Altia Plc’s Business Review January-March 2021: Sales and profitability improved in Q1
Altia Plc Stock Exchange Release on 28 April 2021 at 8:30 am EET
Altia Plc’s Business Review January-March 2021: Sales and profitability improved in Q1
This release is a summary of Altia Plc's Business Review for January-March 2021. The complete review is attached to this release and is also available on the company website at www.altiagroup.com/investors.
January–March 2021 compared to January–March 2020
- Reported net sales were EUR 71.7 (68.2) million
- In constant currencies, net sales increased by 3.1% in comparison to the previous year
- Net sales of Finland & Exports segment were EUR 23.0 (23.8) million
- Scandinavia segment’s net sales were EUR 24.2 (22.0) million
- Altia Industrial’s net sales were EUR 24.5 (22.4) million
- Comparable EBITDA was EUR 7.7 (5.5) million, 10.8% (8.1%) of net sales
- EBITDA was EUR 4.6 (5.4) million, 6.4% (8.0%) of net sales
- Items affecting comparability were EUR -3.2 million relating to planned merger between Altia and Arcus
- Net debt / comparable EBITDA (rolling 12 months) was 0.2 (1.1)
- Altia has decided to provide a short-term outlook but no guidance for 2021, due to the uncertainties caused by COVID-19 and the low predictability for the full year 2021.
This is not an interim report as specified in the IAS 34 standard. The company complies with half-yearly reporting, according to the Finnish Securities Markets Act and discloses business reviews for the first three- (Q1) and nine-month (Q3) periods of the year. The figures in the review are unaudited. Reconciliation of alternative key ratios to IFRS figures is presented in the appendix on page 13. For important information for U.S. shareholders, please see “Important Information” on page 12.
|Q1 21||Q1 20||2020|
|Net sales, EUR million||71.7||68.2||342.4|
|Comparable EBITDA, EUR million||7.7||5.5||52.4|
|% of net sales||10.8||8.1||15.3|
|EBITDA, EUR million||4.6||5.4||40.3|
|Comparable operating result, EUR million||3.9||1.1||35.0|
|% of net sales||5.4||1.6||10.2|
|Operating result, EUR million||0.7||1.0||22.9|
|Result for the period, EUR million||0.7||1.3||17.8|
|Earnings per share, EUR||0.02||0.04||0.49|
|Net cash flow from operating activities, EUR million||-0.3||-15.4||56.1|
|Net debt / comparable EBITDA, rolling 12 months||0.2||1.1||-0.1|
|Average number of personnel||640||642||650|
CEO Pekka Tennilä:
“I am happy that our year has gotten off to a great start. Our financial performance during the first quarter of 2021 was solid. The preparations for the Altia and Arcus merger is proceeding in good dialogue with the competition authorities. During the pandemic our focus has been on the health and safety of our employees and continuity of our operations. Thanks to our joint efforts in supply chain, we have been able to run our operations without any major delays. In the monopoly channels we have continued to strengthen our brands through digital activations and bring exciting novelties to growing categories. I want to thank all our employees for their strong and successful efforts during these extraordinary times.
During the first quarter of 2021, Altia’s net sales increased by 5.1% from the previous year. In the Scandinavia segment, net sales grew in all markets, in Sweden, Norway, and Denmark. The growth was driven by strong sales in the monopolies offsetting the decline in on-trade. By product categories, growth was strongest in spirits. The Finland & Exports segment has been more affected by the Covid-19 restrictions. Net sales declined from the previous year due to the significant sales drop in travel retail and on-trade. However, in Finland, sales increased driven by monopoly channel growth. The timing of Easter had a positive impact on consumer goods sales in both consumer segments. Altia Industrial segment sales exceeded our expectations in the first quarter with growth in all industrial products’ categories.In the first quarter our profitability improved from the previous year with comparable EBITDA increasing from EUR 5.5 million to EUR 7.7 million. The drivers for the strong profitability performance were the two consumer product segments, i.e. Scandinavia and Finland & Exports, where the positive channel and product mix together with initiatives on revenue management delivered good results. The strong performance in Scandinavia was further supported by favourable currency rates. The reported result for the period was impacted by costs related to the planned Altia and Arcus merger, booked as items affecting comparability.
During the first quarter our financial position has strengthened further with an improvement in net cash flow from operations. This was due the good development of our net working capital. In our sustainability roadmap, we have set the target for significantly reducing our packaging CO2 footprint and making our packages fully recyclable. During the first quarter our new bag-in-box production line was started at our Rajamäki plant, allowing not only the introduction of new innovative packaging to the market, but -as the only producer in the Nordics- enabling us to make wine bag-in-boxes which are 100% recyclable. We also launched wine PET bottles made of 100% recycled material, for example, for our Chill Out brand, again as the first in the Nordics within wine and spirits.
In 2021, we look forward to reaching an important strategic milestone with the planned merger of Altia and Arcus to form the leading Nordic wine and spirits brand house: Anora Group. The competition authority process is proceeding in good dialogue with the competition authorities in Finland, Sweden and Norway. As disclosed on 15 April 2021, completion of the Merger may be delayed till autumn of 2021, since a binding agreement on the divestments must be entered into prior to the completion of the Merger.
Altia´s Annual General Meeting was held in March 2021. In line with Altia’s Board of Directors proposal, it decided that a dividend of EUR 0.35 per share is to be paid for the financial year 2020. The AGM also decided to renew the Board of Directors’ authorisation to resolve on an extra dividend of EUR 0.40 per share, which is to be paid just before the completion of the merger between Altia and Arcus.
Forecasting the recovery of the operating environment is difficult as this depends largely on the development of COVID-19, the progress of vaccinations, and changes in consumer behaviour. Due to these uncertainties predictability is weak for the full year 2021, and we have decided to provide a short-term outlook but no guidance for 2021.”
Outlook for 2021
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.
COVID-19 update: Of Altia’s beverage sales channels, travel retail, exports and on-trade are restricted or closed due to COVID-19 restrictions. The recovery of these channels depends on the level and extent of government restrictions and recommendations and how consumer behaviour changes. The pace of recovery is difficult to estimate and is expected to vary across sales channels. Uncertainty in the economy and operating environment is high, and the risk of an economic slowdown is high.
There are substantial seasonal fluctuations in the consumption of alcoholic beverages impacting the net sales and cash flow of Altia. The company typically generates large amounts of its revenue and cash flow during the fourth quarter of the year, whereas the first quarter of the year is significantly lower. In addition, excise taxes related to the high season at the end of the year are paid in Q1, resulting in large cash outflows at the beginning of the year. Also Easter fluctuating between Q1 and Q2 impacts quarterly sales and profitability. This year most of the Easter sell-in took place in Q1.
Altia has decided to provide a short-term outlook but no guidance for 2021, due to the uncertainties caused by COVID-19 and the low predictability for the full year 2021. The short-term outlook remains the same as in the Financial Statements Bulletin on 25 February 2021.
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.
Pekka Tennilä, CEO
Juhana Jokinen, Interim CFO
Petra Gräsbeck, Corporate Communications, tel. +358 40 767 0867
CEO Pekka Tennilä and interim CFO Juhana Jokinen will present the report on 28 the same day 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: 988 958 12#
We recommend that questions to the management are sent through the Teams chat. 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 A recording of the event will be available later on Altia’s website.
Nasdaq Helsinki Ltd