Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — H1 2020 Earnings Presentation
55 slides from Anora Group Oyj's earnings presentation, Aug 24, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets AUGUST-SEPTEMBER 2020
Slide 2: Contents
Contents Leading Nordic alcoholic beverage brand company operating in the wines and spirits markets in the Nordic countries, Estonia and Latvia. We • also have production in p3 – ALTIA IN BRIEF Cognac, France. • p10 – MARKETS, TRENDS & INNOVATION • p17 – STRATEGY • p20 – FINANCIALS • p25 – SUMMARY O
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 Head office Key figures 2019 Production Distillery Net sales Comparable EBITDA margin Sales office 359.6 12.4% Warehouse EUR million Exports to approx. 30 co
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 24.8.2020 4
Slide 5: Our business is well balanced
Our business is well balanced NET SALES NET SALES NET SALES BY NET SALES BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) 35% Consumer product sales Nordic Altia 65% Core Finland & 129 52% Spirits 121 49% 145 58% Other Brands Brands E
Slide 6: Our operations are divided into three segments
More information: pp. 30-32, 45 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,
Slide 7: Let's drink better
Let’s drink better We want to support a development of a modern, responsible Nordic drinking culture and develop better drinking experiences. We are proud to work with products that are the best choice for the environment and for the climate, promoted and consumed responsibly. 24.8.2020 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 Around 210 • Natural, unfiltered spring water million kg • Protected water abstraction areas of Finnish barley • 32-37% of The same sour
Slide 9: Barley sourcing
In 2019, Altia’s use of Finnish grain Barley sourcing reached 211.5 (211.7) million kilos, including Barley price development and Altia’s monthly volumes 2007-2020 (June) 208.7 million kilos EUR/tn tn Finnish barley - equals 250 30 000 about 33% of the total market volume 25 000 200 20 000 150 15 00
Slide 10: Markets, trends & innovation
Markets, trends & innovation
Slide 11: Globally, premiumisation is driving growth in all large spirits categories
Globally, premiumisation is driving growth in all large spirits categories Global spirits value (USD) Global spirits market by category (million litres)1) CAGR % 2019-2023 Global spirits volume by geography in 20181) estimated at 6.6%, 0.6% 1.1% historically 2012-2018 CAGR % CAGR % 2.4% 3.1% value g
Slide 12: 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 Volume development of the Nordic wine and spirits market(2 Two thirds of Altia’s The value of the Nordic wine and spirits market(1 consumer beverage Historical Growth forecast sales from state retail CAGR 2012-2018 CAGR 2019-202
Slide 13: Stable spirits volume development in the Nordic monopolies
Stable spirits volume development in the Nordic monopolies Spirits sales volumes in the three Nordic monopolies and Altia’s market shares at the end of 20191 with some brand examples for the largest categories Whisk(e)y 24% 51 629 51 556 51 311 51 755 51 609 Viina/Vodka (Flav+Un 50% Rum 14% Other Sp
Slide 14: We have 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 15: 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 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: Altia's refined strategy
Altia’s refined strategy
Slide 18: 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 19: Altia's refined strategy
Altia’s refined strategy 1. Strengthen Nordic market leadership in 2. Boost Nordic channel excellence of own grain-based spirits brands and partner business execution • Strengthen vodka market leadership • Enable best route-to-market in the Nordics for with full category view. our brands and for our
Slide 20: Financials
Financials
Slide 21: Our operations are based on profitable growth
More information: Our operations are based on profitable growth pp. 33-37, 39-43 Net sales (MEUR) Comparable EBITDA 42.4 44.8 38.0 40.8 40.0 380.7 356.6 359.0 357.3 359.6 11.5 % 11.8 % 12.4 % 11.2 % 10.0 % 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Comparable EBITDA, MEUR Comparable EBITDA ma
Slide 22: Free cash flow in 2018 impacted by working capital development
More information: pp. 33-37, 39-43 Free cash flow in 2018 impacted by working capital development Free cash flow* Net working capital / Net sales, % 122% 8.1 % 80% 88% 75% 4.5 % 38% 54.5 3.5 % 3.1 % 3.2 % 37.1 30.6 30.6 30.6 30.6 37.1 15.1 15.1 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Free
Slide 23: Net working capital
More information: Net working capital pp. 33-37, 39-43 Net working capital Comments EUR million 2015 2016 2017 2018 2019 • Receivables from the state retail monopolies partly sold Inventories 101.2 96.3 94.5 99.6 92.0 • Cognac constitutes notable part of inventory Contract assets, trade and 59.1 63.
Slide 24: Our cash flow enables an attractive dividend capacity
More information: Our cash flow enables an attractive dividend capacity pp. 33-37, 39-43 LOW OPERATIONAL CAPEX NEEDS ENABLE SOLID AND STABLE CASH FLOW Free cash flow Comments EUR million 2015 2016 2017 2018 2019 • In 2019, capital expenditure was related to a number of safety and Comparable EBITDA 3
Slide 25: Q2 2020
Q2 2020
Slide 26: Strong result in an exceptional market environment
Strong result in an exceptional market environment HIGHLIGHTS FROM H1 Reported net sales Comparable EBITDA 149.3 (165.0) 18.8 (13.7) EUR million EUR million Net sales growth in constant currencies Comparable EBITDA margin -8.4% 12.6% (8.3%) 24.8.2020 26
Slide 27: COVID-19 update
COVID-19 update KEY PRIORITIES THE HEALTH AND SAFETY OF EMPLOYEES AND BUSINESS CONTINUITY Impacts so far • Travel retail, exports and on-trade sales channels were closed in Q2 • Consumers shifted purchases to the monopolies • Uplifting of restrictions end of Q2, low impact for Altia • High demand fo
Slide 28: 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 previous year, % Q2 20 Q2 19 H1 20 H1 19 2019 Finland Nordics in total +20.9 +2.4 +15.6 -1.3 +0
Slide 29: H1: Net sales declined from previous year
H1: Net sales declined from previous year CLOSED SALES CHANNELS, LOWER CONTRACT MANUFACTURING VOLUMES AND NORMALISED BARLEY PRICE H1 20: Q2 20: Net sales by segment, MEUR • Net sales decline in constant • Net sales decline in constant currencies was 8.4% currencies was 10.3% -9.5% • COVID-19 restric
Slide 30: Finland & Exports
Finland & Exports JANUARY–JUNE 2020 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 Net sales, MEUR Product launches in Q2 20 • Net sales declined by 11.2% to
Slide 31: Scandinavia
Scandinavia JANUARY–JUNE 2020 The Scandinavia segment comprises the import, sale and marketing of wine and spirits, and other beverages in Sweden, Norway and Denmark. Highlights Net sales, MEUR Product launches in Q2 20 • Reported net sales declined by 1.1% to -1.1% EUR 50.1 (50.7) million • Busines
Slide 32: Altia Industrial
Altia Industrial JANUARY–JUNE 2020 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 c
Slide 33: Significant profitability improvement
Significant profitability improvement ALTIA INDUSTRIAL, MONOPOLY SALES AND COST SAVINGS Quarterly net sales and comparable EBITDA, EUR million 111 110 87 91 86 85 81 74 19,7 68 15,9 H1 20: 13,2 11,4 10,3 • Comparable EBITDA improved by 37% or EUR 8,7 9,4 5.1 million to EUR 18.8 (13.7) million 4,3 5,
Slide 34: Profitability improved in all segments
Profitability improved in all segments ALTIA INDUSTRIAL, MONOPOLY SALES AND COST SAVINGS Comparable EBITDA by segment, MEUR and margins H1 20: Finland & Exports EUR million Q2 20 Q2 19 Change H1 20 H1 19 Change 2019 • Strong monopoly sales, revenue Finland & management and cost savings 5.5 5.3 +4.4%
Slide 35: Cash flow improved significantly
Cash flow improved significantly Net cash flow from operating activities, MEUR H1 20: • Net cash flow from operations was EUR 10.3 (- 4.0) million – Improved comparable EBITDA – Positive development in net working capital • Net working capital was EUR 14.7 (41.0) million • Receivables sold were EUR
Slide 36: Strong financial position and liquidity situation
Strong financial position and liquidity situation Gearing, % 56,7 % 58,4 % 58,1 % 59,1 % 57,9 % Net debt Net debt, EUR million Net debt / Comparable EBITDA (rolling 12m) 31,6 % 33,2 % 86,8 82,9 81,3 81,4 77,4 19,1 % 20,0 % Long-term target <2.5x 47,4 48,9 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1
Slide 37: Guidance 2020 remains suspended
Guidance 2020 remains suspended THE RESTRICTIONS AND INSTRUCTIONS FROM GOVERNMENTS AND HEALTH AUTHORITIES HAVE A SIGNIFICANT IMPACT ON ALTIA’S OPERATING ENVIRONMENT. • The visibility for the rest of the year continues to be poor and forecasting is difficult. Uncertainty in the economy remains at a h
Slide 38: Appendices
Appendices Investor Relations: tua.stenius-ornhjelm@altiacorporation.com www.altiagroup.com
Slide 39: Key ratios
Key ratios EUR million Q2 20 Q1 20 2019 Q4 19 Q3 19 Q2 19 Q1 19 2018 Q4 18 Q3 18 Q2 18 Q1 18 2017 Q4 17 Q3 17 Q2 17 Q1 17 Net sales, EUR million 81.0 68.2 359.6 110.1 84.5 91.2 73.8 357.3 110.9 85.7 87.1 73.5 359.0 109.8 84.5 91.3 73.4 Comparable EBITDA, EUR million 13.2 5.5 44.8 19.7 11.4 9.4 4.3 4
Slide 40: Quarterly net sales and comparable EBITDA by segment
Quarterly net sales and comparable EBITDA by segment Net sales by segment EUR million Q2 20 Q1 20 Q4 19 Q3 19 Q2 19 Q1 19 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 & 29.2 23.8 37.8 31.2 34.7 25.0 39.5 31.8 35.4 27.1 40.7 31.4 35.7 26.0 41.1 31.6 33.9 27.3 Export
Slide 41: Consolidated income statement
Consolidated income statement EUR million Q2 20 Q2 19 H1 20 H1 19 2019 NET SALES 81.0 91.2 149.3 165.0 359.6 Other operating income 1.4 2.0 2.9 3.9 7.6 Materials and services -45.4 -54.4 -84.1 -99.4 -213.1 Employee benefit expenses -11.5 -11.6 -23.0 -23.1 -45.9 Other operating expenses -13.0 -18.0 -
Slide 42: Consolidated balance sheet
Consolidated balance sheet 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec EUR million EUR million 2020 2019 2019 2020 2019 2019 ASSETS EQUITY AND LIABILITIES Non-current assets Equity attributable to owners of the parent Goodwill 80.0 79.8 80.1 Share capital 60.5 60.5 60.5 Other intangible assets 22.5 27
Slide 43: Cash flow from operating activities
Cash flow from operating activities EUR million Q2 20 Q2 19 H1 20 H2 19 2019 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes 7.6 4.5 9.3 4.7 24.6 Adjustments Depreciation, amortisation and impairment 4.4 4.5 8.8 9.0 17.9 Share of profit in associates and joint ventures and income from -1.6 i
Slide 44: Shareholder structure
Shareholder structure AS AT 31 JULY 2020 Shareholders Number of shares % of shares 1 Valtion Kehitysyhtiö Vake Oy 13 097 481 36.2 Non-financial corporations 2 Ilmarinen Mutual Pension Insurance Company 1 113 300 3.1 5% 3 Varma Mutual Pension Insurance Company 1 050 000 2.9 Non-profit Rest of the ins
Slide 45: Finland & Exports, Scandinavia, Altia Industrial
Finland & Exports Scandinavia Altia Industrial Consumer product sales in Finland, Consumer product sales in Industrial products and services the Baltics, travel retail and export Sweden, Norway and Denmark businesses, sourcing, supply chain, customer service and logistics. Key brands: Key brands: In
Slide 46: Key exports contracts
Key exports contracts HIGH-QUALITY DISTRIBUTION AGREEMENTS HAVE BEEN SIGNIFICANT MILESTONES FOR OUR EXPORT AMBITIONS Key export contracts Since 2014, Koskenkorva Vodka exported O.P. Anderson Larsen Cognacs Koskenkorva launched to China, to Russia with distribution Targeting 2017 Vodka entry to 2017
Slide 47: 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 2018 2019 Reform of New Finland Finnish IPO business Alcohol Act model in Roots and geographical The roots of Altia can be traced back to z Nordic Region Denmark 1888 when a yeast plant was Baltics expansion establ
Slide 48: 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 49: Barley reports and publications
Barley reports and publications July: Utilised Agricultural Area F regional preliminary data, I February: Forecast of area sown current year (Luke) for the coming harvest period July: First advance estimate of N (VYR, TNS Gallup) the harvest, current year (Luke) November: Crop Production L March: Cr
Slide 50: Macro indicators
Macro indicators ALCOHOL CONSUMPTION (WHO) Total per capita (15+) consumption (in litres of Consumption of pure alcohol by pure alcohol) type of beverage, % 2010 2016 Beer Wine Spirits Other Finland 12.6 10.7 Finland 48.8 20.6 21.5 9.1 Sweden 9.5 9.2 Sweden 36.4 47.8 14.1 1.7 Norway 9.0 7.5 Norway 4
Slide 51: 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 52: 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 12% 9% 9% 70% I II III initial listing Travel Whole- Grocery Monopolies in Finland, Sweden and Norwa
Slide 53: Alcohol taxation
Alcohol taxation Changes in Finnish alcohol taxation Alcohol excise duty rates and value-added tax rates in the Nordics* • January 2019 As at 1 Jan 2019 Spirits Wine(1 VAT, % – Tax increase of EUR 30 million 48.8 36.09 24.0 – Even split on different categories, on average 2.5% 53.8 24.8 25.0 – Spiri
Slide 54: 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 55: Follow us
Follow us: www.altiagroup.com Investor Relations: tua.stenius-ornhjelm@altiacorporation.com