Anora Group Plc’s Interim Report January–September 2024: All segments improved their gross margins in Q3, lower volumes in beverage sales had a negative impact on comparable EBITDA

Anora Group Plc Interim report 7 November 2024 at 8:30 am EET

Anora Group Plc’s Interim Report January–September 2024: All segments improved their gross margins in Q3, lower volumes in beverage sales had a negative impact on comparable EBITDA

This release is a summary of Anora Group Plc's Interim Report January–September 2024. The complete report is attached to this release and is also available on the company website at: www.anora.com/en/investors

Q3 2024 in brief

• Net sales were EUR 162.7 (173.0) million, down by 6.0%.

• Comparable EBITDA was EUR 15.9 (20.2) million, or 9.8% (11.7%) of net sales, down by 21.4%.

• EBITDA was EUR 15.3 (28.9) million, or 9.2% (16.7%) of net sales, down by 47.1%. The one-off capital gain of EUR 12.2 million from the divestment of Larsen was reported during the comparative period in 2023 under other operating income, which amounted to EUR 14.3 million.

• Net cash flow from operating activities was EUR -19.1 (-13.8) million.

• Earnings per share was EUR 0.05 (0.21).

January–September 2024 in brief

• Net sales were EUR 486.7 (515.3) million, down by 5.5%.

• Comparable EBITDA was EUR 40.0 (41.1) million, or 8.2% (8.0%) of net sales, down by 2.8%.

• EBITDA was 38.0 (45.6) million, or 7.8% (8.8%) of net sales, down by 16.7%.

• Net cash flow from operating activities was EUR -68.1 (35.2) million.

• Earnings per share was EUR 0.04 (0.06).

• Net debt/comparable EBITDA (rolling 12 months) was 3.3 (3.5).

Guidance

In 2024, Anora’s comparable EBITDA is expected to be EUR 65-70 million (2023: EUR 68.2 million).

Key figures

CEO Jacek Pastuszka:

“During the third quarter, we continued to improve the marginality of our beverage business and strengthen the balance sheet by increasing the share of margin accretive businesses as well as focusing on pricing and revenue management, stable operating expenses and net working capital reduction. We also continued to invest in our brands, to build our performance over the long-term. As a result, both Wine and Spirits improved their respective gross margins.

The Group gross margin for last year was impacted by the one-off capital gain from the Larsen divestment of EUR 12.2 million, which was not allocated to any segment. As a result, our gross profit showed a decline of 17.6% to EUR 68.4 million in Q3.

However, our markets declined in September more than previously forecasted and the sharp volume drop in monopolies had a material impact on our bottom-line performance for the quarter, resulting also in lower guidance for the full year. In Finland, monopoly sales decline was exacerbated by the introduction of alcoholic beverages containing up to 8% ABV in grocery stores. Our comparable EBITDA decreased by 21.4 percent and amounted to EUR 15.9 (20.2) million or 9.8 percent of net sales in the third quarter. In the Wine and Spirits segments, the comparable EBITDA declined by 33.7% and 21.8% from the previous year, respectively. There have been some operational challenges in Denmark due to the Globus Wine integration. In the Industrial segment, the ongoing efficiency improvement programmes helped to improve the margins from the previous year.

Net sales in the third quarter declined by 6.0 percent to EUR 162.7 million, primarily due to lower volumes in beverage sales in Wine and Spirits segments especially in the monopoly channels. In the Wine segment, we launched a wide range of products for grocery stores in Finland, following the legislative amendment to Finland’s Alcohol Act in June allowing the sale of alcoholic beverages containing up to 8% ABV in grocery stores. As the country’s market-leading wine company with local production facility at Rajamäki in Finland, we are uniquely positioned to harness this opportunity. We gained a leading position in Finnish groceries due to the successful launch of our new wine selection. In the Spirits segment, the markets declined in all monopoly markets. Sweden delivered net sales growth, while net sales declined in all other countries. The Industrial segment's net sales was negatively impacted by decreased ethanol and side product sales prices and production volumes, while the contract manufacturing volume improved compared to the previous year after a slower start in the beginning of the year, in line with expectations.

We paid down our long-term interest-bearing debt by EUR 50 million at the end of the period, thus lowering our net financial expenses going forward. At the end of the quarter our cash and cash equivalents amounted to EUR 65.9 million. Our interest-bearing net debt amounted to EUR 218.1 (219.5) million, while our net interest-bearing debt / comparable EBITDA ratio was 3.3 (3.5).

While I have communicated to the Board of Directors of Anora my wish to retire once the new CEO is nominated, we will maintain in mid-term our focus on improving the marginality of our beverage business through active mix and revenue management. We also aim to strengthen our cash position and balance sheet by reducing working capital and improving inventory turnover. We seek to restore organic net sales growth in the Wine and Spirits segments by concentrating our efforts on the largest brands and partnerships. I am convinced that these actions and the progress achieved so far will allow us to get back on track in executing Anora’s ambitious transformation strategy and deliver on our long-term financial targets.”

Outlook and guidance for 2024

Market outlook

In 2024, the volumes in our key markets are expected to be slightly lower than in 2023 due to challenging economic conditions.

Finnish monopoly sales are expected to decline, at least temporarily, during 2024, due to the alcohol legislation change effect from 10 June 2024, allowing up to 8% ABV alcoholic drinks to be sold in grocery stores. This is expected to result in less customer visits in Alko stores. The drop is expected to be mostly compensated by sales of up to 8% ABV wines in the Finnish grocery channel. This outlook is dependent on consumer acceptance of the new products and the retailers’ actions in developing the category.

Guidance

In 2024, Anora’s comparable EBITDA is expected to be EUR 65-70 million (2023: EUR 68.2 million).

Anora’s financial reporting for the year 2024

Anora will publish its Financial Statements Bulletin for 2024 on 12 February 2025.

Anora applies a silent period of 30 days before the publication of financial reports.

ANORA GROUP PLC

Further information:

Jacek Pastuszka, CEO

Stein Eriksen, CFO

Contacts:

Milena Hæggström, Director, Investor Relations

tel. +358 40 5581 328

milena.haeggstrom@anora.com

Results presentation:

CEO Jacek Pastuszka and CFO Stein Eriksen will present the report today at 11:00 am EET. The presentation will be held as a Microsoft Teams Meeting. We recommend that participants join the event using the online meeting option: Join meeting here.

It is also possible to dial-in to the meeting about 5 minutes earlier at the following numbers:

• FI: +358 9 2310 6678

• NO: +47 21 40 41 04

• SE: +46 8 502 428 54

• DK: + 45 32 72 56 80

• UK: +44 20 7660 8309

• US: +1 917-781-4622

Conference ID 879 642 800#

Q&A

Questions to the management can be sent through the Teams chat.

Presentation material and on-demand recording

The presentation material will be shared in the online meeting and it can be downloaded at: www.anora.com/en/investors. Recording of the presentation will also be available on Anora’s website.

Distribution:

Nasdaq Helsinki

Principal media

www.anora.com