Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Investor Presentation (September 2019)
59 slides from Anora Group Oyj's investor presentation, September 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets AUGUST-SEPTEMBER 2019
Slide 2: Contents
Contents • ALTIA IN BRIEF • MARKETS, TRENDS & INNOVATION • STRATEGY • FINANCIALS • H1 19 HIGHLIGHTS AND KEY FINANCIALS Leading Nordic APPENDICES alcoholic beverage brand company operating in the wines and spirits markets in the Nordic countries, Estonia and Latvia. We also have production in Cognac,
Slide 3: We are the leading Nordic alcoholic beverage brand house
We are the leading Nordic alcoholic beverage brand house on the wine and spirits markets WE OPERATE ON THE STABLE AND PROFITABLE NORDIC MARKET Key figures 2018 Head office Net sales Comparable EBITDA margin Production 357.3 11.2% Distillery EUR million Sales office Warehouse Exports to approx. 30 co
Slide 4: We are the Nordic iconic brands
We are the Nordic iconic brands BRAND FOCUSED BUSINESS THROUGH OWN AND PARTNER BRANDS Wide assortment of many other own and partner brands from around 150 partners 19.8.2019 4
Slide 5: Our business is well balanced
Our business is well balanced NET SALES 2018 NET SALES 2018 NET SALES 2018 BY NET SALES 2018 BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) Consumer product sales 36% Nordic Finland & 134 Altia 64% Core 53% Spirits 124 49% 151 60% O
Slide 6: Our operations are divided into three segments
Our operations are divided into three segments ALTIA INDUSTRIAL PROVIDES INDUSTRIAL PARTNERS WITH HIGH-QUALITY SOLUTIONS AND SERVICES Finland & Exports Scandinavia Altia Industrial • Consumer product sales in • Consumer product sales in • Industrial products Finland, the Baltics, travel Sweden, Norw
Slide 7: Let's drink better
Let’s drink better Altia wants to support the development of a modern and responsible Nordic drinking culture Altia awarded as the Green Company of the Year ”Altia was selected as the winner due to the bio and circular economy achieved at its Koskenkorva distillery in Finland.” 19.8.2019 7
Slide 8: Sustainability and high quality raw materials are key elements of our brands
Sustainability and high quality raw materials are key elements of our brands Finnish farmers and circular economy of barley – high material efficiency Spring water Over 200 • Natural, unfiltered spring water • Protected water abstraction areas million kg of Finnish barley • The same source of water
Slide 9: Barley sourcing
Altia’s use of barley in 2018 reached 211.7 Barley sourcing (206.0) million kilos - Equals about 30% of the total market volume Barley price development and Altia’s monthly volumes 2007-2019 (Jan-Jun) EUR/tn tn In H1 19: 106 (108) 250 30 000 million kilos 25 000 200 20 000 150 15 000 100 10 000 50 5
Slide 10: Markets, trends & innovation
Markets, trends & innovation
Slide 11: Globally, premiumisation is driving growth in all large spirits categories
Globally, premiumisation is driving growth in all large spirits categories Global spirits value (USD) CAGR % 2019-2023 Global spirits market by category (million litres)1) estimated at 6.6%, Global spirits volume by geography in 20181) historically 2012-2018 0.6% 1.1% value growth reached 2.4% 3.1%
Slide 12: We operate in the large and non-cyclical Nordic wine and spirits market
We operate in the large and non-cyclical Nordic wine and spirits market Volume development of the Nordic wine and spirits market Two thirds of Altia’s The value of the Nordic wine and spirits market consumer beverage Historical Growth forecast sales from state retail CAGR 2012-2018 CAGR 2019-2023 mo
Slide 13: Stable volume development in the Nordic spirits monopolies
Stable volume development in the Nordic spirits monopolies Spirits sales volumes in the three Nordic monopoly markets and Altia’s market shares at the end of 20181 51 609 51 629 51 556 51 311 Whisk(e)y 25.2% Viina/Vodka (Flav+Un 52.1% Rum 13.5% Other Spirits 7.0% Liqueurs 21.0% Grape Spirits 19.0% G
Slide 14: Extensive experience in operating with monopolies and regulated markets
We have extensive experience in operating with monopolies and in the regulated markets CHARACTERISTICS OF THE NORDIC MARKET 1 2 3 4 5 Alcoholic State retail Route-to- Pricing beverages in Advertising monopolies assortment & taxation grocery trade • Finland, Sweden, • Tender process • Transparent pri
Slide 15: Our market and consumer knowledge give us competitive advantage
Our market and consumer knowledge give us competitive advantage in the Nordics 1 2 3 4 Agility in sourcing, Knowledge to Local consumer Marketing and production and succeed in tenders knowledge promotions distribution • Altia’s wide and deep • Knowledge of the monopolies’ • Local consumer knowledge
Slide 16: Advocating responsible drinking culture
Our goal – Advocating responsible drinking culture Innovation is facing a new consumer landscape As consumers demand more that will have a major impact to the business in transparency across sectors, the food and drink industry cannot the coming years just pay lip service through clever marketing __
Slide 17: Brand portfolio well positioned to capture growth pockets
Our brand portfolio is well positioned to capture the growth pockets created by key market trends ALCOH OLIC BEV ERA GES TECHNI 50 CAL ETHANO L About % decrease in CO2 emissions Koskenkorva Distillery & bioenergy plant Ov er 60 % fuel self-sufficiency in st eam product ion rat e 34% Health Authentic
Slide 18: Strategy
Strategy
Slide 19: The core of our strategy is to deliver profitable growth
The core of our strategy is to deliver profitable growth Commercial battles 1 • Expand into new geographical markets Growth and Grow Nordic Core Brands • Innovate into new occasions and Active brand profitability consumer segments through the five portfolio strategic streams • Grow wine segment with
Slide 20: Strengthening the strategy execution
Strengthening the strategy execution FURTHER INITIATIVES IDENTIFIED TO REACH LONG-TERM NET SALES AND PROFITABILITY TARGETS Based on our Initiatives within: strategy to create • Revenue management profitable growth, Growth • Expansion in growing categories in Sweden and Norway we have identified • Ex
Slide 21: Our financial targets aim towards stable shareholder returns
Our financial targets aim towards stable shareholder returns Net sales growth + 2% • Altia’s target is to achieve an annual net sales growth of 2 per cent over time (CAGR) CAGR Comparable EBITDA margin 15 % • Comparable EBITDA margin target to reach 15 per cent in the long-term Net debt / comparable
Slide 22: Financials
Financials
Slide 23: Our operations are based on profitable growth
Our operations are based on profitable growth Net sales (EURm) Comparable EBITDA (EURm) and comparable EBITDA margin % 20 60 40.8 42.4 40.0 15 38.0 40 380.7 356.6 359.0 357.3 11.5% 11.8% 11.2% 10 20 10.0% 0 5 2015 2016 2017 2018 2015 2016 2017 2018 Stable and diversified revenue streams underpinned
Slide 24: Free cash flow in 2018 impacted by working capital development
Free cash flow in 2018 impacted by working capital development Free cash flow*, EURm Net working capital / Net sales, % 10% 8.1% 8% 6% 4.5% 3.5% 4% 30.6 30.6 37.1 15.1 2% 3.1% 0% 2015 2016 2017 2018 2015 2016 2017 2018 Gross capex / Net sales, % Net debt / Comparable EBITDA, ratio 3.3% 4% 3.0% 1.2x
Slide 25: Net working capital
Net working capital Net working capital Comments EUR million 2015 2016 2017 2018 • Receivables from the state retail monopolies partly sold Inventories 101.2 96.3 94.5 99.6 • Cognac constitutes notable part of inventory Contract assets, trade and other 59.1 63.8 53.9 61.2 receivables • The seasonal
Slide 26: Our cash flow enables an attractive dividend capacity
Our cash flow enables an attractive dividend capacity Free cash flow Comments EUR million 2015 2016 2017 2018 • Low operational capex need enables solid and stable cash flow Comparable EBITDA 38.0 40.8 42.4 40.0 Change in working capital1) 3.9 (1.6) 6.7 (17.2) • In 2018, capital expenditure was prim
Slide 27: H1 2019 Highlights and Key Financials
H1 2019 HIGHLIGHTS AND KEY FINANCIALS
Slide 28: Summary of H1 19
SUMMARY OF H1 19 Good net sales growth in first half and second quarter Short and long- term initiatives to Guidance remains improve unchanged profitability progressing 15.8.2019 28
Slide 29: Good net sales growth in first half
Good net sales growth in first half, initiatives to improve profitability in progress HIGHLIGHTS FROM H1 19 Reported net sales Comparable EBITDA Comparable EBITDA margin 165.0 (160.6) 13.7 (13.8) 8.3% (8.6%) EUR million EUR million Net sales Comparable EBITDA Comparable EBITDA margin grew by 3.5% wi
Slide 30: Market development
Market development APPROXIMATELY TWO THIRDS OF CONSUMER PRODUCT SALES COME FROM STATE RETAIL MONOPOLIES Combined spirits and wine sales volume development in the state retail monopolies Change compared to • Nordic spirits and wine market in total – volumes in the three retail H1 19 H1 18 H1 17 2018
Slide 31: Net sales highlights
Net sales highlights JANUARY–JUNE 2019 • Reported net sales grew by 2.7% to EUR 165.0 (160.6) million • Net sales of beverages in constant currencies were 0.7% • Continued headwind from SEK, in constant currencies net sales below last year’s level 3.5% above last year’s level • Declining monopoly vo
Slide 32: Finland & Exports
Finland & Exports JANUARY–JUNE 2019 The Finland & Exports segment comprises the import, sale and marketing of wine and spirits, and other beverages in Finland and the Baltics, as well as exports and travel retail. Highlights Key financials Product launches & events • Net sales were 59.6 (62.5) milli
Slide 33: Scandinavia
Scandinavia JANUARY–JUNE 2019 The Scandinavia segment comprises the import, sale and marketing of wine and spirits, and other beverages in Sweden, Norway and Denmark. Highlights Key financials, MEUR Product launches & events • Reported net sales were EUR 50.7 (49.9) 25 2,5 million, up by 1.6% • Head
Slide 34: Altia Industrial
Altia Industrial JANUARY–JUNE 2019 The Altia Industrial segment comprises Koskenkorva plant operations, starch, feed component and technical ethanol businesses, as well as contract manufacturing services at Rajamäki. It also includes supply chain operations, i.e. production operations in different c
Slide 35: Barley cost, fx rates and declining volumes affected profitability
Barley cost, fx rates and declining volumes in all monopolies have negatively affected profitability development SEASONALITY AFFECTS NET SALES AND PROFITABILITY • Comparable EBITDA was EUR 13.7 (13.8) million, excluding IFRS 16 impact EUR 11.7 million • Comparable EBITDA margin was 8.3% (8.6%), excl
Slide 36: Comparable EBITDA by segment
Comparable EBITDA by segment SOLID Q2 DEVELOPMENT DRIVEN BY TIMING OF EASTER, REVERSAL OF EXCISE TAX ACCRUAL AND SOME TIMING EFFECT BETWEEN THE QUARTERS IN INCOME AND EXPENSES Q2 19 H1 19 EUR million Q2 19 Q2 18 H1 19 H1 18 2018 excl. IFRS 16 excl. IFRS 16 Finland & Exports 5.3 5.2 4.6 8.2 8.1 8.0 1
Slide 37: Financial position and balance sheet KPI's
Financial position and balance sheet KPI’s AS AT 30 JUNE Net cash flow from operating activities EUR -4.0 (-26.7) million Receivables sold EUR 61.0 (55.5) million Net debt EUR 81.3 /69.6 excl. IFRS 16 (77.4) million Gearing 59.1% / 50.6% excl. IFRS 16 (56.7%) Equity ratio 35.5% / 36.6% excl. IFRS 16
Slide 38: Financial position and balance sheet KPI's
Financial position and balance sheet KPI’s Net debt Gearing, % 86,8 Net debt, EUR million 82,9 81,3 77,4 58,4 % 58,1 % 59,1 % Net debt / Comparable 75,9 9,8 56,9 % 56,7 % EBITDA (rolling 12m) 11,6 51,6% 50,6% 77,0 excl. excl. Long-term excl. 69,6 IFRS 16 IFRS 16 IFRS 16 excl. 34,9 % target <2.5x 47,
Slide 39: Guidance 2019
Guidance 2019 • The comparable EBITDA is expected to improve from the 2018 level. – The positive trend of Altia’s Nordic core brand portfolio is expected to continue. – Market development in Finland is expected to flatten out in comparison to 2018 and the markets in Sweden and Norway are expected to
Slide 40: Appendices
Appendices www.altiagroup.com Investor Relations: [email protected]
Slide 41: Key ratios
Key ratios EUR million Q2 19 Q2 19 H1 19 H1 18 2018 Net sales, EUR million 91.2 87.1 165.0 160.6 357.3 Comparable EBITDA, EUR million 9.4 8.7 13.7 13.8 40.0 % of net sales 10.4 9.9 8.3 8.6 11.2 EBITDA, EUR million 9.2 8.3 13.5 9.3 34.0 Comparable operating result, EUR million 5.0 5.2 4.7 6.8 25.6 %
Slide 42: Consolidated income statement
Consolidated income statement EUR million Q2 19 Q2 18 H1 19 H1 18 2018 NET SALES 91.2 87.1 165.0 160.6 357.3 Other operating income 2.0 2.0 3.9 3.5 7.4 Materials and services -54.4 -49.1 -99.4 -91.0 -206.8 Employee benefit expenses -11.6 -12.9 -23.1 -27.1 -49.9 Other operating expenses -18.0 -18.8 -
Slide 43: Consolidated balance sheet
Consolidated balance sheet EUR million EQUITY AND LIABILITIES H1 19 H1 18 2018 EUR million H1 19 H1 18 2018 Equity attributable to owners of the parent ASSETS Share capital 60.5 60.5 60.5 Invested unrestricted equity fund 1.2 1.2 1.2 Non-current assets Fair value reserve 0.6 0.6 0.6 Goodwill 79.8 80
Slide 44: Cash flow from operations
Cash flow from operations EUR million Q2 19 Q2 18 H1 19 H1 18 2018 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes 4.5 4.2 4.7 2.0 18.6 Adjustments Depreciation, amortisation and impairment 4.5 3.5 9.0 7.0 14.4 Share of profit in associates and income from investments in joint operations -0.
Slide 45: Quarterly net sales and comparable EBITDA by segment
Quarterly net sales and comparable EBITDA by segment Net sales by segment EUR million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Finland & 34.7 25.0 39.5 31.8 35.4 27.1 40.7 31.4 35.7 26.0 41.1 31.6 33.9 27.3 Exports Scandinavia 29.0 21.7 42.8 25.0 27.4 22.5
Slide 46: Reconciliation of alternative performance measures
Reconciliation of alternative performance measures (APM) and items affecting comparability (IAC) EUR million Q2 19 Q2 18 H1 19 H1 18 2018 Items affecting comparability Net gains or losses from business and assets disposals -0.1 0.4 -0.1 0.4 0.4 Cost for closure of business operations and restructuri
Slide 47: Shareholder structure
Shareholder structure AS AT 30 JUNE 2019 Number of Shareholders % of shares shares 1 Valtion Kehitysyhtiö Vake Oy 13 097 481 36.2 Non-financial corporations 2 Varma Mutual Pension Insurance Company 1 550 000 4.3 4% 3 Ilmarinen Mutual Pension Insurance Company 973 300 2.7 Rest of the Households world
Slide 48: Grocery trade offering
Grocery trade offering Koskenkorva Vichy sugarfree 15.8.2019 19.8.2019 48
Slide 49: Altia's digital platforms
Altia’s digital platforms Finland: www.viinimaa.fi Sweden: www.folkofolk.se Germany: www.nordicspirits.com • A leading consumer channel for alcoholic • A unique and unrivaled position in the market for • Nordic alcohol brand store in Germany since 5/18 beverages in Finland alcoholic beverages • Incu
Slide 50: Finland & Exports, Scandinavia, Altia Industrial
Finland & Exports Scandinavia Altia Industrial Consumer product sales in Consumer product sales in Industrial products and services Finland, the Baltics, travel Sweden, Norway and Denmark businesses, supply chain, retail and export customer service and logistics. Key brands: Key brands: Industrial p
Slide 51: Responsibility work driven by key megatrends
Our responsibility work is driven by key megatrends: health & wellbeing, circular economy and climate change ALTIA CORPORATE RESPONSIBILITY CORNERSTONES AND MATERIALITY DRIVEN BY THE MEGATRENDS HEALTH & WELLBEING, CIRCULAR ECONOMY AND CLIMATE CHANGE Altia & customers Altia & society Altia & environm
Slide 52: Corporate Responsibility is an integral part of our business
Corporate Responsibility is an integral part of our business LET’S DRINK BETTER – SUPPORT THE DEVELOPMENT OF A MODERN RESPONSIBLE NORDIC DRINKING CULTURE Highlights H1 2019 • Acknowledged by inclusion on Sitra’s most interesting companies in the circular economy • First multi-chaneled media campaign
Slide 53: Our journey to being the Nordic powerhouse and market leader
Our journey to being the Nordic powerhouse and market leader 1888 1990 2000 2010 2017 The journey continues Finland Open Western markets with key Nordic core Roots and geographical The roots of Altia can be traced back to z Nordic Region brands 1888 when a yeast plant was expansion Baltics establish
Slide 54: Our integrated operating model creates synergies
Our integrated operating model creates synergies and economies of scale ONE SHARED PLATFROM FOR OUR OWN BRANDS, PARTNER BRANDS AND INDUSTIRAL SERVICES Ownership of the brands and Liquid product development the whole value chain and innovation Innovation workshops Innovation lead time New marketing t
Slide 55: Barley reports and publications
Barley reports and publications July: Utilised Agricultural Area F regional preliminary data, I February: Forecast of area sown current year (Luke) for the coming harvest period July: First advance estimate of N (VYR, TNS Gallup) the harvest, current year (Luke) November: Crop Production L March: Cr
Slide 56: Our sales channels provide stable and predictable sales
Our sales channels provide stable and predictable sales APPROXIMATELY TWO THIRDS OF OUR CONSUMER PRODUCT SALES COME FROM RETAIL MONOPOLIES How Altia operates Consumer sales1) Examples Description in the channel • State retail monopolies in Finland, Sweden and Norway are the largest channels and • Se
Slide 57: Two thirds of consumer product sales from monopolies
Two thirds of Altia’s consumer product sales from Transparent pricing - fixed and predetermined monopolies gross margins for monopoly Annual windows for price revisions7) Price lock-up period after a 13% 9% 10% 68% I II III initial listing Travel Whole- Grocery Monopolies in Finland, Sweden and Norw
Slide 58: Our Executive Management Team
B A C D E F G Our Executive Management Team A Pekka Tennilä B Niklas Nylander C Janne Halttunen D Kari Kilpinen E Hannu Tuominen F Kirsi Lehtola G Kirsi Puntila CEO CFO SVP, SCANDINAVIA SVP, FINLAND & EXPORTS SVP, ALTIA INDUSTRIAL SVP, HR SVP, MARKETING 19.8.2019 58
Slide 59: Follow us
Follow us: www.altiagroup.com Investor Relations: [email protected]