Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Q3 2020 Earnings Presentation
57 slides from Anora Group Oyj's earnings presentation, November 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Leading Nordic alcoholic beverage brand company in the wine and spirits markets NOVEMBER-DECEMBER 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 – MERGER OF ALTIA AND ARCUS •
Slide 3: 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 11.11.2020 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. 33-35, 47 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. 11.11.2020 7
Slide 8: Sustainability and high quality raw materials
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 Jan-Sep 2020, Barley sourcing Altia’s use of Finnish barley reached 160 (157) Barley price development and Altia’s monthly volumes 2007-2020 (September) million kilos. EUR/tn tn 250 30 000 25 000 200 20 000 150 15 000 100 10 000 50 5 000 2007 2009 2011 2013 2015 2017 2019 0 0 Altia's grain purcha
Slide 10: Markets, trends & innovation
Markets, trends & innovation
Slide 11: Premiumisation driving growth in global 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: 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: Experience 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: Market and consumer knowledge give competitive advantage
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: Brand portfolio positioned for key market trends
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: 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: Merger of Altia and Arcus
Merger of Altia and Arcus ANNOUNCED ON 29 SEPTEMBER 2020
Slide 21: Forming a leading wine and spirits brand house in the Nordics
Forming a leading wine and spirits brand house in the Nordics MERGER OF ALTIA AND ARCUS Altia and Arcus are joining forces to form a leading spirits and wine brand house in the Nordics: ANORA Deal rationale Transaction consideration GROUP. The wine and spirits brand The shareholders of Arcus will
Slide 22: Merger timetable, governance and shareholder structure
Forming a leading wine and spirits brand house in the Nordics MERGER OF ALTIA AND ARCUS Timetable Corporate governance Shareholder structure 29 Sep 2020 Announcement The current shareholders of Altia will own 53.5% and the current shareholders of Arcus will own 46.5% of 23 Oct 2020 Publication of pr
Slide 23: Financials
Financials
Slide 24: 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 25: Free cash flow in 2018 impacted by working capital
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 26: 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 27: 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 28: Q3 2020
Q3 2020
Slide 29: COVID-19 update
COVID-19 update KEY PRIORITIES THE HEALTH AND SAFETY OF EMPLOYEES AND BUSINESS CONTINUITY Impacts so far • Significant negative impacts on travel retail, exports and on-trade • Consumers shifting purchases to the monopolies • Following 2nd wave of COVID-19, new restrictions from mid Q3 • Demand for
Slide 30: Strong third quarter, guidance updated
Strong third quarter, guidance updated HIGHLIGHTS FROM Q1-Q3 2020 Reported net sales Comparable EBITDA Q1-Q3 Q1-Q3 235.9 (249.5) 33.4 (25.1) EUR million EUR million Net sales growth in constant currencies Comparable EBITDA margin -4.7% 14.2% (10.1%) 11.11.2020 30
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 Q1-Q3 Q1-Q3 Change compared to previous year, % Q3 20 Q3 19 2019 Finland 20 19 Nordics in total +18.2 1.5 16.5 -0.
Slide 32: Net sales grew in Q3
Net sales grew in Q3 STABLE DEVELOPMENT ACROSS ALL SEGMENTS Q1-Q3 20: Q3 20: Net sales by segment, MEUR • Net sales decline in constant currencies was • Net sales increase was 2.5% 4.7% • Spirits sales grew driven by strong -5.5% • Significant negative impacts of COVID-19 monopoly sales 250 • Normal
Slide 33: Finland & Exports
Finland & Exports JANUARY–SEPTEMBER 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 Q3 20 • Net sales were EUR 82.8 (9
Slide 34: Scandinavia
Scandinavia JANUARY–SEPTEMBER 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 Q3 20 • Net sales were EUR 77.5 (76.3) million, up by 1.7%. • Growth in constant
Slide 35: Altia Industrial
Altia Industrial JANUARY–SEPTEMBER 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 differ
Slide 36: Q1-Q3: Significant profitability improvement
Q1-Q3: Significant profitability improvement ALTIA INDUSTRIAL, MONOPOLY SALES AND COST SAVINGS Quarterly net sales and comparable EBITDA, EUR million 111 110 91 86 85 87 81 74 19,7 68 15,9 14,6 Q1-Q3 20: 13,2 11,4 10,3 • Comparable EBITDA improved by 33% or EUR 9,4 8.3 million to EUR 33.4 (25.1) mil
Slide 37: Profitability improved in all segments
Profitability improved in all segments ALTIA INDUSTRIAL, MONOPOLY SALES AND COST SAVINGS Comparable EBITDA by segment, MEUR and margins Q1-Q3 20: Q1-Q3 Q1-Q3 Finland & Exports EUR million Q3 20 Q3 19 Change 20 19 Change 2019 • Strong monopoly sales, revenue Finland & management and cost savings 5.5
Slide 38: Strong financial position
Strong financial position SOLID NET CASH FLOW FROM OPERATIONS AND LIQUIDITY POSITION Net cash flow from operating activities, MEUR Gearing, % 58,4 % 58,1 % 59,1 % 57,9 % 31,6 % 33,2 % 24,5 % Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 19,1 % 20,0 % Net cash flow from operating
Slide 39: Updated guidance provided
Updated guidance provided DESPITE THE ESCALATED UNCERTAINTIES, ALTIA IS PROVIDING AN UPDATED GUIDANCE FOR 2020 • Towards the rest of the year, the uncertainties related to COVID-19 have escalated and the negative impacts on Altia’s last and most important quarter are expected to be substantial. • Th
Slide 40: Appendices
Appendices Investor Relations: tua.stenius-ornhjelm@altiacorporation.com www.altiagroup.com
Slide 41: Key ratios
Key ratios Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 EUR million 2019 2018 2017 20 20 20 19 19 19 19 18 18 18 18 17 17 17 17 Net sales, EUR million 86.6 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 14.6 13.2 5.5 44.8 19.
Slide 42: Quarterly net sales and comparable EBITDA by segment
QUARTERLY NET SALES AND COMPARABLE EBITDA BY SEGMENT Net sales by segment EUR million Q3 20 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 & 29.8 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
Slide 43: Consolidated income statement
Published only for full- Consolidated income statement year and half-year 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
Slide 44: Consolidated balance sheet
Published only for full- Consolidated balance sheet year and half-year 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
Slide 45: Cash flow from operating activities
Published only for full- Cash flow from operating activities year and half-year 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 associat
Slide 46: Shareholder structure
Shareholder structure AS AT 31 OCTOBER 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 6% 3 Varma Mutual Pension Insurance Company 1 050 000 2.9 Non-profit Rest of the
Slide 47: 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 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 54: Two thirds of consumer product sales from monopolies
Two thirds of Altia’s consumer product sales from Transparent pricing - fixed and predetermined monopolies1) gross margins for monopoly Annual windows for price revisions8) Price lock-up period after a 12% 9% 9% 70% I II III initial listing Travel Whole- Grocery Monopolies in Finland, Sweden and Nor
Slide 55: Alcohol taxation
Alcohol taxation Changes in Finnish alcohol taxation Alcohol excise duty rates and value-added tax rates in the Nordics1)* • January 2019 As at 1 Jan 2019 Spirits Wine(2 VAT, % – Tax increase of EUR 30 million 48.8 36.1 24.0 – Even split on different categories, on average 2.5% 50.0 23.0 25.0 – Spir
Slide 56: 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 57: Follow us
Follow us: www.altiagroup.com Investor Relations: tua.stenius-ornhjelm@altiacorporation.com