Olvi Group’s interim report 1 January to 30 September 2022 (9 months)

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OLVI PLC                  Interim report 19 October 2022 at 9 am

Olvi Group’s interim report 1 January to 30 September 2022 (9 months)

Financial performance in brief

Olvi Group’s sales volume and net sales developed strongly during the third quarter, and the company improved its position in the market. The operating profit decreased as costs continued to grow substantially. Price increases will continue to be implemented during the rest of the year to improve profitability. The Group’s solvency remained strong. 

 

Near-term outlook (changed)

 

The operating profit from continuing operations in 2022 is expected to decrease from the previous year. (Previously: the operating profit will remain at the previous year’s good level.)

Costs arising from raw materials, packaging materials, energy and logistics are increasing at an exceptionally high rate, and there are challenges with availability. The increase in costs is expected to continue in the near future. It has not yet been possible to fully transfer the cost increases to sales prices, especially in Finland and Denmark.  

 

Olvi publishes its near-term outlook for continuing operations, which include the company’s reporting segments in Finland and the Baltic Sea region. Its business operations in Belarus are presented as discontinued operations / assets held for sale in accordance with IFRS 5 and will therefore not be included in the near-term outlook

 

The Group’s key ratios (continuing operations)

 

7-9/

2022

7-9/

2021

Change,
%/pp

1-9/

2022

1-9/

2021

Change,
%/pp

1-12/

2021

Sales volume, Mltr

189.4

161.0

17.6

512.9

432.7

18.5

574.5

Net sales, MEUR

130.5

103.6

26.0

342.3

275.0

24.5

364.8

Gross profit, MEUR

48.3

45.0

7.4

128.2

117.9

8.8

151.7

% of net sales

37.0

43.4

 

37.4

42.9

 

41.6

Operating profit, MEUR

14.6

17.9

-18.6

34.6

39.8

-12.9

45.1

% of net sales

11.2

17.3

 

10.1

14.5

 

12.4

Profit for the period, MEUR

12.7

15.9

-20.5

27.4

32.3

-15.3

36.7

% of net sales

9.7

15.4

 

8.0

11.7

 

10.1

Earnings per share, EUR

0.61

0.77

-20.4

1.32

1.56

-15.5

1.77

Investments, MEUR

9.2

5.0

83.7

26.3

19.2

36.8

26.8

Equity per share, EUR

 

 

 

15.89

13.94

14.0

14.19

Equity ratio, %

 

 

 

60.3

59.5

0.8

60.7

Gearing, %

 

 

 

-11.9

-16.2

-4.3

-16.6

 
Key ratios for the Group, including assets held for sale

 

7-9/

2022

7-9/

2021

Change,

%/pp

1-9/

2022

1-9/

2021

Change,

%/pp

1-12/

2021

Sales volume, Mltr

279.2

247.3

12.9

746.4

661.0

12.9

853.7

Net sales, MEUR

174.9

134.3

30.2

447.6

351.6

27.3

462.2

Operating profit, MEUR

25.0

23.6

5.8

58.0

52.3

11.1

59.4

% of net sales

14.3

17.6

 

13.0

14.9

 

12.9

 

Assets held for sale are discussed in more detail under item 11 of Table 5 in the table section of the interim report bulletin. Despite new sales restrictions imposed by the authorities on assets in Belarus, the company’s management considers it likely that the divestment of the company’s operations in Belarus can be implemented within the next 12 months.


Business development

Lasse Aho, Managing Director:

Business development during the third quarter

 

The sales volume of continuing operations increased by 17.6% in the third quarter, and the net sales of continuing operations grew by 26.0%. In the domestic market, sales increased in retail and reached pre-pandemic levels in the hotel, restaurant, and catering (HoReCa) sector and cross-border trade. The company entered new export markets, which compensated for the end of exports to Russia. Because of the strong increase in costs, price increases continued to be implemented as far as possible in each market and sales channel. However, costs have increased more rapidly than predicted, and it has not been possible to transfer cost increases fully to prices because of country- and customer-specific contract structures. For this reason, the operating profit decreased by 18.6%.

 

There have been challenges with the availability of raw materials and packaging materials. The price of energy in particular was at a record high due to the war in Ukraine. The war has also reduced availability and caused prices to increase significantly in terms of malt, sugar, glass and plastic bottles, cans and carbon dioxide, for example. The higher prices of fuels have a direct impact on logistics costs. Cost inflation is expected to continue to increase, and it is also predicted that there will be problems with availability.

 

Business development since the beginning of the year

 

Since the beginning of the year, the sales volume has increased by 18.5% and net sales have grown by 24.5%. Sales growth was driven by the domestic market, and the company strengthened its overall market position. Sales during the summer season were at a good level, supported by the warm weather in August. The operating profit was EUR 34.6 million, decreasing by 12.9% from the previous year. The company’s performance is being affected by the rapid and strong cost inflation. The management of cost inflation and its transfer to the prices of end products at the same pace have been challenging. 

 

Olvi has increased investments in growing its production and storage capacity and ensuring the availability of critical raw materials. The company has also invested in energy solutions in the Baltic countries, and an investment in carbon capture equipment is in progress in Finland. Olvi aims to achieve carbon-neutral operations in its Iisalmi plant during 2023 and in its other plants in the coming years. In terms of digitalisation and data-based management, business capabilities have been improved by implementing a new financial planning tool.  

 

Segment-specific business development

 

The sales volume of Olvi’s operations in Finland increased by 1.5% in the third quarter and by 1.9% during the review period. Olvi’s market shares remained at a good level especially in beers, ciders, and water.  Successes in 2022 include hard seltzers, in which Olvi is the market leader by a clear margin. Growth was also achieved in sales to the hotel, restaurant, and catering (HoReCa) sector and cross-border trade. Net sales increased by 6.5% in the third quarter and by 7.8% during the review period. Retail price periods were not open during the third quarter, which is why it was not possible to implement price increases in accordance with cost increases. Price increases in retail will continue during the fourth quarter. The operating profit decreased by 30.0% during the third quarter, and has decreased by 15.2% since the beginning of the year. Maintaining the profitability level was difficult due to the rapid and strong increase in costs and the timing of price increases.  


In the Baltic Sea region reporting segment, the sales volume increased by 30.5% during the third quarter, and has increased by 36.0% since the beginning of the year. Sales developed particularly well in the Baltic domestic market, and exports grew through new market entries. The operating profit increased by 50.4% during the third quarter, and has increased by 48.7% since the beginning of the year. Since the beginning of the year, price increases have been implemented flexibly especially in the Baltic countries, which is reflected in net sales development. Denmark, which was not included in the previous year’s comparison figures until the beginning of September, is significantly contributing to the growth of the Baltic Sea region segment. Excluding the acquisitions made in 2021, the sales volume increased by 20.4% and net sales by 37.3% in January–September. The increase in energy and fuel costs has been very strong. Combined with the increase in raw material and

packaging material prices and availability problems, this has reduced profitability. In addition, salaries have increased significantly in the Baltic countries since the beginning of the year. The operating profit decreased by 6.6% in the third quarter and has decreased by 7.7% since the beginning of the year. The company’s operations have performed well in the Baltic market, but the operating profit has decreased in Denmark, where price increases are implemented with a delay, and the strong increase in energy prices has affected performance more than in other countries. 

 

Seasonal nature of operations
 

The nature of the Group’s business operations involves seasonal fluctuation. The net sales and operating profit of the geographical reporting segments are not accumulated steadily. Instead, they fluctuate in accordance with the special characteristics of the seasons of the year and product seasons.

Sales development

Olvi Group’s sales volume grew by 18.5% in January–September, totalling 512.9 (432.7) million litres. The growth focused on the Baltic Sea region segment, which did not include Denmark in the comparison period until the end of August.

Sales volume, Mltr

7-9/

2022

7-9/

2021

Change, %

 1-9/

2022

 1-9/

2021

Change, %

Finland

70.1

69.1

1.5

200.7

197.0

1.9

Baltic Sea region

134.7

103.2

30.5

353.0

259.6

36.0

Eliminations

-15.4

-11.2

 

-40.9

-23.8

 

Continuing operations, total

189.4

161.0

17.6

512.9

432.7

18.5

 

The Group’s net sales increased by 24.5% in January–September and were EUR 342.3 (275.0) million.

 

Net sales, MEUR

7-9/

2022

7-9/

2021

Change, %

 1-9/

2022

 1-9/

2021

Change, %

Finland

56.3

52.9

6.5

156.8

145.4

7.8

Baltic Sea region

83.2

55.3

50.4

207.9

139.8

48.7

Eliminations

-8.9

-4.6

 

-22.4

-10.2

 

Continuing operations, total

130.5

103.6

26.0

342.3

275.0

24.5

 

Financial performance

 

The Group’s operating profit in January–September was EUR 34.6 (39.8) million, or 10.1% (14.5%) of net sales. The operating profit was burdened by rapidly increasing production costs related to energy, raw materials, packaging materials and logistics in particular. It has not been possible to transfer the cost increases immediately to the prices of end products because of the pricing periods in the retail sector in Finland, among other reasons.

Operating profit, MEUR

7-9/

2022

7-9/

2021

Change, %

 1-9/

2022

 1-9/

2021

Change, %

Finland

6.8

9.8

-30.0

18.2

21.5

-15.2

Baltic Sea region

7.9

8.4

-6.6

17.5

18.9

-7.7

Eliminations

-0.2

-0.3

 

-1.1

-0.7

 

Continuing operations, total

14.6

17.9

-18.6

34.6

39.8

-12.9


The Group’s profit after taxes in January–September was EUR 27.4 (32.3) million.

Earnings per share calculated from the profit attributable to the owners of the parent company were EUR 1.32 (1.56) in January–September.

Balance sheet, financing, and investments

Olvi Group’s balance sheet total at the end of September 2022 was EUR 552.6 (491.4) million. Equity per share at the end of September 2022 was EUR 15.89 (13.94). The equity ratio was 60.3% (59.5%), and gearing was -11.9% (-16.2%). The Group’s liquidity indicator, the current ratio, remained almost at the same level as before, at 1.1 (1.2).

Interest-bearing liabilities amounted to EUR 7.1 (12.8) million at the end of September. Of the interest-bearing liabilities, short-term liabilities accounted for EUR 4.7 (5.2) million.

Olvi Group’s expansion and replacement investments were EUR 26.3 (19.2) million in January–September. Of the investments, EUR 9.8 million were made in Finnish companies and EUR 16.5 million in subsidiaries in the Baltic Sea region. Olvi Group has continued its investments in continuing operations as planned and has invested in increasing and diversifying its production and storage capacity and in modernising its production facilities and making them more environmentally friendly. Investments in ensuring the continuity of production were made particularly in terms of energy solutions. An investment in carbon capture and storage equipment is in progress in the Baltic countries and Finland. 

Personnel

The average number of personnel in Olvi Group’s continuing operations was 1,497 (1,264) in January–September. The Group’s average number of personnel increased by 18.4%, mainly because of the acquisition of Piebalgas and Vestfyen in 2021.

Olvi Group’s average number of personnel by segment:

 

7-9/

2022

7-9/

2021

Change, %

 1-9/

2022

 1-9/

2021

Change, %

Finland

469

448

4.7

451

419

7.6

Baltic Sea region

1,084

920

17.8

1,046

845

23.8

Total

1,553

1,368

13.5

1,497

1,264

18.4


Board of Directors and management

No changes took place in Olvi plc’s Board of Directors during the review period.

 

The managing director of the Estonian subsidiary changed on 1 September 2022. The new managing director is Jaanus Vihand.

By means of a separate stock exchange release issued on 20 June 2022, Olvi plc announced that it had appointed a new Managing Director due to the retirement of its current Managing Director. Patrik Lundell will take over as Olvi’s Managing Director on 1 January 2023. Lasse Aho will continue as Managing Director until 31 December 2022.

Other events during the review period

Changes in the Group structure

No significant changes took place in Olvi’s subsidiary holdings during January–September 2022.

Business risks and their management

Impacts of the war in Ukraine

 

The war in Ukraine has significantly increased business risks. There have been challenges in the availability of packaging materials because of the coronavirus pandemic, and the war in Ukraine has worsened the situation, especially in terms of cans and glass bottles. So far, there have been no significant losses of sales. The prices of packaging materials have continued to increase because of higher production and logistics costs. The prices of packaging materials begun to increase during the coronavirus pandemic. In addition, the prices of raw materials have increased rapidly, especially for barley malt and sugar, as well as carbon dioxide, and availability has decreased in the market. The price of energy has multiplied for electricity and gas during the first half of the year, particularly in the Baltic Sea region segment, which affects production costs. The price of oil has increased

fuel prices, which are directly reflected in logistics costs. The company will respond to the increase in costs by continuing price increases as far as possible. Olvi is actively seeking alternative suppliers and is working to improve the efficiency of its production operations.

 

Consumer prices have risen rapidly during 2022, especially in Europe as a result of the war in Ukraine. General cost inflation is reducing consumers’ purchasing power and thereby affecting consumer behaviour. The focus of consumption is shifting towards more affordable product options, and total consumption may decrease. This may have an impact on business growth opportunities over the long term.  

 

The challenges related to the availability of natural gas have been taken into account, especially in Olvi’s business operations in the Baltic countries. Alternative energy solutions have been sought, and production plants have been successfully adapted to any energy-related changes to ensure uninterrupted production. Investments in self-sufficiency in raw materials are also being made in Finland by implementing carbon capture and storage equipment. 

 

The war in Ukraine has significantly changed the business environment in Russia and Belarus. In accordance with the stock exchange release issued on 5 March 2022, Olvi has stopped exports to Russia from all its countries of operation, and has started careful planning to divest its business operations in Belarus. The end of exports to Russia, the increase in production and logistics costs caused by the war and the divestment of business operations in Belarus are having a significant impact on the Group’s business operations. The business operations of its company in Belarus are affected by the sanctions imposed by the EU and by the end of exports to Russia. However, successful efforts have been made to continue the Belarusian company’s operational and maintenance activities by ensuring sufficient procurement locally. The situation concerning the divestment of business operations in Belarus is discussed in more detail under item 11 of Table 5 in the table section of the interim report bulletin. 

 

Coronavirus pandemic

 

There are uncertainties in forecasting the development of business operations, because it has been difficult to predict the spill over effects of the coronavirus pandemic. These effects are related to sales channel restrictions imposed to prevent the spread of the coronavirus pandemic and to travel restrictions, for example, as well as to changes in overall demand. In addition, there have been major challenges in global production and transport chains in terms of availability and cost impacts. These have continued because of the strict measures related to the coronavirus pandemic in China, among other reasons. During the first half of 2022, there were still significant sales channel restrictions related to the coronavirus pandemic in Olvi’s countries of operation, but these restrictions were lifted at the beginning of the second quarter. Consumer demand has recovered, especially in the hotel, restaurant and catering (HoReCa) sector and cross-border trade.

 

Preparedness


Olvi Group has prepared several scenarios related to the development of the business environment and is prepared to respond to changing situations. We are prepared for production disruptions and have drawn up continuity plans related to the availability of labour, raw materials, and energy, for example. Investments are in progress to ensure the availability of energy, in case of possible sanctions. The company has also made efforts to ensure the availability of raw materials and packaging materials.

 

A more detailed description of the normal risks related to business operations is provided in the Board of Directors’ report and the notes to the financial statements and on the company website (Investors > Olvi as an investment > Risks and risk management).

 

Events after the review period


There are no significant events to report after the review period.
 


OLVI PLC
Board of Directors

More information:
Lasse Aho, Managing Director, Olvi plc, tel. +358 290 00 1050 or +358 400 203 600
Tiina-Liisa Liukkonen, CFO, Olvi plc, tel. +358 290 00 1050 or +358 41 505 4779


TABLES:
- Consolidated statement of comprehensive income, Table 1
- Consolidated balance sheet, Table 2
- Consolidated statement of changes in equity, Table 3
- Consolidated cash flow statement, Table 4
- Notes to the interim report bulletin, Table 5


DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Key media outlets
www.olvi.fi

 

OLVI GROUP

 

 

 

TABLE 1

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

EUR 1,000

 

 

 

 

 

 

7-9/2022

7-9/2021

1-9/2022

1-9/2021

1-12/2021

 

 

 

 

 

 

Gross sales

297,036

254,496

795,395

700,816

924,637

Excise taxes and other adjustments

-166,505

-150,900

-453,111

-425,810

-559,871

Net sales

130,531

103,596

342,284

275,006

364,766

 

 

 

 

 

 

Cost of sales

-82,230

-58,623

-214,100

-157,151

-213,079

Gross profit

48,301

44,973

128,184

117,855

151,687

 

 

 

 

 

 

Logistics, sales and marketing expenses

-26,038

-20,093

-70,356

-57,352

-77,723

Administrative expenses

-7,984

-7,389

-23,834

-21,388

-29,954

Other operating income and expenses

287

397

618

635

1,070

Operating profit

14,566

17,888

34,612

39,750

45,080

 

 

 

 

 

 

Financial income

52

10

158

34

46

Financial expenses

-125

-121

-360

-100

-302

Share of the profit of associated companies and joint ventures

0

0

0

0

44

Profit before tax

14,493

17,777

34,410

39,684

44,868

 

 

 

 

 

 

Income taxes

-1,824

-1,842

-7,047

-7,384

-8,198

Profit for the period, continuing operations

12,669

15,935

27,363

32,300

36,670

Profit for the period, assets held for sale

8,511

4,909

18,712

10,393

11,691

PROFIT FOR THE PERIOD

21,180

20,844

46,075

42,693

48,361

 

 

 

 

 

 

Other items of comprehensive income that may be later reclassified to profit or loss:

 

 

 

 

 

Translation differences related to foreign subsidiaries

8,927

1,692

14,737

4,292

5,366

Income taxes related to items

-88

1

-154

-43

-85

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

30,019

22,537

60,658

46,942

53,642

 

 

 

 

 

 

Distribution of the profit for the period:

 

 

 

 

 

- Owners of the parent company

20,866

20,603

45,363

42,247

47,862

- Non-controlling interest

314

241

712

446

499

 

 

 

 

 

 

Distribution of comprehensive income for the period:

 

 

 

 

 

 - Owners of the parent company

29,423

22,238

59,485

46,658

52,977

 - Non-controlling interest

596

299

1,173

284

665

 

 

 

 

 

 

Earnings per share calculated from profit attributable to owners of the parent company, EUR

 

 

 

 

 

- Undiluted, continuing operations

0.61

0.77

1.32

1.56

1.77

- Diluted, continuing operations

0.61

0.77

1.32

1.56

1.77

- Undiluted, assets held for sale

0.40

0.23

0.88

0.48

0.54

- Diluted, assets held for sale

0.40

0.23

0.88

0.48

0.54

 

OLVI GROUP

 

 

TABLE 2

CONSOLIDATED BALANCE SHEET

 

 

 

EUR 1,000

30 Sep 2022

30 Sep 2021

31 Dec 2021

ASSETS

 

 

 

Non-current assets

 

 

 

Tangible assets

201,214

189,567

190,627

Goodwill

22,204

22,204

22,204

Other intangible assets

11,219

11,720

12,355

Shares in associated companies

980

974

1,018

Other investments

1,037

888

888

Loans receivable and other long-term receivables

2,375

2,296

1,393

Deferred tax assets

1,468

1,240

1,452

Total non-current assets

240,497

228,890

229,937

 

 

 

 

Current assets

 

 

 

Inventories

56,035

45,452

47,164

Accounts receivable and other receivables

98,065

78,886

86,270

Income tax receivables

56

196

0

Cash and cash equivalents

46,642

60,280

50,640

Total current assets

200,797

184,814

184,075

Non-current assets held for sale

111,338

77,706

76,231

 

TOTAL ASSETS

552,632

491,410

490,242

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

Equity attributable to owners of the parent company

 

 

 

Share capital

20,759

20,759

20,759

Other reserves

1,387

1,387

1,387

Treasury shares

-1,079

-390

-438

Translation differences

-39,606

-54,731

-53,727

Retained earnings

347,331

321,786

326,016

 

328,792

288,811

293,997

Non-controlling interest

4,200

3,631

3,627

Total equity

332,992

292,442

297,624

 

 

 

 

Non-current liabilities

 

 

 

Financial liabilities

2,427

7,649

1,913

Other liabilities

4,003

4,873

3,985

Deferred tax liabilities

13,720

13,489

13,943

 

 

 

 

Current liabilities

 

 

 

Financial liabilities

4,719

5,198

1,269

Accounts payable and other payables

173,272

150,779

158,164

Income tax liability

2,151

1,810

872

Liabilities related to non-current assets held for sale

19,348

15,169

12,471

Total liabilities

 

219,640

198,968

192,617

TOTAL EQUITY AND LIABILITIES

552,632

491,410

490,242

 

OLVI GROUP

 

 

 

TABLE 3

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

EUR 1,000

Share capital

Other reserves

Reserve for
treasury shares

Fair value reserve

Translation differences

Earnings

Attributable to
non-controlling interest

Total

Equity 1 Jan 2022

20,759

1,092

-438

295

-53,728

326,016

3,627

297,624

Comprehensive income:

 

 

 

 

 

 

 

 

     Profit for the period

 

 

 

 

45,363

712

46,075

     Other items of comprehensive income:

 

 

 

 

 

 

          Translation differences

 

 

14,276

 

461

14,737

          Income taxes related to items

 

 

 

-154

 

 

-154

Total comprehensive income for the period

 

 

14,122

45,363

1,173

60,658

Business transactions with shareholders:

 

 

 

 

 

 

     Dividend payment

 

 

 

 

 

-24,855

-368

-25,223

     Acquisition of treasury shares

-641

 

 

 

 

-641

     Share-based incentives, value of work performance

 

 

840

 

840

     Adjustment for previous periods

 

 

 

-32

 

-32

Business transactions with shareholders, total

-641

 

 

-24,048

-368

-25,058

Changes in holdings in subsidiaries:

 

 

 

 

 

 

     Acquisition of non-controlling interest

 

 

-232

 

-232

     Change in non-controlling interest

 

 

232

-232

0

Changes in holdings in subsidiaries, total

 

 

0

-232

-232

Equity 30 Sep 2022

20,759

1,092

-1,079

295

-39,606

347,331

4,200

332,992

 

 

 

 

 

 

EUR 1,000

Share capital

Other reserves

Reserve for
treasury shares

Fair value reserve

Translation differences

Earnings

Attributable to
non-controlling interest

Total

Total equity 1 Jan 2021

20,759

1,092

-1,802

295

-58,842

303,465

3,165

268,132

Comprehensive income:

 

 

 

 

 

 

 

 

     Profit for the period

 

 

 

 

42,247

446

42,693

     Other items of comprehensive income:

 

 

 

 

 

 

          Translation differences

 

 

4,154

 

138

4,292

          Income taxes related to items

 

 

 

-43

 

 

-43

Total comprehensive income for the period

 

 

4,111

42,247

584

46,942

Business transactions with shareholders:

 

 

 

 

 

 

     Dividend payment

 

 

 

 

 

-22,771

-346

-23,117

     Share-based incentives, value of work performance

 

 

549

 

549

     Acquisition of treasury shares

-874

 

 

 

 

-874

     Issue of treasury shares to personnel

1,687

 

 

-1,614

 

73

     Sale of treasury shares to personnel

599

 

 

 

 

599

     Adjustment for previous periods

 

 

 

-90

-26

-116

Business transactions with shareholders, total

1,412

 

 

-23,926

-372

-22,886

Changes in holdings in subsidiaries:

 

 

 

 

 

 

    Change in non-controlling interest

 

 

 

254

254

Changes in holdings in subsidiaries, total

 

 

 

 

254

254

Equity 30 Sep 2021

20,759

1,092

-390

295

-54,731

321,786

3,631

292,442

 

OLVI GROUP

 

TABLE 4

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

EUR 1,000

 

 

 

 

1-9/2022

1-9/2021

1-12/2021

 

 

 

 

Profit for the period, continuing operations

27,363

32,300

36,670

Profit for the period, assets held for sale

18,712

10,393

11,691

Adjustments:

 

 

 

     Depreciation and impairment

18,303

19,870

27,006

     Other adjustments

12,394

9,768

10,251

Change in net working capital:

 

 

 

     Change in accounts receivable and other receivables

-16,675

-1,593

-5,878

     Change in inventories

-9,609

-5,486

-8,684

     Change in accounts payable and other liabilities

14,362

22,261

28,561

Interest paid

-793

-366

-594

Interest received

207

182

268

Dividends received

5

3

3

Taxes paid

-8,456

-6,435

-9,687

Cash flow from operating activities (A)

55,813

80,897

89,607

 

 

 

 

Investments in tangible and intangible assets

-25,847

-22,983

-31,213

Proceeds from the sale of tangible and intangible assets

824

1,072

1,068

Acquisition of shares from non-controlling interest

-378

0

0

Acquisition of shares in subsidiaries, associated companies and joint ventures

0

-11,121

-11,121

Expenditure on other investments

-153

-30

-30

Dividends received

38

21

21

Cash flow from investing activities (B)

-25,516

-33,041

-41,275

 

 

 

 

Loan withdrawals

6,864

172

884

Repayment of loans

-3,883

-1,774

-12,371

Acquisition of treasury shares

-641

-874

-874

Sale of treasury shares to personnel

0

599

551

Dividends paid

-23,267

-21,255

-23,240

Cash flow from financing activities (C)

-20,927

-23,132

-35,050

 

 

 

 

Increase (+) / decrease (-) in cash and cash equivalents (A+B+C)

9,370

24,724

13,282

 

 

 

 

Cash and cash equivalents 1 Jan

58,741

45,096

45,096

Impact of exchange rate changes

2,084

248

363

Cash and cash equivalents 30 Sep / 31 Dec

70,195

70,068

58,741

 

   * The cash flow statement includes both continuing operations and assets held for sale.

 
OLVI GROUP     TABLE 5

NOTES TO THE INTERIM REPORT

The interim report has been prepared in accordance with IAS 34, applying the same accounting principles that were applied to the 2021 financial statements (31 December 2021), with the exception of IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), which has been applied as a new standard. In accordance with IFRS 5, the Belarusian operations have been classified as non-current assets held for sale. More detailed information about the impacts of the classification is provided in Note 11.

 

Olvi has changed its segment reporting in accordance with IFRS 8 (Operating Segments) from 1 January 2022 onwards. The comparison information has been changed accordingly. 

 

The figures in the interim report are presented in thousands (1,000) of euros. For presentation, individual figures and totals have been rounded up to the next full thousand, which causes differences in totals. Exchange rates obtained from the Central Bank of Belarus have been used as the exchange rate for the Belarusian rouble. The key ratios have been calculated by using accurate euro-denominated figures. The information published in the interim report has not been audited.

1. SEGMENT INFORMATION

 

 

 

SEGMENTS’ NET SALES AND PROFIT 1-9/2022

 

 

EUR 1,000

 

Finland

 

Baltic Sea region

Eliminations

 

Group total

 

 

 

 

 

INCOME

 

 

 

 

External sales

155,831

186,453

 

342,284

     Beverage sales

154,490

186,453

 

340,943

     Equipment services

1,341

0

 

1,341

Internal sales

989

21,436

-22,425

0

Total net sales

156,820

207,889

-22,425

342,284

 

 

 

 

 

Total profit for the period

39,646

13,575

-25,858

27,363

 

SEGMENTS’ NET SALES AND PROFIT 1-9/2021

 

 

EUR 1,000

 

Finland

 

Baltic Sea region

Eliminations

 

Group total

 

 

 

 

 

INCOME

 

 

 

 

External sales

144,599

130,407

 

275,006

     Beverage sales

143,730

130,407

 

274,137

     Equipment services

869

0

 

869

Internal sales

817

9,385

-10,202

0

Total net sales

145,416

139,792

-10,202

275,006

 

 

 

 

 

Total profit for the period

35,883

15,666

-19,249

32,300

 

2. RELATED PARTY TRANSACTIONS

 

Management’s employee benefits

 

Board members’ and the Managing Director’s salaries and other short-term employee benefits

EUR 1,000

 1-9/2022

 1-9/2021

 1-12/2021

Managing Director

502

852

939

Chair of the Board

52

54

73

Other Board members

 

120

126

172

Total

674

1,032

1,184


3. SHARES AND SHARE CAPITAL

 

 

 

30 Sep 2022

      %

 

 

 

Series A shares, number of shares

16,989,976

82.0

Series K shares, number of shares

3,732,256

18.0

Total

20,722,232

100.0

 

 

 

Total number of votes, Series A shares

16,989,976

18.5

Total number of votes, Series K shares

74,645,120

81.5

Total number of votes

91,635,096

100.0

 

 

 

Votes per Series A share

1

 

Votes per Series K share

20

 

 

The registered share capital totalled EUR 20,759 thousand on 30 September 2022.


A dividend of EUR 1.20 per share for 2021 (EUR 1.10 per share for 2020), totalling EUR 24.9 (22.8) million, will be paid on shares in Olvi plc. The dividend will be paid in two instalments. The first instalment, EUR 0.60 per share, was paid on 20 April 2022. The second instalment, EUR 0.60 per share, was paid on 2 September 2022. Series K shares and Series A shares provide their holders with equal rights to dividends. The Articles of Association include a redemption clause concerning Series K shares.

 

4. TREASURY SHARES 

 

At the end of the review period, Olvi plc held a total of 29,404 of its own Series A shares as treasury shares. The total acquisition price of treasury shares was EUR 1,079.4 thousand. The treasury shares do not provide the company with voting rights. The Series A shares held by Olvi plc represent 0.14% of all shares in the company and 0.03% of all votes provided by the shares in the company. The treasury shares account for 0.17% of all Series A shares in the company and the votes provided by all Series A shares in the company.

5. NUMBER OF SHARES*

 1-9/2022

 1-9/2021

 1-12/2021

  - Average

20,703,463

20,704,514

20,706,610

  - At the end of the period

20,692,828

20,712,828

20,712,828

 

* The treasury shares held by the company have been deducted.

 

 

6. TRADING IN SERIES A SHARES ON THE NASDAQ HELSINKI

 

 

 

 1-9/2022

 1-9/2021

 1-12/2021

Trading in Series A shares in Olvi, number of shares

1,985,713

1,537,432

1,812,283

Total value of trading, EUR 1,000

71,236

75,018

89,417

Proportion of the trading out of the total number of Series A shares, %

11.7

9.0

10.7

 

 

 

 


Average share price, EUR

35.92

48.80

49.35

Closing price, EUR

31.50

50.00

51.20

Highest price, EUR

52.00

55.50

55.70

Lowest price, EUR

29.40

43.10

43.10


  

7. FOREIGN AND NOMINEE-REGISTERED HOLDINGS 30 SEPTEMBER 2022

 

Book-entry shares

Number of votes

Shareholders

 

number

%

number

%

number

%

Finnish, total

16,513,467

79.69

87,426,331

95.41

21,028

99.59

Foreign, total

64,474

0.31

64,474

0.07

76

0.36

Nominee-registered (foreign), total

428,703

2.07

428,703

0.47

6

0.03

Nominee-registered (Finnish), total

3,715,588

17.93

3,715,588

4.05

5

0.02

Total

20,722,232

100.00

91,635,096

100.00

21,115

100.00

 

8. LARGEST SHAREHOLDERS 30 SEPTEMBER 2022

 

 

 

 

 

Series K

Series A

Total

%

Number of votes

%

1. Olvi Foundation       

2,363,904

890,613

3,254,517

15.71

48,168,693

52.57

2. The estate of Heikki Hortling*                                   

903,488

103,280

1,006,768

4.86

18,173,040

19.83

3. Timo Einari Hortling

212,600

49,152

261,752

1.26

4,301,152

4.69

4. Marit Hortling-Rinne    

149,064

14,234

163,298

0.79

2,995,514

3.27

5. Nordea Bank Abp, nominee-registered

2,003,626

2,003,626

9.67

2,003,626

2.19

6. Skandinaviska Enskilda Banken Ab (publ), Helsinki branch, nominee-registered

1,667,118

1,667,118

8.05

1,667,118

1.82

7. Varma Mutual Pension Insurance Company

828,075

828,075

4.00

828,075

0.90

8. Ilmarinen Mutual Pension Insurance Company

683,000

683,000

3.30

683,000

0.75

9. Pia Johanna Hortling

23,388

25,366

48,754

0.24

493,126

0.54

10. Jens Einari Hortling

23,388

16,216

39,604

0.19

483,976

0.53

Other

56,424

10,709,296

10,765,720

51.93

11,837,776

12.91

 

Total

3,732,256

16,989,976

20,722,232

100.00

91,635,096

100.00

* The shareholding includes shares held by the shareholder and the entities controlled by them.

 

Olvi did not receive any flagging notifications under chapter 2, section 10 of the Securities Markets Act in January–September 2022.

 

9. PROPERTY, PLANT AND EQUIPMENT

 

EUR 1,000

 

 

 

 

 1-9/2022

 1-9/2021

  1-12/2021

 

 

 

 

Opening balance

190,627

168,833

168,833

Additions

26,110

36,616

43,203

Deductions and transfers

-133

-1,561

-1,951

Depreciation and amortisation

-15,297

-14,321

-19,458

Exchange rate differences

-93

0

0

Total

201,214

189,567

190,627

 


10. CONTINGENT LIABILITIES

 

 

 

EUR 1000

 

 

 

 

30 Sep 2022

30 Sep 2021

31 Dec 2021

 

 

 

 

Pledged assets and contingent liabilities

 

 

 

   On the company’s own behalf

10,004

19,226

10,007

 

 

 

 

Lease and rental liabilities:

 

 

 

   Maturing in less than a year

872

756

1,012

   Maturing within 1–5 years

1,156

636

550

Total lease and rental liabilities

2,028

1,392

1,562

 

 

 

 

Other liabilities

67

60

60

 

11. NON-CURRENT ASSETS HELD FOR SALE

 

Classification and accounting principles

 

Olvi strongly condemns the Russian attack on Ukraine. At its meeting on 5 March 2022, Olvi plc’s Board of Directors decided to divest the company’s business operations in Belarus and start preparations to sell Lidskoe Pivo, a subsidiary in which Olvi plc has a holding of 96.36%. Since the interim report for January–March 2022 (31 March 2022), Lidskoe Pivo has been classified as discontinued operations / assets held for sale in accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations).

 

The divestment in Belarus will cause the Group’s business operations to reduce significantly. In 2021, Belarus represented 33.2% of the Group’s sales volume, 21.1% of its net sales and 24.3% of its operating profit. In addition, the planning and implementation of the divestment will cause non-recurring costs. Following the Board’s decision, Olvi stopped investments in Lidskoe Pivo, ended its significant Russian exports and started identifying potential buyers and negotiating the divestment of the business. The balance sheet items related to Lidskoe Pivo have been measured at book value in the interim report. The process has progressed as planned and is being actively promoted. There are several prospective buyers, and new enquiries have been submitted throughout the process. The assessment of potential buyers and negotiations are in progress. Local and international legislation, the employees and Olvi's values will be taken into account during the process.

 

The classification in accordance with IFRS 5 has required management discretion. Permission from the local authorities and the competition regulator is required for the divestment. These are two separate processes. The Belarusian authorities have a pre-emptive right in company acquisitions. In June, the Belarusian Government announced additional restrictions on the sale of companies under Western ownership for shareholders from countries that have imposed sanctions. These new restrictions that have emerged during the sales process are making the official procedure longer and more complicated. However, based on the information currently available and the negotiations carried out with the local authorities, the company’s management believes that it is still possible to implement the divestment, but for the reasons stated above, it may not be possible to complete the divestment in accordance with the previously announced schedule. The company’s management believes that the divestment will be implemented within the next 12 months.

 

Income statement, assets held for sale

 

EUR 1,000

 

 

 

 

1-9/2022

1-9/2021

1-12/2021

 

 

 

 

Net sales

105,297

76,584

97,464

Expenses

-81,864

-64,073

-83,105

Operating profit

23,433

12,511

14,359

Financial items

-1,060

34

-115

Profit before tax

22,373

12,545

14,244

Income taxes

-3,661

-2,152

-2,553

Profit for the period, assets held for sale

18,712

10,393

11,691

 

Since the beginning of the year, the sales volume has increased by 2.3% and net sales have grown by 37.5%. Domestic demand in retail and the HoReCa sector developed strongly and offset the impact of the end of Russian exports. Net sales increased as a result of the price increases implemented. Production and logistics costs grew significantly. The operating profit increased by 87.3%. Increased net sales, the adjustment measures and the significantly stronger exchange rate had a positive impact on the comparable operating profit in euros. In addition, depreciation is not recognised for assets held for sale in accordance with the IFRS. The impact of this depreciation on the result would have been EUR 3.2 million. The adjustment measures have not affected the number of personnel.

 

Balance sheet, assets held for sale

 

EUR 1,000

 

 

 

 

30 Sep 2022

30 Sep 2021

31 Dec 2021

 

 

 

 

Consolidated goodwill

4,527

3,708

3,762

Intangible assets

448

211

341

Tangible assets

46,184

38,632

38,729

Loans receivable and other long-term receivables

297

356

338

Deferred tax assets

333

196

36

Inventories

14,907

10,045

11,445

Current receivables

21,089

14,770

13,479

Cash in hand and at bank

23,553

9,788

8,101

Non-current assets held for sale

111,338

77,706

76,231


 

EUR 1,000

 

 

 

 

30 Sep 2022

30 Sep 2021

31 Dec 2021

 

 

 

 

Non-current financial liabilities

19

0

0

Deferred tax liabilities

10

0

0

Current financial liabilities

5

11

3

Accounts payable and other payables

17,377

14,030

12,468

Income tax liability

1,937

1,128

0

Liabilities related to non-current assets held for sale

19,348

15,169

12,471

 

Other information concerning assets held for sale

 

1,000 euros/litres

 

 

 

 

1-9/2022

1-9/2021

1-12/2021

 

 

 

 

Sales volume

233,561

228,263

279,197

Average number of personnel

849

830

832

Earnings per share, EUR, undiluted

0.88

0.48

0.54

Earnings per share, EUR, diluted

0.88

0.48

0.54

Cash flow from operating activities

19,476

12,581

12,847

Cash flow from investing activities

-705

-4,078

-5,043

Cash flow from financing activities

-5,404

-4,464

-5,569

 


12. CALCULATION PRINCIPLES FOR KEY RATIOS


In its summary of key ratios (page 1), the Group presents key ratios directly derived from the consolidated income statement (net sales, operating profit, profit for the period and their proportions of net sales, as well as earnings per share). (Earnings per share = Profit for the period attributable to owners of the parent company / Average number of shares during the period, adjusted for share issues).

 

In addition to its IFRS-based consolidated financial statements, Olvi plc presents Alternative Performance Measures that describe the financial performance of its business operations and provide a comparable overview of the company’s profitability, solvency and liquidity.

The Group has applied the European Securities and Markets Authority’s (ESMA) new guidelines (effective since 3 July 2016) on Alternative Performance Measures and has determined such measures as follows:

The Group presents sales volume data in millions of litres as an Alternative Performance Measure that supports net sales. Sales volume is an important and widely used indicator in the industry that describes the scope of operations.

Earnings per share = Equity attributable to owners of the parent company / Number of shares at the end of the period, adjusted for share issues.

Equity ratio, % = 100 * (Equity attributable to owners of the parent company + non-controlling interest) / (Balance sheet total).

Gearing, % = 100 * (Interest-bearing debt – Cash in hand and at bank) / (Equity attributable to owners of the parent company + Non-controlling interest).