Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Investor Presentation (February 2019)
59 slides from Anora Group Oyj's investor presentation, Feb 27, 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets FEBRUARY-MARCH 2019
Slide 2: Contents
Contents • Altia in brief • Markets, trends & innovation • Strategy Leading Nordic alcoholic beverage brand company operating in the • Financials wines and spirits markets in the Nordic countries, • 2018 highlights and key financials Estonia and Latvia. We also have production in Cognac, France. App
Slide 3: We are the leading Nordic alcoholic beverage brand house
We are the leading Nordic alcoholic beverage brand house on the wine and spirits markets WE OPERATE ON THE STABLE AND PROFITABLE NORDIC MARKET Market positions in the Nordic region Head office Spirits Wine Production Market position #1 #1 Market position #1 Distillery #3 #1 #1 Sales office Spirits W
Slide 4: We are the Nordic iconic brands
We are the Nordic iconic brands BRAND FOCUSED BUSINESS THROUGH OWN AND PARTNER BRANDS Wide assortment of many other own and partner brands from around 150 partners 27.2.2019 4
Slide 5: Our business is well balanced
Our business is well balanced NET SALES 2018 NET SALES 2018 NET SALES 2018 BY NET SALES 2018 BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) Consumer product sales 36% Nordic Finland & 134 Altia 64% Core 53% Spirits 124 49% 151 60% O
Slide 6: Our operations are divided into three segments
Our operations are divided into three segments ALTIA INDUSTRIAL PROVIDES INDUSTRIAL PARTNERS WITH HIGH-QUALITY SOLUTIONS AND SERVICES Finland & Exports Scandinavia Altia Industrial • Consumer product sales in • Consumer product sales in • Industrial products Finland, the Baltics, travel Sweden, Norw
Slide 7: Let's drink better
Let’s drink better Altia wants to support the development of a modern and responsible Nordic drinking culture Altia awarded as the Green Company of the Year ”Altia was selected as the winner due to the bio and circular economy achieved at its Koskenkorva distillery in Finland.” 27.2.2019 7
Slide 8: Sustainability and high quality raw materials are key elements of our brands
Sustainability and high quality raw materials are key elements of our brands Finnish farmers and circular economy of barley – high material efficiency Spring water Over 200 • Natural, unfiltered spring water • Protected water abstraction areas million kg of Finnish barley • The same source of water
Slide 9: Markets, trends & innovation
Markets, trends & innovation
Slide 10: Globally, premiumisation is driving growth in all large spirits categories
Globally, premiumisation is driving growth in all large spirits categories Global spirits market Global spirits volume by geography in 20171) by category (million litres)1) 2.4 2.9 Asia Pacific 59% Global spirits -3.8 1.0 CAGR % 2018-2022 forecast 3 313 9% Australasia 0% by volume 1.3% and 2 997 Cog
Slide 11: We operate in the large and non-cyclical Nordic wine and spirits market
We operate in the large and non-cyclical Nordic wine and spirits market Two thirds of Altia’s consumer Stable value growth on the large Market value growth outlook product sales from state retail Nordic wine and spirits market1) 2017-20211) (outlook 2018-20221)) monopolies Wine Spirits Spirits 12 38
Slide 12: Stable volume development in the Nordic spirits monopolies
Stable volume development in the Nordic spirits monopolies Spirits sales volumes in the three Nordic monopoly markets and Altia’s market shares at the end of 2018 51 609 51 629 51 556 51 311 Whisk(e)y 25% Viina/Vodka (Flav+Un 52% Rum 14% Other Spirits 7% Liqueurs 21% Grape Spirits 19% Gin/Geneva 13%
Slide 13: Extensive experience in operating with monopolies and regulated markets
We have extensive experience in operating with monopolies and in the regulated markets CHARACTERISTICS OF THE NORDIC MARKET 1 2 3 4 5 Alcoholic State retail Route-to- Pricing beverages in Advertising monopolies assortment & taxation grocery trade • Finland, Sweden, • Tender process • Transparent pri
Slide 14: Our market and consumer knowledge give us competitive advantage in the Nordics
Our market and consumer knowledge give us competitive advantage in the Nordics 1 2 3 4 Agility in sourcing, Knowledge to Local consumer Marketing and production and succeed in tenders knowledge promotions distribution • Altia’s wide and deep • Knowledge of the monopolies’ • Local consumer knowledge
Slide 15: Our goal – Advocating responsible drinking culture
Our goal – Advocating responsible drinking culture Innovation is facing a new consumer landscape As consumers demand more that will have a major impact to the business in transparency across sectors, the food and drink industry cannot the coming years just pay lip service through clever marketing __
Slide 16: Our brand portfolio is well positioned to capture growth pockets
Our brand portfolio is well positioned to capture the growth pockets created by key market trends ALCOH OLIC BEV ERA GES TECHNI 50 CAL ETHANO L About % decrease in CO2 emissions Koskenkorva Distillery & bioenergy plant Ov er 60 % fuel self-sufficiency in st eam product ion rat e 34% Health Authentic
Slide 17: Strategy
Strategy
Slide 18: The core of our strategy is to deliver profitable growth
The core of our strategy is to deliver profitable growth Commercial battles 1 • Expand into new geographical markets Growth and Grow Nordic Core Brands • Innovate into new occasions and Active brand profitability consumer segments through the five portfolio strategic streams • Grow wine segment with
Slide 19: Strengthening the strategy execution
Strengthening the strategy execution FURTHER INITIATIVES IDENTIFIED TO REACH LONG-TERM NET SALES AND PROFITABILITY TARGETS Based on our Initiatives within: strategy to create • Revenue management profitable growth, Growth • Expansion in growing categories in Sweden and Norway we have identified • Ex
Slide 20: International expansion provides upside potential
International expansion provides upside potential HIGH-QUALITY DISTRIBUTION AGREEMENTS HAVE BEEN SIGNIFICANT MILESTONES FOR OUR EXPORT AMBITIONS Key export contracts Since 2014, Koskenkorva 1 Vodka exported O.P. Anderson Larsen Cognacs Exports Koskenkorva launched to China, possess significant to Ru
Slide 21: Cognac is the key imported spirits in China
Cognac is the key imported spirits in China • China is the second largest cognac market in the world in volume and important especially in premium quality segments (VSOP, XO and above) • Increased disposable incomes are driving growth in private consumption • After the anti-corruption crackdown in 2
Slide 22: Our financial targets aim towards stable shareholder returns
Our financial targets aim towards stable shareholder returns Net sales growth + 2% • Altia’s target is to achieve an annual net sales growth of 2 per cent over time (CAGR) CAGR Comparable EBITDA margin 15 % • Comparable EBITDA margin target to reach 15 per cent in the long-term Net debt / comparable
Slide 23: Financials
Financials
Slide 24: Our operations are based on profitable growth
Our operations are based on profitable growth Net sales (EURm) Comparable EBITDA (EURm) and comparable EBITDA margin % 20 60 40.8 42.4 40.0 15 38.0 40 380.7 356.6 359.0 357.3 11.5% 11.8% 11.2% 10 20 10.0% 0 5 2015 2016 2017 2018 2015 2016 2017 2018 Stable and diversified revenue streams underpinned
Slide 25: Free cash flow in 2018 impacted by working capital development
Free cash flow in 2018 impacted by working capital development Free cash flow*, EURm Net working capital / Net sales, % 10% 8.1% 8% 6% 4.5% 3.5% 4% 30.6 30.6 37.1 15.1 2% 3.1% 0% 2015 2016 2017 2018 2015 2016 2017 2018 Gross capex / Net sales, % Net debt / Comparable EBITDA, ratio 3.3% 4% 3.0% 1.2x
Slide 26: Net working capital
Net working capital Net working capital Comments EUR million 2015 2016 2017 2018 • Receivables from the state retail monopolies partly sold Inventories 101.2 96.3 94.5 99.6 • Cognac constitutes notable part of inventory Contract assets, trade and other 59.1 63.8 53.9 61.2 receivables • The seasonal
Slide 27: Our cash flow enables an attractive dividend capacity
Our cash flow enables an attractive dividend capacity Free cash flow Comments EUR million 2015 2016 2017 2018 • Low operational capex need enables solid and stable cash flow Comparable EBITDA 38.0 40.8 42.4 40.0 Change in working capital1) 3.9 (1.6) 6.7 (17.2) • In 2018, capital expenditure was prim
Slide 28: Guidance 2019
Guidance 2019 • The comparable EBITDA is expected to improve from the 2018 level. – The positive trend of Altia’s Nordic core brand portfolio is expected to continue. – Market development in Finland is expected to flatten out in comparison to 2018 and the markets in Sweden and Norway are expected to
Slide 29: Full-year 2018
Full-year 2018 HIGHLIGHTS AND KEY FINANCIALS
Slide 30: Highlights from 2018
Highlights from 2018 • Financial performance in 2018 challenged by external factors in the operating environment – Increased raw material costs – Unfavourable currencies • In constant currencies net sales grew by 1.4% driven by – Nordic core brands such as Koskenkorva Vodka and Larsen, and exports –
Slide 31: Market development
Market development APPROXIMATELY TWO THIRDS OF CONSUMER PRODUCT SALES COME FROM STATE RETAIL MONOPOLIES Combined spirits and wine sales volume development in the state retail monopolies Change compared to • Nordic spirits and wine market in total – volumes in the three retail Q4 18 Q4 17 2018 2017 p
Slide 32: Net sales highlights
Net sales highlights NEGATIVE CURRENCY IMPACT CONTINUED • In constant currencies 1.4% above last year’s level • Net sales of beverages in constant currencies is flat at 0.3% • Reported net sales were EUR 357.3 (359.0) million • Growth in exports and grocery trade in Finland • Finland & Exports and S
Slide 33: Barley costs pushing down profitability in Q4
Barley costs pushing down profitability in Q4 – together with weak currencies and the tax provision SEASONALITY AFFECTS NET SALES AND PROFITABILITY • Comparable EBITDA was EUR 40.0 (42.4) million • Comparable EBITDA margin was 11.2% (11.8%) • Items affecting comparability amounted to EUR 6.0 (2.1) m
Slide 34: Profitability
Profitability Comparable EBITDA Reported EBTIDA MEUR % MEUR % 45 11.8% 12 45 11.2% • Items affecting comparability 11.2% totalled EUR -6.0 (-2.1) million 40 40 10 10 • EUR 4.6 million related to the 9.5% 35 35 initial public offering of Altia 30 8 30 8 • In addition, restructuring costs from efficie
Slide 35: Cash flow and balance sheet
Cash flow and balance sheet AS AT 31 DECEMBER Net cash flow from operating activities EUR 6.5 (37.6) million The receivables sold EUR 80.2 (83.6) million Net debt EUR 47.4 (47.7) million Gearing 31.6% (34.9%) Equity ratio 38.4% (34.3%) The reported net debt to comparable 1.2 (1.1) EBITDA ratio In us
Slide 36: Appendices
Appendices www.altiagroup.com www.altiagroup.com IR: tua.stenius-ornhjelm@altiacorporation.com
Slide 37: New accounting standards: IFRS 16 Leases
New accounting standards: IFRS 16 Leases NOT SIGNIFICANT IMPACT ON ALTIA • Altia implements the standard by using a simplified approach (modified retrospective approach) – Comparative figures will not be restated • Altia will recognise the accumulated effect of adopting IFRS 16 as an adjustment to e
Slide 38: Key ratios
Key ratios EUR million Q1 18 Q2 18 Q3 18 Q4 18 2018 Q1 17 Q2 17 Q3 17 Q4 17 2017 Net sales, EUR million 73.5 87.1 85.7 110.9 357.3 73.4 91.3 84.5 109.8 359.0 Comparable EBITDA, EUR million 5.2 8.7 10.3 15.9 40.0 4.3 9.2 10.4 18.5 42.4 % of net sales 7.0 9.9 12.0 14.3 11.2 5.8 10.0 12.3 16.9 11.8 EBI
Slide 39: Quarterly net sales and comparable EBITDA by segment
Quarterly net sales and comparable EBITDA by segment Net sales by segment EUR million Q4 18 Q3 18 Q2 18 Q1 18 Q4 17 Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Q2 16 Q1 16 Finland & Exports 39.5 31.8 35.4 27.1 40.7 31.4 35.7 26.0 41.1 31.6 33.9 27.3 Scandinavia 42.8 25.0 27.4 22.5 44.4 26.5 29.7 23.2 45.9 26.7 30
Slide 40: Consolidated income statement
Consolidated income statement EUR million 2018 2017 NET SALES 357.3 359.0 Other operating income 7.4 8.3 Materials and services -206.8 -202.0 Employee benefit expenses -49.9 -52.0 Other operating expenses -73.9 -72.9 Depreciation, amortisation and impairment -14.4 -14.2 OPERATING RESULT 19.7 26.1 Fi
Slide 41: Consolidated balance sheet
Consolidated balance sheet EUR million 2018 2017 EUR million 2018 2017 ASSETS EQUITY AND LIABILITIES Non-current assets Equity attributable to owners of the parent Goodwill 80.7 82.1 Share capital 60.5 60.5 Other intangible assets 29.6 34.4 Invested unrestricted equity fund 1.2 - Fair value reserve
Slide 42: Cash flow from operations
Cash flow from operations EUR million 2018 2017 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes 18.6 25.0 Items affecting Adjustments comparability Depreciation, amortisation and impairment 14.4 14.2 (MEUR 6) and barley Share of profit in associates and income from investments in joint opera
Slide 43: Reconciliation of alternative performance measures and items affecting comparability
Reconciliation of alternative performance measures (APM) and items affecting comparability (IAC) EUR million 2018 2017 Items affecting comparability Net gains or losses from business and assets disposals 0.4 1.3 Cost for closure of business operations and restructurings -1.1 -1.1 Major corporate pro
Slide 44: Shareholder structure
Shareholder structure AS AT 31 JANUARY 2018 Number Shareholders % of shares of shares 1 Prime Minister’s Office 13 097 481 36.2 2.7 0.7 2 Varma Mutual Pension Insurance Company 1 550 000 4.3 3.9 44.7 18.3 3 Ilmarinen Mutual Pension Insurance Company 1 088 300 3.0 Public sector 44.7 4 OP-Finland Smal
Slide 45: Finland & Exports
Finland & Exports The Finland & Exports segment comprises the import, sale and marketing of wine and spirits, and other beverages in Finland and the Baltics, as well as exports and travel retail. Highlights Product launches & events Key financials MEUR % • Positive development in exports of • Kosken
Slide 46: Scandinavia
Scandinavia The Scandinavia segment comprises the import, sale and marketing of wine and spirits, and other beverages in Sweden, Norway and Denmark. Highlights Product launches & events Key financials MEUR % • The Scandinavia segment has shown a 10 stable development throughout the 120 9.3% 9 year,
Slide 47: Altia Industrial
Altia Industrial The Altia Industrial segment comprises Koskenkorva plant operations, starch, feed component and technical ethanol businesses, as well as contract manufacturing services at Rajamäki. It also includes supply chain operations, i.e. production operations in different countries, customer
Slide 48: Grocery trade offering
Grocery trade offering Koskenkorva Vichy sugarfree 27.2.2019 49
Slide 49: Altia's digital platforms
Altia’s digital platforms Finland: www.viinimaa.fi Sweden: www.folkofolk.se Germany: www.nordicspirits.com • A leading consumer channel for alcoholic • A unique and unrivaled position in the market for • Nordic alcohol brand store in Germany since 5/18 beverages in Finland alcoholic beverages • Incu
Slide 50: Finland & Exports, Scandinavia, Altia Industrial
Finland & Exports Scandinavia Altia Industrial Consumer product sales in Consumer product sales in Industrial products and services Finland, the Baltics, travel Sweden, Norway and Denmark businesses, supply chain, retail and export customer service and logistics. Key brands: Key brands: Industrial p
Slide 51: Our responsibility work is driven by key megatrends
Our responsibility work is driven by key megatrends: health & wellbeing, circular economy and climate change ALTIA CORPORATE RESPONSIBILITY CORNERSTONES AND MATERIALITY DRIVEN BY THE MEGATRENDS HEALTH & WELLBEING, CIRCULAR ECONOMY AND CLIMATE CHANGE Altia & customers Altia & society Altia & environm
Slide 52: Our journey to being the Nordic powerhouse and market leader
Our journey to being the Nordic powerhouse and market leader 1888 1990 2000 2010 2017 The journey continues Finland Open Western markets with key Nordic core Roots and geographical The roots of Altia can be traced back to z Nordic Region brands 1888 when a yeast plant was expansion Baltics establish
Slide 53: Our integrated operating model creates synergies and economies of scale
Our integrated operating model creates synergies and economies of scale ONE SHARED PLATFROM FOR OUR OWN BRANDS, PARTNER BRANDS AND INDUSTIRAL SERVICES Ownership of the brands and Liquid product development the whole value chain and innovation Innovation workshops Innovation lead time New marketing t
Slide 54: Our sales channels provide stable and predictable sales
Our sales channels provide stable and predictable sales APPROXIMATELY TWO THIRDS OF OUR CONSUMER PRODUCT SALES COME FROM RETAIL MONOPOLIES How Altia operates Consumer sales1) Examples Description in the channel • State retail monopolies in Finland, Sweden and Norway are the largest channels and • Se
Slide 55: Two thirds of Altia's consumer product sales from monopolies
Two thirds of Altia’s consumer product sales from Transparent pricing - fixed and predetermined monopolies gross margins for monopoly Annual windows for price revisions7) Price lock-up period after a 13% 9% 10% 68% I II III initial listing Travel Whole- Grocery Monopolies in Finland, Sweden and Norw
Slide 56: Alcohol taxation
Alcohol excise duty rates and value-added tax rates in the Nordic countries Alcohol taxation Spirits Wine VAT, % 47.9 34.8 24.0 Changes in Finnish alcohol taxation 53.8 24.8 25.0 • January 2019 – Tax increase of EUR 30 million 80.8 52.7 25.0 – Even split on different categories, on Source: Informati
Slide 57: Global cognac market
• Global cognac market value grew by 14.4% to EUR 3.15 billion • Volume growth 10.2% to 197.4 million bottles – Highest volume growth in the US (+11.5%) and China (+31.5%) – VS quality is the biggest category (50%) • The US accounts for 42% of global volume, mostly VS quality • China (incl. Singapor
Slide 58: Our Executive Management Team
B C A D G E F Our Executive Management Team A Pekka Tennilä B Niklas Nylander C Janne Halttunen D Kari Kilpinen E Hannu Tuominen F Kirsi Lehtola G Kirsi Puntila CEO CFO SVP, SCANDINAVIA SVP, FINLAND & EXPORTS SVP, ALTIA INDUSTRIAL SVP, HR SVP, MARKETING 27.2.2019 60
Slide 59: Follow us
Follow us: www.altiagroup.com www.altiagroup.com IR: tua.stenius-ornhjelm@altiacorporation.com