Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anora Group PLC (FRA:28Q, Financial) managed to sustain most of the gains in marginality achieved earlier in the year, demonstrating effective pricing and mix management.
- Gross profit for the beverage business was relatively flat, with a slight increase in wine and a minor decrease in spirits, indicating resilience in gross margins.
- The company reported mid-single digit growth in gross profitability for spirits and wine on a year-to-date basis.
- Anora Group PLC successfully launched its 8% ABV wines in Finland, gaining a leading position in Finnish groceries and achieving 18% net revenue growth in the Finnish wine market for the third quarter.
- The company reduced its interest-bearing net debt by EUR50 million, reflecting a commitment to improving its cash position and balance sheet.
Negative Points
- The quarter was below expectations, leading to a reduction in full-year guidance due to soft volumes in key Nordic markets, particularly in Norway, Sweden, and Denmark.
- Net revenue declined by 6% for the quarter and 5.5% on a year-to-date basis, primarily due to lower volumes in the beverage sales of wine and spirits.
- EBITDA was significantly impacted by increased marketing spend and operational disruptions in the former Globus wine business in Denmark.
- The industrial segment remained a drag on performance, with a EUR5 million EBITDA shortfall compared to the previous year.
- The company faced challenges in maintaining market share in Norway and experienced a systematic issue with spirits volume decline in Finland due to new legislation affecting alcohol sales.
Q & A Highlights
Q: How has the new legislation allowing contact wine in grocery stores impacted Anora's wine profitability in Finland?
A: Jacek Pastuszka, CEO, explained that the impact of the legislation is still uncertain, but Anora has managed to secure a strong market share in grocery stores, resulting in an 18% net revenue growth for the third quarter. The company is meeting its gross margin targets, which are not threatening overall profitability.
Q: Has the new legislation affected the overall traffic in the Finnish monopoly, and how does it impact the spirits business?
A: Jacek Pastuszka noted that anecdotal evidence and feedback from the monopoly suggest that footfall and volumes have been affected by the legislative change, impacting the spirits business.
Q: Can you discuss the seasonality of cash flow, especially given the extension of the sale of receivable programs?
A: Stein Eriksen, CFO, stated that the swing in working capital during the year is around EUR90 million, with Q4 being crucial for cash flow, typically generating a significant portion of annual EBITDA and cash flow.
Q: Why was there a drop in the wine segment's gross margin in Q3 compared to previous quarters?
A: Jacek Pastuszka attributed the drop to challenges in the former Globus wine business in Denmark, including product costing and operational disruptions due to ERP integration. These issues affected both product costs and operational expenses.
Q: What are the expectations for market volumes in Q4, given the weaker performance earlier in the year?
A: Stein Eriksen mentioned that while Q3 saw a 6% decline in turnover, Q4 is expected to be crucial for both turnover and profitability, with expectations for volumes to be between 0% and 6% lower.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
