Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Investor Presentation (November 2019)
63 slides from Anora Group Oyj's investor presentation, Nov 7, 2019
Slide 1: Investor Presentation November 2019
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets NOVEMBER 2019
Slide 2: Agenda
Agenda Leading Nordic alcoholic beverage brand company operating in the wines and spirits markets in the Nordic countries, Estonia and Latvia. We also have production in Cognac, France. • p3 – ALTIA IN BRIEF • p10 – MARKETS, TRENDS & INNOVATION • p19 – STRATEGY • p23 – FINANCIALS • p28 – SUMMARY OF
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 7.11.2019 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.” 7.11.2019 7
Slide 8: Sustainability and high quality raw materials are key elements of our brands
Sustainability and high quality raw materials More information: are key elements of our brands pp. 54-56 Finnish farmers and circular economy of barley – high material efficiency Spring water Over 200 • Natural, unfiltered spring water million kg • Protected water abstraction areas of Finnish barley
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-Sep) EUR/tn tn In q1-q3 19: 160 (165) 250 30 000 million kilos 25 000 200 20 000 150 15 000 100 10 000 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) Global spirits market by category (million litres)1) CAGR % 2019-2023 Global spirits volume by geography in 20181) estimated at 6.6%, 0.6% 1.1% historically 2012-2018 CAGR % CAGR % 2.4% 3.1% value g
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(2 Two thirds of Altia’s The value of the Nordic wine and spirits market(1 consumer beverage Historical Growth forecast sales from state retail CAGR 2012-2018 CAGR 2019-202
Slide 13: Stable spirits volume development in the Nordic monopolies
Stable spirits volume development in the Nordic monopolies Spirits sales volumes in the three Nordic monopolies and Altia’s market shares at the end of 20181 with some brand examples for the largest categories 51 609 51 629 51 556 51 311 Whisk(e)y 11% Viina/Vodka (Flav+Un 51% Rum 13% Other Spirits 5
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; innovation and new consumer landscape
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: Our brand portfolio is 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: Blossa
Blossa fr. BL BLOSSA MINDRE* | SOCKER 3) Lika god smak! ALTIA 7.11.2019 18
Slide 19: Strategy
Strategy
Slide 20: 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 21: The core of our strategy is to deliver profitable growth
The core of our strategy is to deliver profitable growth Commercial battles • Expand into new geographical markets Growth and profitability 1 Grow Nordic Core Brands and growing categories • Innovate into new occasions and consumer segments Active brand through the five portfolio strategic streams m
Slide 22: 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 23: Financials
Financials
Slide 24: Our operations are based on profitable growth
More information: Our operations are based on profitable growth pp. 30-39, 41-47 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 diver
Slide 25: Free cash flow in 2018 impacted by working capital development
More information: pp. 30-39, 41-47 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 / Comparab
Slide 26: Net working capital
More information: Net working capital pp. 30-39, 41-47 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
Slide 27: Our cash flow enables an attractive dividend capacity
More information: Our cash flow enables an attractive dividend capacity pp. 30-39, 41-47 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
Slide 28: Q1-Q3 2019 Highlights and Key Financials
Q1-Q3 2019 HIGHLIGHTS AND KEY FINANCIALS
Slide 29: Highlights from Q1-Q3 2019
HIGHLIGHTS FROM Q1-Q3 2019 Profitability improved in third quarter Solid development Guidance remains of spirits net sales unchanged 7.11.2019 29
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 Q1-Q3 Q1-Q3 • Nordic spirits and wine market in total (%) Q3 19 Q3 18 2018 previous year, % 19
Slide 31: Net sales highlights
Net sales highlights JANUARY–SEPTEMBER 2019 Q1-Q3 19 Q1 –Q3 19 • Reported net sales grew by 1.3% to EUR 249.5 (246.4) million • Net sales of spirits and wine at last year’s level • Continued headwind from weak SEK, in constant currencies net • Partner portfolio changes in other beverages drive total
Slide 32: Finland & Exports
Finland & Exports JANUARY–SEPTEMBER 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 90.9 (94.3)
Slide 33: Scandinavia
Scandinavia JANUARY–SEPTEMBER 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 76.3 (74.9) 80 5 million, up by 1.8% 70
Slide 34: Altia Industrial
Altia Industrial JANUARY–SEPTEMBER 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 differ
Slide 35: Initiatives taking effect – profitability improving slightly in Q3
Initiatives taking effect – profitability improving slightly in Q3 IMPORTANT LAST QUARTER AHEAD Q3 19 Q1-Q3 19 • Comparable EBITDA was EUR 11.4 (10.3) million, excluding IFRS 16 • Comparable EBITDA was EUR 25.1 (24.1) million, excluding IFRS 16 impact impact EUR 10.5 million EUR 22.2 million • Compa
Slide 36: Comparable EBITDA by segment
Comparable EBITDA by segment IMPROVED PROFITABILITY IN CONSUMER SEGMENTS; NEGATIVE IMPACT FROM FX AND BARLEY Q3 19 Q1-Q3 19 EUR million Q3 19 Q3 18 Q1-Q3 19 Q1-Q3 18 2018 excl. IFRS 16 excl. IFRS 16 Finland & Exports 5.0 5.0 4.9 13.3 13.1 13.0 19.2 % of net sales 16.1 16.0 15.6 14.6 14.4 13.8 14.3 S
Slide 37: Financial position and balance sheet KPI's
Financial position and balance sheet KPI’s AS AT 30 SEPTEMBER Net cash flow from operating activities EUR -0.8 (-31.1) million Receivables sold EUR 44.8 (48.3) million Net debt EUR 81.4 /70.5 excl. IFRS 16 (82.9) million Gearing 57.9% / 50.2% excl. IFRS 16 (58.4%) Equity ratio 37.4% / 38.6% excl. IF
Slide 38: Financial position and balance sheet KPI's
Financial position and balance sheet KPI’s Gearing, % 56,9 % 56,7 % 58,4 % 58,1 % 59,1 % 57,9 % Net debt 51,6% 50,6% excl. 50,2% excl. Net debt, EUR million IFRS 16 excl. 86,8 IFRS 16 IFRS 16 Net debt / Comparable 82,9 81,3 81,4 34,9 % 77,4 31,6 % EBITDA (rolling 12m) 75,9 9,8 11,6 10,9 19,2 % 77,0
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 Q3 19 Q2 19 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 2018 Q1 17 Q2 17 Q3 17 Q4 17 2017 Net sales, EUR million 84.5 91.2 73.8 73.5 87.1 85.7 110.9 357.3 73.4 91.3 84.5 109.8 359.0 Comparable EBITDA, EUR million 11.4 9.4 4.3 5.2 8.7 10.3 15.9 40.0 4.3 9.2 10.4 18.5 42.4 % of net sales 13.5
Slide 42: Consolidated income statement
Published only at H1 and FY 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 oper
Slide 43: Consolidated balance sheet
Published only at H1 and FY 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
Slide 44: Cash flow from operations
Published only at H1 and FY 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 investm
Slide 45: Quarterly net sales and comparable EBITDA by segment
Quarterly net sales and comparable EBITDA by segment Net sales by segment EUR million Q3 19 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 & 31.2 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 25.6 29.0 21.7 42.8
Slide 46: Reconciliation of alternative performance measures and items affecting comparability
Reconciliation of alternative performance measures (APM) and items affecting comparability (IAC) EUR million Q3 19 Q3 18 Q1-Q3 19 Q1-Q3 18 2018 Items affecting comparability Net gains or losses from business and assets disposals -0.0 - -0.2 0.4 0.4 Cost for closure of business operations and restruc
Slide 47: New accounting standards: IFRS 16 Leases
New accounting standards: IFRS 16 Leases NOT SIGNIFICANT IMPACT ON ALTIA • The reporting period from 1 January to 30 September 2019 Q1-Q3 19 includes the adoption of the IFRS 16 standard as of 1 January 2019. Comparable EBITDA, EUR million 25.1 • The IFRS 16 standard had a positive effect of EUR 2.9
Slide 48: Shareholder structure
Shareholder structure AS AT 31 OCTOBER 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 5% 3 Ilmarinen Mutual Pension Insurance Company 973 300 2.7 Rest of the world Househo
Slide 49: Grocery trade offering
Grocery trade offering With the change of the Finnish Alcohol Act in January 2018, the grocery trade opened up for ethanol-based beverages of up to 5.5% ABV. In addition, the use of spirits brands in grocery trade was allowed. 7.11.2019 8.11.2019 49
Slide 50: 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 51: 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 52: Key exports contracts
Key exports contracts HIGH-QUALITY DISTRIBUTION AGREEMENTS HAVE BEEN SIGNIFICANT MILESTONES FOR OUR EXPORT AMBITIONS Key export contracts Since 2014, Koskenkorva Vodka exported O.P. Anderson Larsen Cognacs Koskenkorva launched to China, to Russia with distribution Targeting 2017 Vodka entry to 2017
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 2018 Reform of Finnish Finland Alcohol Act IPO Roots and geographical The roots of Altia can be traced back to z Nordic Region 1888 when a yeast plant was Baltics expansion established in Rajamäki by a group of Fin
Slide 54: Our responsibility work is 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 55: 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 56: Our integrated operating model creates synergies and economies of scale
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 57: 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 58: Macro indicators
Macro indicators ALCOHOL CONSUMPTION (WHO) Total per capita (15+) consumption (in litres of Consumption of pure alcohol by pure alcohol) type of beverage, % 2010 2016 Beer Wine Spirits Other Finland 12.6 10.7 Finland 48.8 20.6 21.5 9.1 Sweden 9.5 9.2 Sweden 36.4 47.8 14.1 1.7 Norway 9.0 7.5 Norway 4
Slide 59: 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 60: Two thirds of Altia's 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 61: Alcohol taxation
Alcohol taxation Changes in Finnish alcohol taxation Alcohol excise duty rates and value-added tax rates in the Nordics* • January 2019 As at 1 Jan 2019 Spirits Wine(1 VAT, % – Tax increase of EUR 30 million 48.8 36.09 24.0 – Even split on different categories, on average 2.5% 53.8 24.8 25.0 – Spiri
Slide 62: 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 7.11.2019 62
Slide 63: Follow us
Follow us: www.altiagroup.com Investor Relations: [email protected]