Altia Plc Financial Statements Bulletin 2018

Altia Plc Stock Exchange Release 7 February at 8:30 am EET

Altia Plc Financial Statements Bulletin 2018: Challenging operating environment impacted 2018 results – comparable EBITDA at EUR 40 million

This release is a summary of Altia Plc's Financial Statements Bulletin 2018. The complete report is attached to this release and is also available on the company website at https://altiagroup.com/investors.

January–December 2018 compared to January–December 2017

  • Reported net sales were EUR 357.3 (359.0) million
  • In constant currencies net sales grew by 1.4% in comparison to previous year
  • Net sales of Finland & Exports segment were EUR 133.8 (133.9) million
  • Scandinavia segment’s net sales were EUR 117.7 (123.7) million, in constant currencies net sales were at last year’s level
  • Altia Industrial’s net sales were EUR 105.8 (101.3) million
  • Comparable EBITDA was EUR 40.0 (42.4) million, 11.2% (11.8%) of net sales
  • EBITDA was EUR 34.0 (40.3) million, 9.5% (11.2%) of net sales
  • Net debt / comparable EBITDA (rolling 12 months) was 1.2 (1.1)
  • Earnings per share were EUR 0.42 (0.51)

October–December 2018 compared to October–December 2017

  • Reported net sales were EUR 110.9 (109.8) million
  • In constant currencies net sales grew by 2.8%
  • Comparable EBITDA was EUR 15.9 (18.5) million, 14.3% (16.9%) of net sales
  • EBITDA was EUR 14.4 (16.3) million, 13.0% (14.9%) of net sales

Key figures

Q4 18 Q4 17 2018 2017
Net sales, EUR million 110.9 109.8 357.3 359.0
Comparable EBITDA, EUR million 15.9 18.5 40.0 42.4
   % of net sales 14.3 16.9 11.2 11.8
EBITDA, EUR million 14.4 16.3 34.0 40.3
Comparable operating result, EUR million 12.2 15.0 25.6 28.2
   % of net sales 11.0 13.6 7.2 7.8
Operating result, EUR million 10.7 12.7 19.7 26.1
Result for the period, EUR million 8.6 8.0 15.1 18.3
Earnings per share, EUR 0.24 0.22 0.42 0.51
Net debt / comparable EBITDA, rolling 12 months 1.2 1.1 1.2 1.1
Average number of personnel 701 718 718 762

Reconciliation of alternative key ratios to IFRS figures is presented in the Financial Statements Bulletin on page 25.

CEO Pekka Tennilä:

“Our financial development in 2018 was challenged by external factors in the operating environment. Increased raw material costs and negative impact from currencies have driven our financial results down.

When excluding the negative impact from currencies, we are pleased with the net sales growth of 1.4%. Our Nordic core brands such as Koskenkorva Vodka and Larsen Cognac continued to perform at a good level driven by growth in exports. In addition, the opening of the grocery trade in Finland and of our own wine brands, Blossa and Chill Out, performed well.

Looking at the Nordic monopoly markets, we can see solid volume growth in Sweden and Norway, and a declining market in Finland in 2018. Due to the changes in alcohol legislation and taxation in Finland at the beginning of year 2018, the volumes in the Finnish monopoly market have declined. In total, the three monopoly markets for spirits and wine showed flat volume development during 2018. In these markets, Altia strengthened its market position in wines, but lost slightly in spirits due to partner portfolio changes in Sweden.

Altia Industrial’s positive contribution to net sales was driven by its continued good development in industrial products and the completed price increases following the higher barley prices.

Corporate responsibility is at the core of our strategy and business. In November 2018, Altia was presented with the Green Company of the Year award by the international Drinks Business magazine. This is a great recognition for Koskenkorva distillery’s circular economy.

We are also taking the right steps in digitalising Altia and developing our capabilities in this area. The work with our digital platforms Viinimaa in Finland and folkofolk in Sweden has proven successful. In May 2018, we opened a webshop for Nordic alcoholic beverages on the German market: www.nordicspirits.com.

In 2019, especially in the first quarters of the year, the negative impact of the increased barley cost will be reflected as higher raw material costs in comparison to the same period last year. We have already taken actions to improve our comparable EBITDA from the 2018 level through price increases in beverage products as well as cost savings. In the Scandinavia and Finland & Exports segments, we have completed organisational changes, and price increases in beverage products in the three monopoly markets are being implemented during the first quarter. In addition, we have identified initiatives to improve supply chain efficiency.

Our work to renew Altia continues. Based on our strategy to create profitable growth, we have identified further specific initiatives to reach the earlier communicated long-term net sales and profitability targets. These additional initiatives focus on sales growth, revenue management, supply chain efficiencies, procurement savings and overall organisational efficiency.

In March 2018, Altia was listed on Nasdaq Helsinki. Our first General Meeting of Shareholders since the IPO is planned to be held on 15 May 2019 in Helsinki. The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.38 per share be paid for the financial year 2018.”

Outlook 2019

Market outlook

The development of the Group’s business operations and profitability are affected by the competitive environment, the overall economic outlook, imports by consumers and changes in alcohol taxation. Uncertainty related to changes in consumer buying behaviour and consumer demand continues.

Seasonality

There are substantial seasonal fluctuations in the consumption of alcoholic beverages impacting the net sales and cash flow of Altia. The company typically generates large amounts of its revenue and cash flow during the fourth quarter of the year, whereas the first quarter of the year is significantly lower. In addition, excise taxes related to the high season at the end of the year are paid in January, resulting in large cash outflows at the beginning of the year.

Guidance

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 grow. The negative impact of the increased barley cost will be reflected in high raw material costs especially in the first quarters of the year. The guidance assumes a normal harvest in 2019.

In addition, the impact from the implementation of the new IFRS 16 standard is expected to improve comparable EBITDA by 3-4 million.

Dividend proposal

According to the financial statements on 31 December 2018, the parent company’s distributable funds amount to EUR 72 084 125.87 including profit for the period of EUR 14 102 839.85.

There have been no significant changes to the parent company’s financial position after the end of the financial year.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.38 per share be paid for the financial year 2018. The Board’s proposal is based on earnings per share (EPS) and takes into consideration the items affecting comparability included in the result for 2018.

Annual General Meeting 2019

Altia Plc’s Annual General Meeting (AGM) 2019 is planned to be held on 15 May 2019 in Helsinki. The Board of Directors will summon the AGM later.

Financial calendar for 2019

The Annual Report 2018 including the financial statements, Board of Directors' report, Auditor's report, the Corporate Governance statement and the remuneration statement will be published in English and Finnish on Altia’s website during week 12 (the week starting on 18 March).

Altia will publish financial reports in 2019 as follows:

  • 8 May 2019: Business Review for January-March 2019
  • 15 August 2019: Half-Year Report for January-June 2019
  • 7 November 2019: Business Review for January-September 2019

ALTIA PLC

Additional information:

Pekka Tennilä, CEO

Niklas Nylander, CFO

Contacts:

Analysts and investors: Tua Stenius-Örnhjelm, Investor Relations, tel. +358 40 7488864

Media: Petra Gräsbeck, Corporate Communications, tel. +358 40 767 0867

Press conference:

Press conference today at 9:00 am at Altia’s head office in Helsinki, Kaapeliaukio 1. The event is hosted by CEO Pekka Tennilä and CFO Niklas Nylander.

Conference call and audio webcast:

Conference call and audio webcast for analysts and investors in English today at 11:00 am EET.

CEO Pekka Tennilä and CFO Niklas Nylander will present the full year results. Presentation material will be made available before the call begins on Altia’s website at: https://altiagroup.com/investors.

Conference call participants are requested to dial in and register 5–10 minutes beforehand on the following numbers, please use pin 46979445# to access:

Finland: +358981710310

Sweden: +46 856642651

United Kingdom: +44 3333000804

United States: +1 6319131422

The conference call can also be followed online. To join the audio webcast please go to: https://altia.videosync.fi/2018-q4-teleconference. A recording of the audio webcast will be available later on Altia’s website: https://altiagroup.com/investors

Distribution:

Nasdaq Helsinki Ltd

Principal media

www.altiagroup.com

Altia is a leading Nordic alcoholic beverage brand company operating in the wines and spirits markets in the Nordic and Baltic countries. Altia wants to support a development of a modern, responsible Nordic drinking culture. Altia’s key exports brands are Koskenkorva, O.P. Anderson and Larsen. Other iconic Nordic brands are Chill Out, Blossa, Xanté, Jaloviina, Leijona, Explorer and GrönstedtsAltia’s net sales in 2018 were EUR 357.3 million and the company employs about 700 professionals. Altia’s shares are listed on Nasdaq Helsinki.  www.altiagroup.com.

About Us

Altia is a leading Nordic alcoholic beverage company operating in the wines and spirits markets in the Nordic countries, Estonia and Latvia. Altia produces, imports, markets, sells and distributes both own and partner brand beverages. The Company also has production in Cognac, France. Further, Altia exports alcoholic beverages to approximately 30 countries, most of which are in Europe, Asia and North America. Altia’s own core brands are Koskenkorva, Chill Out, Blossa, Larsen, O.P. Anderson, Renault, Xanté and Valhalla. Altia’s net sales in 2017 were EUR 359.0 million and the Company employs about 700 professionals. Altia wants to enhance a modern, responsible Nordic drinking culture. Altia’s shares are listed on Nasdaq Helsinki Ltd. www.altiagroup.com.

Contacts