Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viva Wine Group AB (OSTO:VIVA, Financial) reported a 6.4% increase in net sales for Q2, with an organic growth of 6.6%.
- The company achieved record-high market shares in the Nordic monopoly markets, strengthening its position as the market leader.
- Adjusted EBITDA margin improved significantly to 9.6%, showing a notable increase from the previous year.
- The new law amendment in Finland allowing sales of wines up to 8% in grocery stores was well-received, further strengthening the company's position in the Finnish market.
- Strong operating cash flow from ongoing business activities, despite planned inventory increases and one-time effects related to bonus payments.
Negative Points
- The timing of Easter had a negative effect on total market sales, impacting overall performance.
- The eCom segment showed only slight organic growth of 0.1%, with net sales slightly down due to discontinued businesses.
- Consumer sentiment in the eCom market remains low, indicating potential challenges ahead.
- The company expects a 'bumpy road' for the eCom segment in the coming quarters, indicating potential volatility.
- An impairment charge related to an old financial investment in a wine producer negatively impacted financial results.
Q & A Highlights
Q: Can you elaborate on the gross margin improvement in the Nordics and expectations for the future?
A: We expect gradual improvements throughout the year. The 2% uptick in Q2 is promising, and we anticipate further enhancements in Q3 and Q4, especially with the upcoming pricing window at the end of Q3. (Linn Gäfvert, CFO)
Q: What are the key drivers for the lower OpEx spend in the Nordics, and is this sustainable?
A: Improvements and efficiencies implemented last year have contributed to lower OpEx. However, there are timing effects, and we expect some increase in Q3. Overall, the ratio of net sales to OpEx will be better, but no significant decrease is expected in the next two quarters. (Linn Gäfvert, CFO)
Q: How have customer acquisition costs in the eCom segment changed with market conditions?
A: Customer acquisition costs have remained fairly similar. We expect these costs to decrease once consumer sentiment improves. (Emil Sallnäs, CEO)
Q: What strategic initiatives have led to increased working capital?
A: The increase is due to higher inventory levels to support increased sales and the new 8% wine product line in Finland. Additionally, last year's warehouse move in the eCom segment contributed to this increase. (Linn Gäfvert, CFO)
Q: How might the product mix in the Nordics change with improved economic conditions?
A: We continuously adjust prices and launch new products to meet demand for lower-priced options while maintaining margins. This strategy allows us to offer products with decent margins even in lower price segments. (Emil Sallnäs, CEO)
Q: How will price increases in the Nordics be managed in the upcoming pricing windows?
A: We will continue to increase prices gradually to maintain sales volumes. We have been active in price adjustments over the past two years and will continue this approach in the upcoming pricing periods. (Emil Sallnäs, CEO)
Q: How will intensified marketing efforts in the eCom segment affect profitability?
A: Marketing costs are dependent on total demand. Increased consumer demand will lower customer acquisition costs. We use various marketing strategies, including digital and leaflet marketing, to optimize costs. (Emil Sallnäs, CEO)
Q: How will the Finnish legislation change impact volumes and margins?
A: It's too early to determine the full impact. While the 8% wine category has been well received, we expect to continue growing market share. Margins in this segment are slightly lower, but overall margins in the Nordics should remain stable. (Emil Sallnäs, CEO; Linn Gäfvert, CFO)
Q: Can you elaborate on the "bumpy road" ahead for the eCom segment?
A: We expect fluctuations in performance due to consumer sentiment. The market may see slight ups and downs over the next few quarters. Q3 has started within these parameters, with a slight decline. (Emil Sallnäs, CEO)
Q: What was the impairment charge in the quarter related to?
A: The impairment charge was related to an old financial investment in a wine producer, now valued at zero. This is a one-time event and the only investment of this kind we have had. (Emil Sallnäs, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
