CEO Jacek Pastuszka comments on Anora's Q4 and full-year 2023 results

“Overall, the year 2023 was a challenging one for Anora, marked by multiple market headwinds and weaker financial performance. As communicated before, while remaining highly committed to our long-term growth strategy, we have recently intensified focus on profitability and on reducing net debt leverage, in order also to improve our dividend capacity going forward.

During the year, we executed several actions to renew our operational model and improve margin trajectory. We launched reorganisation related change negotiations in Q4 and a cost savings initiative in Q2. We are now well on track with the targets set out in these initiatives.

We managed to end the year in a more positive territory and saw results from these cost cuts and the most recent price increases, supported by lower raw material prices and more stabilised currencies.

Our comparable EBITDA in Q4 was higher than last year and amounted to EUR 28.2 (20.9) million or 13.3 percent of net sales. For the full year 2023, comparable EBITDA decreased from EUR 76.1 million to EUR 69.4 million or 9.5 percent of net sales.

Net sales in the fourth quarter declined by 4.2% to EUR 212.4 million, largely due to currency impacts and decrease in Industrial sales. The monopolies saw lower consumer demand, as the shoppers were trading down ahead of the holiday season. On the other hand, our lower-mainstream wine and spirit offerings had a good growth in sales and continued to gain market share, demonstrating the breadth and flexibility of our product portfolio. Our seasonal products such as Aquavits and Blossa played in our favour as well. The partner wines in Sweden declined due to termination of some contracts earlier in the year and currency impact. Important to note, we have won some important new partners recently, such as South African Spier, a producer known for its exceptional wines and commitment to sustainability and responsible winemaking practices, as well as Charles Smith Wines of The Wine Group, one of the largest wine producers in the world. For them we enable CO₂ emission reduction in wine transports from US to Europe with our near-market filling capabilities.

For the full year, net sales were EUR 727.6 million, showing a growth of 3.5%. Globus Wine has been reported as part of Anora’s Wine segment as of 1 July 2022. Koskenkorva net sales grew in double-digit figures and represented nearly 15% of our total spirit sales.

Our efforts to reduce our leverage also progressed well. At the end of the year the cash balance was high, supported by lower working capital due to inventory reduction and the Larsen divestment. Our cash and cash equivalents reached EUR 212.7 million. This resulted in lower net debt of EUR 137.5 million, while our net interest-bearing debt / comparable EBITDA ratio was 2.0x, well below our long-term financial target of 2.5x. This also enables our Board of Directors to propose a dividend payment of EUR 0.22 per share for the financial year 2023 to the Annual General Meeting.

As a result of our annual impairment testing, we made impairments of EUR 65.4 million to fixed assets owned and right-of-use assets in Norway following the Centre of Excellence program, weakening the Group operating result to EUR -30.2 (34.7) million. We also impaired the value of shares of our subsidiaries in Denmark mainly due to weak profitability of Globus Wine, which reduces Anora Group Plc’s distributable funds by EUR 58.7 million to EUR 100.2 million. For shares owned by other Group companies, we made impairments totalling EUR 23.6 million to the values of shares of companies held by Vingruppen in Sweden and Norway due to recent partner losses, reducing the distributable funds of their respective parent companies. The impairments made do not impact the loans, cash flows or the financial targets of the Group.

As we close the year 2023, I would like to thank our customers, partners, shareholders and our approximately 1,200 Anorafolks for their contribution during our journey so far. At the end of the year, we left our science-based emission reduction targets to be validated by Science Based Targets initiative. This continues our ambitious sustainability work as the forerunners of the industry. Looking ahead to 2024, we remain committed to our near-term actions to halt profitability decline, strengthen balance sheet and invest in profitable growth. This includes further price adjustments, and a continued focus on reducing net working capital and improving inventory turnover. I am convinced that our continued customer focus combined with enhanced efficiency will enable us to deliver on our targets and strategy.”