Enemy of the State show starring Jeremy Strong.
The market share comments are based on value data. Net sales including internal sales, see page 25.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 8
BUSINESS REVIEW
Industrial
Q1 24 | Q1 23 | Change,% | 2023 | |
Net sales external, EUR million | 33.3 | 37.7 | -11.6% | 155.1 |
Net sales internal, EUR million | 21.9 | 29.9 | -26.7% | 114.3 |
Net sales (total), EUR million | 55.2 | 67.5 | -18.3% | 269.5 |
Gross profit, EUR million | 25.8 | 29.2 | -11.6% | 119.0 |
Gross margin, % of net sales | 46.7 | 43.2 | 44.2 | |
Comparable EBITDA, EUR million | 0.8 | 2.5 | -68.9% | 17.5 |
Comparable EBITDA margin, % of net sales | 1.5 | 3.7 | 6.5 | |
Net sales
In Q1 2024, the Industrial segment's total net sales decreased to EUR 55.2 (67.5) million. External net sales decreased by 11.6 % to EUR 33.3 (37.7) million.
In the Industrial segment, net sales were negatively impacted by lower sales prices due to the lower price of barley combined with lower production volumes.
Production
The record-high cost of grain seen in 2022 has now declined and the prices were below the corresponding period previous year.
Profitability
In Q1, the comparable EBITDA of the Industrial segment was EUR 0.8 (2.5) million, or 1.5% (3.7%) of net sales. The performance of the Industrial segment was negatively impacted by lower volume and price erosion due to barley value based side product sales. Most of the decline came from Industrial Business as well as volume transfers from Gjelleråsen to Köge and Rajamäki.
Q1 2024 Interim Report | January-March 2024 | 7 May 2024| 9
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Anora Group Oyj published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 05:46:07 UTC.
