Altia Plc Half-Year Report January-June 2021: Good net sales growth in Q2, merger expected to be completed on 1 September 2021

Altia Plc  Stock Exchange Release  18 August 2021 at 8:30 EET

Altia Plc Half-Year Report January-June 2021: Good net sales growth in Q2, merger expected to be completed on 1 September 2021

This release is a summary of Altia Plc's Half-Year Report January-June 2021. The complete report is attached to this release and is also available on the company website at www.altiagroup.com/investors.

January–June 2021 compared to January–June 2020

  • Reported net sales increased by 6.2% to EUR 158.5 (149.3) million
  • In constant currencies, net sales increased by 4.4%
  • The Finland & Exports segment’s net sales were EUR 54.1 (53.0) million
  • The Scandinavia segment’s net sales were EUR 53.3 (50.1) million; in constant currencies net sales grew by 0.8% 
  • Altia Industrial’s net sales were EUR 51.1 (46.1) million
  • Comparable EBITDA was EUR 20.1 (18.8) million, 12.7% (12.6%) of net sales
  • Reported EBITDA decreased due to items affecting comparability (IAC) and was EUR 14.7 (18.0) million, 9.3% (12.1%) of net sales
  • Net cash flow from operating activities was EUR -1.6 (10.3) million
  • Net debt / comparable EBITDA (rolling 12 months) was 0.2 (0.6)

April–June 2021 compared to April–June 2020

  • Reported net sales were EUR 86.8 (81.0) million
  • In constant currencies, net sales increased by 5.4%
  • Comparable EBITDA was EUR 12.3 (13.2) million, 14.2% (16.3%) of net sales
  • Reported EBITDA decreased due to items affecting comparability (IAC) and was EUR 10.1 (12.6) million, 11.7% (15.5%) of net sales
  • Altia has updated its short-term outlook but is not providing guidance for 2021, due to the uncertainties caused by COVID-19 and the low predictability for the full year 2021

Key figures

Q2 21 Q2 20 H1 21 H1 20 2020
Net sales, EUR million 86.8 81.0 158.5 149.3 342.4
Comparable EBITDA, EUR million 12.3 13.2 20.1 18.8 52.4
    % of net sales 14.2 16.3 12.7 12.6 15.3
EBITDA, EUR million 10.1 12.6 14.7 18.0 40.3
Comparable operating result, EUR million 8.5 8.9 12.4 9.9 35.0
   % of net sales 9.8 10.9 7.8 6.7 10.2
Operating result, EUR million 6.3 8.2 7.0 9.2 22.9
Result for the period, EUR million 4.7 6.1 5.3 7.5 17.8
Earnings per share, EUR 0.13 0.17 0.15 0.21 0.49
Net cash flow from operating activities, EUR million -1.3 25.7 -1.6 10.3 56.1
Net debt / comparable EBITDA, rolling 12 months 0.2 0.6 0.2 0.6 -0.1
Average number of personnel 669 659 655 651 650

This half-year report has been prepared in accordance with the International Financial Reporting Standards (IFRS) and IAS 34 Interim Financial Reporting as approved by the EU. The figures in the report are unaudited. A reconciliation of alternative key ratios to IFRS figures is presented in appendix 1 on page 30. For important information for U.S. shareholders, please see “Important Information” on page 19.

CEO Pekka Tennilä:

“I am pleased to see that we performed well during the second quarter. Our net sales grew as a result of a gradual market recovery. With the restricted sales channels opening in the second quarter, we have activated our brands in the monopolies, exports, travel retail and on-trade with good results. The health and safety of our employees and the continuity of our operations have been in our focus, and our operations have run without major disruptions. Our continued solid development reflects the strong commitment and hard work of our employees, and I want to thank everyone for these achievements.

The Altia and Arcus merger to become Anora has taken important steps as we received all regulatory approvals for the merger and we are today announcing the future Executive Management Team. We are now working towards completing the merger on 1 September 2021.

During the first half of the year, our net sales grew by 6.2% from the same period last year, with all segments growing. In the Finland & Exports segment, we can see the positive impact of less COVID-19 restrictions as net sales turned to growth, mainly driven by higher spirits sales in exports and travel retail. In the Scandinavia segment, we saw growth in all three markets, Sweden, Norway and Denmark. In Sweden, reported net sales grew, supported by strong spirits sales in the monopoly, the recovery of the on-trade channel and a favourable currency rate. Wine sales were impacted by declining volumes and partner portfolio changes in Q2 2020. In Norway, Altia’s sales grew across categories, supported by high market volumes. In the Altia Industrial segment, net sales growth was driven by the positive development of contract manufacturing, as well as the starch and feed businesses.

In January-June, our profitability improved from the previous year, with comparable EBITDA increasing from EUR 18.8 million to EUR 20.1 million. The profitability improvement was driven by the Finland & Exports and Scandinavia segments. In Q2, profitability declined due to the increased price of barley and temporary cost savings measures implemented due to COVID-19 in Q2 last year. Our liquidity position has remained strong throughout the period. However, the development of net cash flow from operations has been impacted by the change in channel mix and items affecting comparability.

Our sustainability actions continue to receive high praise internationally: we were awarded a Gold Medal in the EcoVadis Corporate Social Responsibility rating and the title of “Sustainability Trailblazer” in the first global travel retail industry event to focus on sustainability.

During the pandemic, we have been working hard on the planned merger to be better prepared for the opportunities ahead. After a diligent process, we are now very close to the completion of the Altia and Arcus merger to form Anora, the leading wine and spirits brand house in the Nordic and Baltic region. As one company, we will be more competitive and have a stronger financial position to pursue growth outside the Nordics as well. With a broader portfolio of iconic brands, combined innovation expertise and award-winning sustainability work, we can provide even greater value to our customers. Our enhanced consumer understanding in our home markets and a broader distribution network will make Anora the best possible partner. In our Industrial and Logistics businesses, the merger will bring greater volumes and drive productivity.

With the merger we aim at creating value for our shareholders with the annual EBITDA net synergy target of EUR 8-10 million which we expect to be achieved within approximately two years. The extra dividend payment of EUR 0.40 per share to Altia shareholders which was approved by the Annual General Meeting is payable in connection with the completion of the merger.

We have updated our short-term outlook but we are not providing guidance for 2021. In the second half of 2021, COVID-19 is still expected to impact travel retail, exports and the on-trade. The channel mix in monopoly markets depends on the restrictions and recommendations set in travel retail and the on-trade.

In Altia Industrial, for the second half of 2021, COVID-19 is expected to continue to impact supply chain, industrial services and products. The focus on the health and safety of Altia’s employees remain high. The uncertainty in industrial products is due to potential disruptions in demand for starch and ethanol, and in supply chain due to the availability and delivery times of raw materials.

Barley market prices are expected to continue increasing for the new crop season following unfavourable weather conditions in Finland, and a global imbalance between the demand for and supply of grain and other raw materials.”

Outlook for 2021

Market outlook

The development of the Group’s business operations and profitability are affected by the competitive environment, the overall economic outlook and changes in alcohol taxation and regulation. Uncertainty related to changes in consumer buying behaviour and consumer demand continues. In addition, overall fluctuations of direct product costs affect the Group’s profitability. 

Short-term outlook

Altia has updated its short-term outlook but is not providing guidance for 2021, due to the uncertainties caused by COVID-19 and the low predictability for the full year 2021.

In the second half of 2021, COVID-19 is still expected to impact travel retail, exports and the on-trade. The channel mix in monopoly markets depends on the restrictions and recommendations set in travel retail and the on-trade.

In Altia Industrial, for the second half of 2021, COVID-19 is expected to continue to impact supply chain, industrial services and products. The focus on the health and safety of Altia’s employees remain high. The uncertainty in industrial products is due to potential disruptions in demand for starch and ethanol, and in supply chain due to the availability and delivery times of raw materials.

Barley market prices are expected to continue increasing for the new crop season following unfavourable weather conditions in Finland, and a global imbalance between the demand for and supply of grain and other raw materials.

The recovery of the operating environment will depend largely on the development of COVID-19, the progress of vaccinations, and changes in consumer behaviour.

The previous short-term outlook as published in the January-March Business Review was as follows:

In the first half of 2021, COVID-19 is expected to impact travel retail, exports and on-trade. The channel shift in the monopoly markets is expected to continue for as long as travel retail and on-trade continue to be restricted. The situation is expected to stabilise earliest after the summer period.

In Altia Industrial, for the first half of 2021, COVID-19 is expected to continue to impact contract manufacturing and industrial products in a significant way. The increased prices of imported ethanol puts pressure on technical ethanol margins. Barley prices increased at the beginning of this year and the price level is expected to be higher than in 2020 until the new crop.

The recovery of the operating environment depends largely on the development of COVID-19, the progress of vaccinations, and changes in consumer behaviour.

Financial calendar for 2021

Altia will publish the Business Review for January-September 2021 on 3 November 2021.

Helsinki, 17 August 2021

Altia Plc

Board of Directors

Additional information:

Pekka Tennilä, CEO

Juhana Jokinen, Interim CFO

Contacts:

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

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

Results presentation:

CEO Pekka Tennilä and interim CFO Juhana Jokinen will present the report today at 11:00 am EET. The presentation will be held as a Microsoft Teams Meeting. We recommend that participants join the event using the online meeting option: Join meeting here.

It is also possible to dial-in to the meeting about 5 minutes earlier at the following numbers:

FI: +358 9 2310 6678

SE: +46 8 502 428 54

UK: +44 20 3443 9579

US: +1 917-781-4622

Conference ID: 893 293 226#

Q&A

We recommend that questions to the management are sent through the Teams chat.

Presentation material

The presentation material will be shared in the online meeting and it can be downloaded on the same day on Altia’s website at: www.altiagroup.com/investors               

On-demand recording

A recording of the event will be available later on Altia’s website. 

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 flagship brands are Koskenkorva, O.P. Anderson and Larsen. Other iconic Nordic brands are Chill Out, Blossa, Xanté, Jaloviina, Leijona, Explorer and Grönstedts. Altia’s net sales in 2020 were EUR 342.4 million and the company employs about 650 professionals. Altia’s shares are listed on Nasdaq Helsinki.  www.altiagroup.com. 

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