Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Q1 2020 Earnings Presentation
57 slides from Anora Group Oyj's earnings presentation, May 2020
Slide 1: Investor Presentation: Leading Nordic alcoholic beverage brand company
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets MAY-JUNE 2020
Slide 2: Contents
Contents 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 p3 – ALTIA IN BRIEF Cognac, France. • p10 – MARKETS, TRENDS & INNOVATION • p17 – STRATEGY • p20 – FINANCIALS • p25 – SUMMARY O
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 Head office Key figures 2019 Production Distillery Net sales Comparable EBITDA margin Sales office 359.6 12.4% Warehouse EUR million 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 11.5.2020 4
Slide 5: Our business is well balanced
Our business is well balanced NET SALES NET SALES NET SALES BY NET SALES BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) 35% Consumer product sales Nordic Altia 65% Core Finland & 129 52% Spirits 121 49% 145 58% Other Brands Brands E
Slide 6: Our operations are divided into three segments
More information: pp. 30-32, 46 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,
Slide 7: Let's drink better
Let’s drink better We want to support a development of a modern, responsible Nordic drinking culture and develop better drinking experiences. We are proud to work with products that are the best choice for the environment and for the climate, promoted and consumed responsibly. 11.5.2020 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 Around 210 • Natural, unfiltered spring water million kg • Protected water abstraction areas of Finnish barley • 32-37% of The same sour
Slide 9: Barley sourcing
In 2019, Altia’s use of Finnish grain Barley sourcing reached 211.5 (211.7) million kilos, including 208.7 million kilos Barley price development and Altia’s monthly volumes 2007-2020 (Feb) Finnish barley - equals EUR/tn tn 250 30 000 about 33% of the total market volume 25 000 200 20 000 150 15 000
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 20191 with some brand examples for the largest categories Whisk(e)y 24% 51 629 51 556 51 311 51 755 51 609 Viina/Vodka (Flav+Un 50% Rum 14% Other Sp
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: Brand portfolio 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 17: Altia's refined strategy
Altia’s refined strategy
Slide 18: 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 19: Altia's refined strategy
Altia’s refined strategy 1. Strengthen Nordic market leadership in 2. Boost Nordic channel excellence of own grain-based spirits brands and partner business execution • Strengthen vodka market leadership • Enable best route-to-market in the Nordics for with full category view. our brands and for our
Slide 20: Financials
Hf! =a tials ‘a 4
Slide 21: Our operations are based on profitable growth
More information: Our operations are based on profitable growth pp. 29-38, 40-44 Net sales (MEUR) Comparable EBITDA 42.4 44.8 38.0 40.8 40.0 380.7 356.6 359.0 357.3 359.6 11.5 % 11.8 % 12.4 % 11.2 % 10.0 % 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Comparable EBITDA, MEUR Comparable EBITDA ma
Slide 22: Free cash flow in 2018 impacted by working capital development
More information: pp. 29-38, 40-44 Free cash flow in 2018 impacted by working capital development Free cash flow* Net working capital / Net sales, % 122% 8.1 % 80% 88% 75% 4.5 % 38% 54.5 3.5 % 3.1 % 3.2 % 37.1 30.6 30.6 30.6 30.6 37.1 15.1 15.1 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Free
Slide 23: Net working capital
More information: Net working capital pp. 29-38, 40-44 Net working capital Comments EUR million 2015 2016 2017 2018 2019 • Receivables from the state retail monopolies partly sold Inventories 101.2 96.3 94.5 99.6 92.0 • Cognac constitutes notable part of inventory Contract assets, trade and 59.1 63.
Slide 24: Our cash flow enables an attractive dividend capacity
More information: Our cash flow enables an attractive dividend capacity pp. 29-38, 40-44 LOW OPERATIONAL CAPEX NEEDS ENABLE SOLID AND STABLE CASH FLOW Free cash flow Comments EUR million 2015 2016 2017 2018 2019 • In 2019, capital expenditure was related to a number of safety and Comparable EBITDA 3
Slide 25: Q1 2020
Q1 2020
Slide 26: Summary
Summary Profitability improved in Q1 Full impact of Stable liquidity COVID-19 as of position with Q2 – visibility access to funding for rest of the year is poor 11.5.2020 26
Slide 27: Profitability improved in a solid Q1, guidance is suspended
Profitability improved in a solid Q1, uncertainty for the rest of the year, guidance is suspended HIGHLIGHTS FROM Q1 Reported net sales Comparable EBITDA 68.2 (73.8) 5.5 (4.3) EUR million EUR million Net sales growth in constant currencies Comparable EBITDA margin -6.0% 8.1% (5.8%) 11.5.2020 27
Slide 28: 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 previous year, % Q1 20 Q1 19 2019 Finland Nordics in total 8.9 -5.6 +0.1 • Most of the spirits
Slide 29: Net sales declined in Q1
Net sales declined in Q1 DECLINE PRIMARILY DUE TO ALTIA INDUSTRIAL Net sales by segment, MEUR Q1 20: -7.6% • Net sales declined by 6.0% in constant currencies • Significant negative fx impact on Scandinavia and the reported spirits and wine figures 74 • Decline is due to phasing of contract manufact
Slide 30: Finland & Exports
Finland & Exports JANUARY–MARCH 2020 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 in Q1 20 • Net sales declined by 4.6% to EUR 25 24 23.8 (
Slide 31: Scandinavia
Scandinavia JANUARY–MARCH 2020 The Scandinavia segment comprises the import, sale and marketing of wine and spirits, and other beverages in Sweden, Norway and Denmark. Highlights Net sales, MEUR Product launches in Q1 20 • The good performance from last year continued in Q1 22 22 • Net sales grew in
Slide 32: Altia Industrial
Altia Industrial JANUARY–MARCH 2020 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
Slide 33: Profitability improved in Q1
Profitability improved in Q1 NORMALISATION OF BARLEY PRICE, POSITIVE CHANNEL MIX AND DENATURED ETHANOL Q1 20: • Comparable EBITDA improved by EUR 1.2 million to EUR 5.5 (4.3) million • Normalised barley prices • Channel mix and technical ethanol volumes • COVID-19 impact in volumes in travel retail
Slide 34: Profitability improved in Q1 by segment
Profitability improved in Q1 NORMALISATION OF BARLEY PRICE, POSITIVE CHANNEL MIX AND DENATURED ETHANOL Comparable EBITDA by segment, MEUR and margins Q1 20: • Comparable EBITDA improved by EUR 1.2 million to EUR million Q1 20 Q1 19 Change, % 2019 EUR 5.5 (4.3) million • Normalised barley prices and
Slide 35: Balance sheet key ratios
Balance sheet key ratios SOLID NET CASH FLOW FROM OPERATIONS AND LIQUIDITY POSITION Gearing, % 56,9 % 56,7 % 58,4 % 58,1 % 59,1 % 57,9 % Net debt Net debt, EUR million Net debt / Comparable EBITDA (rolling 12m) 31,6 % 33,2 % 86,8 82,9 81,3 81,4 75,9 77,4 19,1 % Long-term target <2.5x 47,4 48,9 Q1 18
Slide 36: COVID-19 key impacts and uncertainties
COVID-19 key impacts and uncertainties VISIBILITY FOR THE REST OF THE YEAR IS POOR AND FORECASTING IS DIFFICULT Consumer beverages (Finland & Exports and Scandinavia) Altia Industrial • Sales in travel retail, on-trade and exports channels, • Uncertainty is high both in industrial products and accou
Slide 37: Measures taken due to COVID-19
Measures taken due to COVID-19 • Our key priorities now are the health and safety of our people and business continuity. • We are following the recommendations and instructions from the governments and health authorities of the countries we operate in. • Remote work when possible and further strengt
Slide 38: Guidance 2020 is suspended
Guidance 2020 is suspended • Visibility for the rest of the year is poor and forecasting the COVID-19 impacts on the operating environment reliably is difficult. • The recovery of the consumer beverage sales depends on the duration of the governmental restrictions, limitations in movement and travel
Slide 39: Appendices
Appendices Investor Relations: [email protected] www.altiagroup.com
Slide 40: Key ratios
Key ratios EUR million Q1 20 2019 Q4 19 Q3 19 Q2 19 Q1 19 2018 Q4 18 Q3 18 Q2 18 Q1 18 2017 Q4 17 Q3 17 Q2 17 Q1 17 Net sales, EUR million 68.2 359.6 110.1 84.5 91.2 73.8 357.3 110.9 85.7 87.1 73.5 359.0 109.8 84.5 91.3 73.4 Comparable EBITDA, EUR million 5.5 44.8 19.7 11.4 9.4 4.3 40.0 15.9 10.3 8.
Slide 41: Quarterly net sales and comparable EBITDA by segment
Quarterly net sales and comparable EBITDA by segment Net sales by segment EUR million Q1 20 Q4 19 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 & 23.8 37.8 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 Scandinav
Slide 42: Consolidated income statement
Consolidated income statement EUR million 2019 2018 NET SALES 359.6 357.3 Other operating income 7.6 7.4 Materials and services -213.1 -206.8 Employee benefit expenses -45.9 -49.9 Other operating expenses -65.0 -73.9 Depreciation, amortisation and impairment -17.9 -14.4 OPERATING RESULT 25.1 19.7 Fi
Slide 43: Consolidated balance sheet
Consolidated balance sheet EUR million 2019 2018 EUR million 2019 2018 ASSETS EQUITY AND LIABILITIES Non-current assets Equity attributable to owners of the parent Goodwill 80.1 80.7 Share capital 60.5 60.5 Other intangible assets 25.2 29.6 Invested unrestricted equity fund 1.2 1.2 Property, plant a
Slide 44: Cash flow from operations
Cash flow from operations EUR million 2019 2018 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes 24.6 18.6 Adjustments Depreciation, amortisation and impairment 17.9 14.4 Share of profit in associates and joint ventures income from investments in joint -1.6 -1.2 operations Net gain on sale of
Slide 45: Shareholder structure
Shareholder structure AS AT 31 MARCH 2020 Shareholders Number of shares % of 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% Non-profit Rest of the 3 Ilmarinen Mutual Pension Insurance Company 973 300 2.7 inst
Slide 46: Finland & Exports, Scandinavia, Altia Industrial
Finland & Exports Scandinavia Altia Industrial Consumer product sales in Finland, Consumer product sales in Industrial products and services the Baltics, travel retail and export Sweden, Norway and Denmark businesses, sourcing, supply chain, customer service and logistics. Key brands: Key brands: In
Slide 47: 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 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 12% 9% 9% 70% I II III initial listing Travel Whole- Grocery Monopolies in Finland, Sweden and Norwa
Slide 54: 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 55: 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 56: 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 11.5.2020 56
Slide 57: Follow us
Follow us: www.altiagroup.com Investor Relations: [email protected]