CEO Pekka Tennilä's comments on Anora's Q1 2023 results

Our comparable EBITDA in Q1 was EUR 7.9 million, 5.0% of net sales. Clearly, it is not at a satisfactory level but corresponded to our expectations in a challenging operating environment. Our key focus for the year is improving profitability with strong initiatives on pricing and cost savings.

Our profitability in Q1 decreased mainly due to the weakening of NOK and SEK. The gross impact of the currency was at level of EUR 4 million, which we were not able to fully compensate with pricing.In addition, our operational costs were significantly higher. During Q1, we implemented the planned price increases to improve our gross margins. The full impact will be seen in Q2, as in Sweden the prices took effect only in March, while in Finland this occurred in April. Our operating costs increased mainly due to the timing of additional maintenance and IT activities in the first quarter. Additionally, travelling and marketing costs have increased since the Covid-19-restrictions were lifted. We are implementing a cost savings programme aiming at EUR 6 million savings for the full year. The results of this programme, as well as the profitability improvement actions being implemented by Globus Wine, will be visible from Q2 onwards.

Our sales growth in Q1, excluding Globus Wine, was 2.3% compared to the previous year. Including Globus Wine, the growth was 20%. There was a small positive impact on our sales due to the timing of Easter. As expected, overall sales volumes have declined in the Nordics. In spirits and wine combined, the market volume declined by almost 3% on average. With rising food and beverage prices we believe that more affordable alcoholic beverages are gaining in popularity. As we have said earlier, we are well positioned for this trend with a strong position in mainstream priced product segments.

In wine, our net sales declined slightly due to the market decline and the currency impact. In local currencies our wine sales, excluding Globus Wine, grew by 3%. Net sales growth including Globus was 38%. In Anora own wines, we continued to increase sales and the market share across all monopoly markets. Globus Wine sales grew by 25%, and we also gained market share in Denmark. In partner wine, the partner losses from last year pulled our sales down.

In spirits, our sales grew by 9%, driven by the continued double-digit growth in our international business. In monopoly countries, we were able to increase both sales and the market share. Our no- and low-alcohol products in grocery retail had a very good start for the year with strong growth compared to last year.

Industrial segment’s external sales grew by 6% due to higher average prices, but the outlook for the rest of the year is weakening in volumes due to the decreasing demand for starch.

In our sustainability work, we reached our target of 100% renewable energy use in our production in Finland. In addition, a new heat recovery system at the Koskenkorva Distillery started its full operation in Q1.

In addition to savings and efficiency actions aiming at profitability improvements, we are working on reducing our working capital, primarily by optimising inventory levels by cutting the buffer stocks and by improving our forecasting accuracy. To improve on our cash flow, we have expanded our sale of receivables programme.

We reiterate our guidance: Anora’s comparable EBITDA in 2023 will be EUR 80–90 million.