Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Investor Presentation (November 2018)
60 slides from Anora Group Oyj's investor presentation, Nov 13, 2018
Slide 1: Investor Presentation
NOVEMBER–DECEMBER 2018 INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets CEO PEKKA TENNILÄ
Slide 2: Contents
Contents • Altia in brief • Markets, trends & innovation • Strategy Leading Nordic alcoholic beverage brand company operating in the • Financials & Q3 Business review wines and spirits markets in the Nordic countries, Appendices Estonia and Latvia. We also have production in Cognac, France. 13.11.20
Slide 3: 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 Market positions in the Nordic region Head office Spirits Wine Production Market position #1 #1 Market position #1 Distillery #3 #1 #1 Sales office Spirits W
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 13.11.2018 4
Slide 5: Our business is well balanced
Our business is well balanced NET SALES 2017 NET SALES 2017 NET SALES 2017 BY NET SALES 2017 BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) Nordic 52% Core Consumer product sales Brands Finland & 134 126 49% Altia 155 52% Spirits 60
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 and co-create the development of a new, modern and responsible Nordic drinking culture 13.11.2018 7
Slide 8: Sustainability and high quality raw materials
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: Markets
Markets
Slide 10: Premiumisation driving growth in spirits categories
Globally, premiumisation is driving growth in all large spirits categories Global spirits market by category1) Global spirits volume by geography in 20171) 2.4 2.9 Global spirits Asia Pacific 59% CAGR % 2018-2022 forecast -3.8 1.0 by volume 1.3% and by value (USD) 6.9% 9% Australasia 0% 10% Cognac a
Slide 11: Large and non-cyclical Nordic wine and spirits market
We operate in the large and non-cyclical Nordic wine and spirits market Nordic wine and spirits market development (EUR million)1) Wine Spirits Market value growth outlook 2.5% 2017-20211) (outlook 2018-20221)) (Finland, Sweden, Norway, Denmark) 0.5% Wine Spirits 1.0 % (2.6 %) 0.2 % (2.3 %) Total 20
Slide 12: Experience 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 & taxation beverages Advertising monopolies assortment in retail • Finland, Sweden, • Tender process • Transparent pricing •
Slide 13: Market and consumer knowledge give 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 14: Trends & innovation
it i _ Trends & innovation
Slide 15: 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 16: Brand portfolio positioned for growth pockets
Our brand portfolio is well positioned to capture the growth pockets created by key market trends 200 Over million kg of Finnish barley every year Ov er 50% CO2 emissions decrease in Koskenkorva Distillery & 24% of bioenergy plant barley grain is used in grain spirit production Over 60% fuel self- 3
Slide 17: Best-in-class innovation generates topline growth
We see that our best-in-class innovation generates topline growth INNOVATION OPENS UP ATTRACTIVE AND TANGIBLE OPPORTUNITIES TO GROW ORGANICALLY Re-design New brands and Innovative & Line extensions of Premiumisation marketing and new existing brands and product launches to re-packaging the market bu
Slide 18: Strategy
Strategy
Slide 19: Core of strategy is 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: International expansion provides upside potential
International expansion provides upside potential HIGH-QUALITY DISTRIBUTION AGREEMENTS HAVE BEEN SIGNIFICANT MILESTONES FOR OUR EXPORT AMBITIONS Recent export contracts 1 Larsen Cognacs O.P. Anderson Exports Koskenkorva Koskenkorva launched to possess significant distribution China, Hong Vodka launc
Slide 21: Cognac is the key imported spirits in China
Cognac is the key imported spirits in China • China is the second largest cognac market in the world in volume and important especially in premium quality segments (VSOP, XO and above) • Increased disposable incomes are driving growth in private consumption • After the anti-corruption crackdown in 2
Slide 22: Financial targets
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 23: Financials
Financials
Slide 24: Operations based on profitable growth
Our operations are based on profitable growth Comparable EBITDA (EUR million) and comparable Net sales (EUR million) EBITDA margin % 75 20% 380.7 359.0 50 40.8 42.4 15% 356.6 38.0 25 10% 11.5% 11.8% 10.0% 0 5% 2015 2016 2017 2015 2016 2017 Stable and diversified revenue streams Strong and improved p
Slide 25: Stable cash flow and strong dividend capacity
Stable cash flow and strong dividend capacity Free cashflow 1) (EUR million) Net working capital 2) / Net sales 5% 4% 4.5% 37.1 3% 3.5% 30.6 30.6 3.1% 2% 1% 2015 2016 2017 2015 2016 2017 Gross capex 3) / Net sales Net debt 4) / Comparable EBITDA 5% 4% 1.1x 3% 3.3% 3.0% 0.5x 2% 2.4% 0.1x 1% 2015 2016
Slide 26: Efficient working capital management
Efficient working capital management Net working capital Comments EURm 2015 2016 2017 • Receivables from State retail monopolies partly sold • Cognac constitutes notable part of inventory Inventories 101.2 96.3 94.5 Trade and other receivables 59.1 63.8 53.9 • The seasonal swings of the business is
Slide 27: Strong cash flow enables dividend capacity
Our strong cash flow enables an attractive dividend capacity Free cash flow Comments EURm 2015 2016 2017 • Low operational Capex need enables solid and stable cash Comparable EBITDA3) 38.0 40.8 42.4 flow Change in working capital1) 3.9 (1.6) 6.7 • In 2017, capital expenditure was mostly related to A
Slide 28: Q3 Business Review
Q3 Business Review HIGHLIGHTS AND FINANCIALS
Slide 29: Highlights from the Q3 business review
Highlights from the Q3 business review • Stable development continued in tough operating environment – Net sales grew by 0.8% in constant currencies – Stable comparable EBITDA development despite cost pushes and SEK headwind • Price increases in industrial products partly mitigate the increased barl
Slide 30: Market development
Market development APPROXIMATELY TWO THIRDS OF CONSUMER PRODUCT SALES COME FROM STATE RETAIL MONOPOLIES Combined spirits and wine sales development in the state retail monopolies Change compared to Q1-Q3 Q1-Q3 • Finland Q3 18 Q3 17 2017 previous year, % 18 17 – Impact of New Alcohol Act and increase
Slide 31: Net sales highlights for January-September
Net sales highlights for January-September NEGATIVE CURRENCY IMPACT CONTINUED • In constant currencies 0.8% above last year’s level • Net sales of beverages up by 0.8% in constant currencies • Reported net sales were EUR 246.4 (249.1) million • Spirits sales negatively impacted by weaker development
Slide 32: Profitability
Profitability Comparable EBITDA Reported EBTIDA MEUR % MEUR % 24,5 11 30 • In Jan-Sep, items affecting comparability were EUR -4.5 10 24 9.6% (0.1) million, mainly related to 10 9.8% 25 Altia’s IPO 23,5 9.6% 8 • No IAC in Q3 23 9 8.0% 20 22,5 6 8 15 22 23.8 24.1 24.0 19.6 21,5 7 4 10 21 6 5 2 20,5 2
Slide 33: Cash flow and balance sheet
Cash flow and balance sheet AS AT 30 SEPTEMBER Net cash flow from operating activities EUR -31.1 (-15.4) million The receivables sold EUR 48.3 (45.2) million Net debt EUR 82.9 (36.5) million Gearing 58.4% (19.2%) Equity ratio 38.2% (47.1%) The reported net debt to comparable 1.9 (0.9) EBITDA ratio I
Slide 34: Guidance 2018
Guidance 2018 • The positive trend in Altia’s core brand portfolio is expected to continue. Cost increases on key raw materials and expansion in exports impact profitability development. Currency fluctuations, especially the weakening of the Swedish and Norwegian kronas, are expected to continue. Gu
Slide 35: Thank you
Thank you www.altiagroup.com IR: [email protected]
Slide 36: Appendices
Appendices www.altiagroup.com
Slide 37: Finland & Exports
Finland & Exports 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 Product launches & events Key financials MEUR % • The challenges in the Finnish • Koskenkorva
Slide 38: Offering in the newly opened Finnish retail channel
Our offering in the newly opened Finnish retail channel Koskenkorva Vichy sugarfree 13.11.2018 38
Slide 39: Scandinavia
Scandinavia The Scandinavia segment comprises the import, sale and marketing of wine and spirits, and other beverages in Sweden, Norway and Denmark. Highlights Product launches & events Key financials MEUR % • Excluding currency impact net sales 80 3,5 3.3% improved by 0.4% 75 3 • New partner in win
Slide 40: Strengthening our partner portfolio
Strengthening our partner portfolio J. García Carrión – one of the biggest wine producers in Hernö Gin – premium craft gins from Sweden Europe • Altia is the exclusive representative of García Carrión’s wine • As of September, Altia will be the exclusive representative of portfolio in Sweden as of J
Slide 41: 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 42: Altia Industrial
Altia Industrial 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 countries, customer
Slide 43: New accounting standards: IFRS 16 Leases
New accounting standards: IFRS 16 Leases NOT SIGNIFICANT IMPACT ON ALTIA • Based on the Altia’s preliminary impact assessment the implementation of IFRS 16 will increase the property, plant and equipment in its balance sheet. • Altia does not expect the impact to be significant due to the nature and
Slide 44: Key ratios
Key ratios EUR million Q3 18 Q3 17 Q1-Q3 18 Q1-Q3 17 2017 Net sales, EUR million 85.7 84.5 246.4 249.1 359.0 Comparable EBITDA, EUR million 10.3 10.4 24.1 23.8 42.4 % of net sales 12.0 12.3 9.8 9.6 11.8 EBITDA, EUR million 10.3 11.1 19.6 24.0 40.3 Comparable operating result, EUR million 6.6 6.9 13.
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 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Finland & Exports 31.8 35.4 27.1 40.7 31.4 35.7 26.0 41.1 31.6 33.9 27.3 Scandinavia 25.0 27.4 22.5 44.4 26.5 29.7 23.2 45.9 26.7 30.0 25.0 Altia In
Slide 46: Reconciliation of alternative performance measures
Reconciliation of alternative performance measures (APM) and items affecting comparability (IAC) EUR million Q3 18 Q3 17 Q1-Q3 18 Q1-Q3 17 2017 Items affecting comparability Net gains or losses from business and assets disposals - 1.3 0.4 1.3 1.3 Cost for closure of business operations and restructu
Slide 47: Shareholder structure
Shareholder structure AS AT 28 SEPTEMBER 2018 Number of Shareholders % of shares shares 1 Prime Minister’s Office 13 097 481 36.2 0.9 3.7 0.4 2 Varma Mutual Pension Insurance Company 1 200 000 3.3 44.3 18.1 3 Ilmarinen Mutual Pension Insurance Company 1 100 000 3.0 Public sector 44.3 4 OP-Finland Sm
Slide 48: Consolidated income statement
Consolidated income statement EUR million Q2 18 Q2 17 H1 18 H1 17 2017 NET SALES 87.1 91.3 160.6 164.6 359.0 Other operating income 2.0 1.6 3.5 3.0 8.3 Materials and services -49.1 -52.2 -91.0 -93.2 -202.0 Employee benefit expenses -12.9 -13.2 -27.1 -26.5 -52.0 Other operating expenses -18.8 -18.5 -
Slide 49: Consolidated balance sheet
Consolidated balance sheet 30 Jun 30 Jun 30 Jun 30 Jun EUR million 2018 2017 2017 EUR million 2018 2017 2017 ASSETS EQUITY AND LIABILITIES Non-current assets Equity attributable to owners of the parent Goodwill 80.1 82.8 82.1 Share capital 60.5 60.5 60.5 Other intangible assets 31.8 36.0 34.4 Invest
Slide 50: Cash flow from operations
Cash flow from operations EUR million Q2 18 Q2 17 H1 18 H1 17 2017 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes 4.2 5.0 2.0 5.7 25.0 Adjustments Depreciation, amortisation and impairment 3.5 3.5 7.0 7.1 14.2 Share of profit in associates and income from investments in joint -0.0 0.0 -0.9
Slide 51: Our journey to being the Nordic powerhouse
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 52: Consumer brand segments
Our consumer brand segments reflect customer similarities and consumer habits Scandinavia Finland & Exports • Net sales of EUR 123.7m and comparable EBITDA margin of 9.3% in • Net sales of EUR 133.9m and comparable EBITDA margin of 14.6% 2017 in 2017 • 86 full-time employees at the end of 2017 • 96
Slide 53: 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 54: Two thirds of consumer 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 12% 11% 9% 69% I II III initial listing Travel Whole- Retail Monopolies in Finland, Sweden and Norwa
Slide 55: Alcohol taxation
Alcohol excise duty rates and value-added tax rates in the Nordic countries Alcohol taxation Spirits Wine VAT, % 47.9 34.8 24.0 Changes in Finnish alcohol taxation 53.8 24.8 25.0 • January 2017 – Tax increase of EUR 100 million 80.8 52.7 25.0 – Spirits +5%; wine +13%; other categories Source: Inform
Slide 56: Global cognac market
• Global cognac market value grew by 14.4% to EUR 3.15 billion • Volume growth 10.2% to 197.4 million bottles – Highest volume growth in the US (+11.5%) and China (+31.5%) – VS quality is the biggest category (50%) • The US accounts for 42% of global volume, mostly VS quality • China (incl. Singapor
Slide 57: Altia Industrial supply chain, services and products
Altia Industrial takes care of the supply chain and provides Industrial Services and Products to customers Introduction to the segment Supply chain footprint Highly integrated operating model ensuring first class efficiency • Net sales of EUR 101.3m and comparable EBITDA margin of 12.3% in 2017 • 40
Slide 58: 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 59: Executive management team
We have a proven executive management team B E C F A D G A Pekka Tennilä C Janne Halttunen E Hannu Tuominen G Kirsi Puntila CEO SVP, SCANDINAVIA SVP, ALTIA INDUSTRIAL SVP, MARKETING B Matti Piri D Kari Kilpinen F Kirsi Lehtola SVP, CFO SVP, FINLAND & EXPORTS SVP, HR 13.11.2018 60
Slide 60: Follow us
Follow us: www.altiagroup.com www.altiagroup.com IR: [email protected]