From the CEO
CEO Pekka Tennilä in the Business Review January-September 2019 (7 November 2019):
“We are happy to see net sales of beverages growing in constant currencies in the third quarter, driven by strong performance in Sweden. This year our raw material costs have been higher than last year due to the increased barley price. Following the normal harvest, the barley price has reached a normal level during the third quarter. With the important fourth quarter ahead of us, we are pleased to see the previously announced initiatives taking effect and our profitability improving from last year’s level in the third quarter.
In January–September, reported net sales grew by 1.3% to EUR 249.5 (246.4) million, and in constant currencies, net sales grew by 2.1%. We are delighted to see the positive development of our spirits sales in our core markets. In Sweden and Norway, our spirits sales increased in growing markets. In Finland, spirits market volumes are still in decline, but this has flattened out, while our sales in value terms have grown. In January–September, comparable EBITDA was EUR 25.1 (24.1) million and EUR 11.4 (10.3) million in the third quarter.
In September, we announced the investment in the Von Elk Company whereby Altia became a minority shareholder in the company and the exclusive distributor in the Nordic and Baltic region of the innovative and award-winning sparkling glögg, Glöet. Glöet is an excellent addition to Altia’s portfolio.
We have extended the Blossa glögg brand with novelties both for the monopoly and grocery trade channels. The novelties include non- and low-alcoholic and low-sugar versions, as well as new flavours and a sparkling Blossa. In addition to glöggs, Christmas is traditionally a season for gift-packs, premium wine brands and higher consumption of spirits such as aquavit and Cognac. This makes the last quarter the most important one for Altia both in terms of net sales and profitability.
Sustainability is a strategic priority and a key success factor for us. We were chosen as the Green Company of the Year 2018 thanks to our Koskenkorva distillery, which operates in accordance with the principles of circular economy. This exemplifies our long-standing commitment to sustainability. As an important input for our future sustainability work, we have finalised the calculation of our first full environmental life-cycle analysis for our key brand, Koskenkorva Vodka. The study shows that most of the carbon footprint during the life-cycle of Koskenkorva Vodka derives from the product’s packaging and the cultivation of the barley used as an ingredient in the vodka. We continue to work on better farming practices with our partners and to develop sustainable packaging. With our biggest customers, the state retail monopolies, we are working for a higher use of sustainable packaging solutions such as PET bottles and bag-in-boxes.
During our annual strategy process, we are reviewing our long-term strategic focus areas and growth ambitions. We expect to communicate more on this during the first half of next year.
Our guidance for 2019 remains unchanged, and we expect the comparable EBITDA to improve from the 2018 level. The guidance assumes a normal barley harvest, a flattened out market development in Finland, and growing markets in Sweden and Norway. In addition, the impact from the implementation of the IFRS 16 standard is expected to improve comparable EBITDA by EUR 3–4 million.”