Anora’s Half-Year Report January-June 2022: Strong net sales growth in spirits in Q2

Anora Group Plc Stock Exchange Release 1 September 2022 at 8:30 am EET

Anora’s Half-Year Report January-June 2022: Strong net sales growth in spirits in Q2

This release is a summary of Anora Group Plc's Half-Year Report January-June 2022. The complete report is attached to this release and is also available on the company website at: www.anora.com/en/investors

Q2 22 in brief

• Net sales were EUR 165.7 million, 3.4% growth compared to the Q2 21 pro forma net sales of EUR 160.1 million

• Comparable EBITDA was EUR 18.9 million or 11.4% of net sales (Q2 21 pro forma: EUR 23.6 million or 14.8%)

• Net cash flow from operating activities was EUR -5.1 (-1.3) million

• Earnings per share EUR 0.06 (Q2 21 pro forma: 0.12)

• Net sales growth supported by the recovery of travel retail and on-trade, as well as implemented price increases

January-June in brief

• Net sales were EUR 299.2 million, 1.8% growth compared to the H1 21 pro forma net sales of EUR 294.4 million

• Comparable EBITDA was EUR 31.9 million or 10.7% of net sales (H1 21 pro forma: EUR 40.3 million or 13.7%)

• Net cash flow from operating activities was EUR -43.7 (-1.6) million

• Earnings per share EUR 0.09 (H1 21 pro forma: 0.16)

• Net debt/comparable EBITDA (rolling 12 months) was 2.4 (0.2)

The acquisition of Globus Wine

In Q2, Anora announced the acquisition of Globus Wine, the leading wine company in Denmark. The acquisition further strengthens Anora’s position as the leading Nordic wine and spirits group. The acquisition was closed on 1 July 2022 and Globus Wine A/S will be consolidated to Anora Group as of Q3 2022.

Guidance

Guidance remains unchanged: Anora’s comparable EBITDA in 2022 is expected to be between EUR 75-85 million. This corresponds to the pre-pandemic level and takes into account the annual impact of EUR 4.6 million of the divestment of Anora brands due to the 2021 merger.

Capital Markets Day

Anora plans to host a Capital Markets Day for investors, analysts, bankers and media on Tuesday 29 November 2022. At the event, Anora’s Executive Management Team will present the company’s growth strategy, financial targets and sustainability roadmap. More information to be published later on anora.com/en/investors.

Key figures

* Pro forma figures Q2 21: net sales EUR 160.1 million; comparable EBITDA EUR 23.6 million or 14.8% of net sales; EPS EUR 0.12. ** Pro forma figures H1 21: net sales EUR 294.4 million; comparable EBITDA EUR 40.3 million or 13.7% of net sales; EPS EUR 0.16. *** Net debt / comparable EBITDA (rolling 12 months) calculated with pro forma comparable EBITDA was 2.2.

CEO Pekka Tennilä:

I am pleased with our good net sales development in the second quarter. Anora’s net sales grew by 3.4% to EUR 166 million compared with the pro forma net sales of EUR 160 million in Q2 last year. The comparable EBITDA development was more challenging due to increased input costs and weaker performance in our Wine segment. Comparable EBITDA declined by 20.0% to EUR 18.9 million.

During Q2, we saw market normalisation continue with a strong recovery of the on-trade and travel retail channels while the market volumes in the monopolies returned to pre-pandemic levels. The timing of Easter sales in Q2 this year provided a positive phasing impact on the sales of wine and spirits.

The strong net sales growth in the Spirits segment was driven by travel retail and on-trade. Also Koskenkorva brand showed strong performance both in the monopoly and international markets. Net sales for our Wine segment declined largely following the declining market and partner portfolio changes. In the Industrial segment, net sales grew because of higher sales prices in both contract manufacturing and industrial products.

The decrease in profitability was driven mainly by the Wine segment, where profitability dropped due to both lower sales and lower margins. The sales decrease was driven by significantly lower overall market volumes, as Covid-effects dissipated, and by a decline in Anora’s market share. Margins declined mainly due to higher input costs, which we have not yet been able fully mitigate through the price increases we have already implemented. Going forward, efficient revenue management will remain important for us.

Our important focus area is to turnaround the development in our wine business – we are working hard with redesigning and relaunching our own brands, to win more tenders and replace lost partners. We have already taken important steps in the right direction and I am convinced that we have the right strategy to turn the wine business on a growth path again.

A significant event in Q2 was the announcement of the acquisition of Globus Wine, the leading wine company in Denmark. Globus Wine is a growing company with a successful own wine brands business and strong capabilities in brand-building and wine sourcing. This acquisition further strengthens our position as the leading Nordic wine and spirits group, and I am very excited about the opportunities this brings to further expand our wine business in the Nordics and start regaining market shares.

After Q2, we announced an investment in ISH, the award-winning Danish scale-up company in non-alcoholic beverages. ISH has done groundbreaking innovation work and has an impressive track record. Non- and low-alcoholic beverages is an strategically interesting and growing category.

Our post-merger integration work has progressed as planned and on schedule. During the second quarter, we continued to work on the logistics integration and completed the first wave of product transfers to Anora’s inhouse logistics center in Sweden. The run rate of annualised net synergies at the end of Q2 22 was EUR 3.0 million, including the annual impact of EUR 4.6 million from the divestment of brands.

Looking at the rest of the year, we reiterate our guidance and expect the comparable EBITDA in 2022 to be between EUR 75-85 million. The outlook for the barley crop is good with the estimated volume better than last year and we expect the cost of barley to decrease from current record-high levels. The operating environment remains unstable, and while it is difficult to foresee all impacts on our business, I believe that our strengths are our stable and resilient business, our extensive brand portfolio covering all segments and our committed and skilled employees. I would like to extend my sincerest thanks to everyone at Anora for their continued hard work during this quarter.

Outlook for 2022

Market outlook

In 2022, the volumes in the monopolies are expected to be significantly lower than in 2020 and 2021 as the lifting of COVID-19 restrictions result in higher on-trade, border trade and duty-free sales. Input costs are expected to remain at a high level.

Guidance

Guidance remains unchanged: Anora’s comparable EBITDA in 2022 is expected to be between EUR 75-85 million. This corresponds to the pre-pandemic level and takes into account the annual impact of EUR 4.6 million of the divestment of Anora brands due to the merger.

ANORA GROUP PLC

Further information:

Pekka Tennilä, CEO

Sigmund Toth, CFO

Contacts:

Analysts and investors: Tua Stenius-Örnhjelm, Investor Relations, tel. +358 40 748 8864

Media: Petra Gräsbeck, Corporate Communications, tel. +358 40 767 0867

Results presentation:

CEO Pekka Tennilä and CFO Sigmund Toth will present the report today at 11:00 am EET. The presentation will be held as a Microsoft Teams Meeting and 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

UK: +44 20 7660 8309

US: +1 917-781-4622

Conference ID: 275 235 187#

Q&A

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

Presentation material

The presentation material will be shared in the online meeting and it can be downloaded at: www.anora.com/en/investors

On-demand recording

A recording of the presentation will be available on Anora’s website.

Distribution:

Nasdaq Helsinki Ltd

Principal media

www.anora.com