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CEO Pekka Tenniläs comments on Anora's Q1 22 results
Anora’s first year as a combined company started off with underlying business developing largely in line with our expectations, despite the turbulence in our operating environment.
For wine and spirits, we saw markets returning to normal during the first quarter, as expected. Volumes in the monopolies have declined, as restrictions were lifted in all markets. Consumption has shifted back to on-trade, travel retail and border trade, and the recovery of these sales channels has been good or even strong.
The significant increase of input costs that we experienced already at the end of last year has further accelerated due to the war in Ukraine. To mitigate this cost inflation, we have increased prices in all sales channels and across both beverage and industrial products. Price increases were implemented already at the end of last year and continued in the first quarter, but in the current inflationary environment, we will need to continue with further price increases throughout the rest of the year.
For the first quarter, Anora’s net sales were EUR 133.4 million, which was slightly below last year’s pro forma net sales of EUR 134.2 million. This year beverage sales in Q1 were impacted by the later timing of Easter sales occuring in Q2 rather than in Q1 as last year. Further, wine sales declined in line with the declining market volumes, while spirits sales grew thanks to the recovery of travel retail. On the industrial side price increases due to the high raw material costs supported net sales development positively. Profitability weakened in Q1 due to the price increases only partly offsetting high input costs, and the lower wine sales. Comparable EBITDA reached EUR 13.0 million, or 9.8% of net sales.
Our post-merger integration work has progressed as planned and on schedule. During the first quarter, we have achieved an important milestone with the consolidation of logistics volumes. We have completed the projects to insource third party logistics operations in both Norway and Finland, while Sweden is expected to be completed during Q3 22. The run-rate of annualised net synergies at the end of Q1 22 was EUR 1.9 million, including the annual impact of EUR 4.6 million from the divestment of brands.
We strongly condemn Russia’s war against Ukraine and respect all sanctions that have been set. When the war started, we reacted quickly and suspended exports to Russia, and in our Baltic operations we suspended purchases of raw materials from Russia and Belarus. Discontinuing exports to Russia does not have a material impact on Group net sales, but due to the war, global supply chain disruptions and constraints in the supply of grain have further increased.
We are working hard to secure the availability of raw materials. Currently, the biggest concerns are with the availability of barley, bulk wine and glass bottles, in particular. In our supply chain operations, the teams are doing continuity planning and working very closely with our partners and suppliers.
During the previous two years, when the pandemic impacted our operating environment significantly, we were able to adapt and respond quickly to changes. This proves the strength of our stable business and the resilience and strong commitment of our employees – we are in a strong position to manage through these challenging times. I want to take this opportunity to thank all Anora employees for their hard work during the start of the year.
Looking forward, the operating environment continues to be unstable, and while it is difficult to foresee all impacts on our business, we will continue to focus on growth and invest in our brands as well as to build the market together with our partners and customers. Meanwhile, work on Anora’s growth strategy progresses, and we look forward to discussing Anora’s future growth ambitions and sustainability roadmap in our first Capital Markets Day planned to be held in the autumn.
For the rest of the year, we reiterate our guidance: we expect Anora’s comparable EBITDA in 2022 to be between EUR 75-85 million.