Anora Group Oyj · OMXHEX:ANORA
Anora Group Oyj — Altia — Q1 2018 Earnings Presentation
42 slides from Anora Group Oyj's earnings presentation, June 2018
Slide 1: Leading Nordic alcoholic beverage brand company in the wine and spirits markets
Leading Nordic alcoholic beverage brand company in the wine and spirits markets in the Nordic Region May–June 2018 CEO Pekka Tennilä & CFO Matti Piri
Slide 2: We are the leading Nordic alcoholic beverage brand house
We are the leading Nordic alcoholic beverage brand house on the wine and spirits markets Net sales in 2017 359.0 EUR million Comparable EBITDA margin in 2017 Leading 11.8% quality wine and Nordic company spirits with operations Personnel at year-end brands in the Baltics and France as well as 703 ex
Slide 3: Let's drink better
Our goal – Advocating responsible drinking culture Self-sufficiency Let’s drink Produced or Average waste in fuels for steam imported beverages utilisation rate production at 93.8 Koskenkorva 99.5% 65% better million litres Altia wants to support and Eco-friendly packaging solutions Responsible sour
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 4
Slide 5: We have a truly Nordic platform
We have a truly Nordic platform WE OPERATE ON THE STABLE AND PROFITABLE NORDIC MARKET Finland & Exports Scandinavia Altia Industrial The import, sale and The import, sale and • Industrial products Market position #1 marketing of wines, spirits marketing of wines, spirits and other beverages in and o
Slide 6: Our business is well balanced
Our business is well balanced NET SALES 2017 NET SALES 2017 NET SALES 2017 BY NET SALES 2017 BY ALTIA VS. PARTNER ALTIA BRANDS 1) BUSINESS SEGMENT PRODUCT CATEGORY 1) BRANDS 1) (%) EURm (%) EURm (%) EURm (%) Nordic 52% Core Brands Consumer product sales Finland & 134 126 49% Altia 155 52% Spirits 60
Slide 7: 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 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: Our integrated operating model creates synergies and economies of scale
Our integrated operating model creates synergies and economies of scale WE MAXIMISE PROFITS THROUGH ONE SHARED PLATFORM FOR OUR OWN BRANDS, PARTNER BRANDS AND INDUSTRIAL SERVICES Ownership of the brands and Liquid product development the whole value chain and innovation Innovation workshops Innovati
Slide 10: Market overview
Market overview 10
Slide 11: Globally, premiumisation is driving growth in all large spirits categories
Globally, premiumisation is driving growth in all large spirits categories PREMIUMISATION IS DRIVING GROWTH IN ALL LARGE SPIRITS CATEGORIES Global spirits market by category5) Global spirits volume by geography in 20165) Millions 0.2% -1.4% 3.8% 2.6% 3.0% -0.5% 1.1% -0.4% 6.0% 2.1% 1.8% 1.3% 4.8% 3.
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 Nordic wine and spirits market development (EUR million)1) Wine Spirits 2.1 % Market value growth 7877 7406 7648 7750 outlook 2017-20211) 0.5 % (Finland, Sweden, Norway, Denmark) 4281 4230 4319 4348 Wine Spirits 1.0 % 0.2 % 2013
Slide 13: 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 200 Over 33% of million kg barley grain is used in of Finnish barley feed component every year production Ov er 50% CO2 emissions decrease in Koskenkorva Distillery & 24% of bioenergy plant barley grain
Slide 14: Our market and consumer knowledge give us competitive advantage
Our market and consumer knowledge give The monopolies’ revenues have generally been growing and they enjoy high level of public support4) us competitive advantage in the Nordics WE HAVE EXTENSIVE EXERIENCE IN OPERATING IN THE REGULATED NORDIC DRINKS MARKET Off-trade Monopoly’s Monopoly’s % of Alcoho
Slide 15: We have extensive experience in operating with monopolies
We have extensive experience in operating with monopolies and the regulated markets 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 knowl
Slide 16: We are the Nordic iconic brands
We are the Nordic iconic brands MARKET LEADER IN THE OVERALL NORDIC SPIRITS AND WINE MARKETS MEASURED IN VOLUME Overall Overall Nordic spirits Nordic wine Altia’s market positions1) 1 #1 # #1 Market position #1 Spirits Wines 28% 6% Market position #1 Market share Altia’s market shares2) #4 Spirits W
Slide 17: Strategy
Strategy 17
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 profitability Active brand consumer segments portfolio through the five • Grow wine segment with innovations and m
Slide 19: Our best-in-class innovation generates topline growth
We see that our best-in-class innovation generates topline growth INNOVATION OPENS UP ATTRACTIVE AND TANGIBLE OPPORTUNITIES TO GROW ORGANICALLY Innovative New brands and Line extensions of Re-design marketing and new product launches to existing brands and Premiumisation & business models the market
Slide 20: Low-alcohol launches
Low-alcohol launches ALTIA HAD A GOOD START FOR RETAIL IN FINLAND IN Q1 18 • New Alcohol Act as of January 2018 • Start building distribution and launch products Koskenkorva Vichy sugarfree 20
Slide 21: International expansion provides upside potential
International expansion provides upside potential HIGH-QUALITY DISTRIBUTION AGREEMENTS HAVE BEEN SIGNIFICANT MILESTONES FOR OUR EXPORT AMBITIONS Recent export contracts Larsen Cognacs 1 O.P. Anderson Exports Koskenkorva Koskenkorva launched to possess significant distribution China, Hong 2017 Vodka
Slide 22: Financials
Financials 22
Slide 23: Our operations are based on profitable growth
Our operations are based on profitable growth Net sales (EUR million) Comparable EBITDA (EUR million) and comparable EBITDA margin % 75 20% 380.7 42.4 359.0 50 38.0 40.8 15% 356.6 25 10% 11.5% 11.8% 10.0% 0 5% 2015 2016 2017 2015 2016 2017 Stable and diversified revenue streams Strong and improved p
Slide 24: Stable cash flow and strong dividend capacity
Stable cash flow and strong dividend capacity Free cashflow 1) (EUR million) Net working capital 2) / Net sales 5% 4% 4.5% 37.1 3% 3.5% 30.6 30.6 3.1% 2% 1% 2015 2016 2017 2015 2016 2017 Gross capex 3) / Net sales Net debt 4) / Comparable EBITDA 5% 4% 1.1x 3% 3.3% 0.5x 3.0% 2% 2.4% 0.1x 1% 2015 2016
Slide 25: Efficient working capital management
Efficient working capital management Net working capital Comments EURm 2015 2016 2017 • Receivables from State retail monopolies partly sold • Cognac constitutes notable part of inventory Inventories 101.2 96.3 94.5 Trade and other receivables 59.1 63.8 53.9 • The seasonal swings of the business is
Slide 26: Our strong cash flow enables attractive dividend capacity
Our strong cash flow enables attractive dividend capacity Free cash flow Comments EURm 2015 2016 2017 • Low operational Capex need enables solid and stable cash flow Comparable EBITDA3) 38.0 40.8 42.4 Change in working capital1) 3.9 (1.6) 6.7 • In 2017, capital expenditure was mostly related to cont
Slide 27: Q1 18: Growth in constant currencies 2.0%
Q1 18: Growth in constant currencies 2.0% 24.0 Spirits • Reported net sales were EUR 73.5 (73.4) million 26.3 Wine • Unfavourable currency fluctuations continue to impact MEUR net sales by EUR –1.3 million in Q1 Other • Timing of Easter in Q1 contributes positively beverages 1.9 • Spirits sales were
Slide 28: Q1 18: Comparable EBITDA improving
Q1 18: Comparable EBITDA improving ITEMS AFFECTING COMPARABILITY MOSTLY IPO RELATED COSTS 28
Slide 29: Q1 18: Cash flow and balance sheet
Q1 18: Cash flow and balance sheet Net cash flow from operating EUR -27.0 (-21.1) million activities (in the first quarter) The receivables sold EUR 52.9 (45.8) million (at the end of the period) Gearing 56.9% (14.3%) The reported net debt to 1.8 (0.7) comparable EBITDA ratio In use from revolving c
Slide 30: 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 31: Guidance 2018
Guidance 2018 • The positive trend in Altia’s core brand portfolio is expected to continue. Cost increases on key raw materials and expansion in exports impact profitability development. Currency fluctuations, especially the weakening of the Swedish and Norwegian kronas, are expected to continue. GU
Slide 32: Thank you
www.altiagroup.com/investors Thank you 32
Slide 33: Appendices
Appendices 33
Slide 34: Key figures
Key figures KEY FIGURES OF THE GROUP Q1 2018 Q1 2017 2017 Net sales, EUR million 73.5 73.4 359.0 Comparable EBITDA, EUR million 5.2 4.3 42.4 % of net sales 7.0 5.8 11.8 EBITDA, EUR million 1.1 3.8 40.3 Comparable operating result, EUR million 1.6 0.7 28.2 % of net sales 2.2 1.0 7.8 Operating result,
Slide 35: Quarterly figures
Quarterly figures Net sales by quarter EUR million Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Finland & Exports 27.1 40.7 31.4 35.7 26.0 Scandinavia 22.5 44.4 26.5 29.7 23.2 Altia Industrial 24.0 24.7 26.5 25.9 24.2 Total 73.5 109.8 84.5 91.3 73.4 EBITDA and operating result by quarter EUR million Q1 2
Slide 36: Consolidated income statement
Consolidated income statement EUR million 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 NET SALES 359.0 356.6 Other operating income 8.3 12.6 Materials and services -202.0 -197.0 Employee benefit expenses -52.0 -36.6 Other operating expenses -72.9 -74.8 Depreciation, amortisation and impairment -14.2 -14.5 OP
Slide 37: Balance sheet
EUR million 31 Dec 2017 31 Dec 2016 Balance sheet ASSETS Non-current assets Goodwill 82.1 83.1 Other intangible assets 34.4 36.7 Property, plant and equipment 67.4 70.0 Investments in associates and interests in joint operations 7.6 7.6 Available-for-sale financial assets 1.4 0.8 Other receivables 1
Slide 38: Cash flow
EUR million 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 CASH FLOW FROM OPERATING ACTIVITIES Cash flow Result before taxes Adjustments Depreciation, amortisation and impairment 25.0 14.2 45.0 14.5 Share of profit in associates and income from investments in joint operations -0.9 -0.9 Net gain on sale of non-
Slide 39: 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 40: We have a proven executive management team
We have a proven executive management team B E C F A D G A Pekka Tennilä C Janne Halttunen E Hannu Tuominen G Kirsi Puntila CEO SVP, SCANDINAVIA SVP, ALTIA INDUSTRIAL SVP, MARKETING B Matti Piri D Kari Kilpinen F Kirsi Lehtola SVP, CFO SVP, FINLAND & EXPORTS SVP, HR 42
Slide 41: Ownership on 29 March 2018
Ownership on 29 March 2018 Nr of shares % of shares Ownership distribution, % of shares 1 Prime Minister’s Office 12 960 000 35.9 Varma Mutual Pension Insurance 0.6% Public sector 2 Company 1 200 000 3.3 1.0% Ilmarinen Mutual Pension Insurance 3 1 100 000 3.0 4.9% Financial and insurance Company cor
Slide 42: Altia's IR
Altia’s IR: www.altiagroup.com/investors 46