Regulatory press release

Anora Group Plc's Half-year Report January-June 2024: Comparable EBITDA improved in Q2 due to higher gross margin

Anora Group Plc Half-year Report 20 August 2024 at 8:30 am EEST

This release is a summary of Anora Group Plc's Half-year Report January-June 2024. The complete report is attached to this release and is also available on the company website at: www.anora.com/en/investors

Q2 2024 in brief

Net sales were EUR 177.1 (182.7) million, down by 3.1%.
Comparable EBITDA was EUR 15.2 (13.0) million, or 8.6% (7.1%) of net sales, up by 16.9%.
EBITDA was EUR 14.9 (9.8) million, or 8.4% (5.4%) of net sales, up by 51.8%.
Net cash flow from operating activities was
EUR -4.4 (45.3) million.
Earnings per share was EUR 0.03 (-0.06).

January-June 2024 in brief

Net sales were EUR 324.0 (342.2) million, down by 5.3%.
Comparable EBITDA was EUR 24.1 (20.9) million, or 7.4% (6.1%) of net sales, up by 15.2%.
EBITDA was 22.7 (16.7) million, or 7.0% (4.9%) of net sales, up by 35.9%.
Net cash flow from operating activities was

EUR -49.0 (49.0) million.

Earnings per share was EUR -0.01 (-0.14).
Net debt/comparable EBITDA (rolling 12 months) was 2.8 (3.9).

Guidance

In 2024, Anora's comparable EBITDA is expected to be EUR 75-85 million (2023: EUR 68.2 million).

Key figures

EUR million Q2 24 Q2 23 Change H1 24 H1 23 Change 2023
Net sales 177.1 182.7 -3.1% 324.0 342.2 -5.3% 726.5
Comparable EBITDA 15.2 13.0 16.9% 24.1 20.9 15.2% 68.2
% of net sales 8.6 7.1 7.4 6.1 9.4
EBITDA 14.9 9.8 51.8% 22.7 16.7 35.9% 67.5
Comparable operating result 8.7 4.8 82.2% 10.6 4.1 159.3% 34.8
% of net sales 4.9 2.6 3.3 1.2 4.8
Operating result 8.4 1.6 9.2 -0.1 -31.3
Result for the period 1.8 -4.2 -0.4 -9.7 -39.9
Earnings per share, EUR 0.03 -0.06 -0.01 -0.14 -0.59
Net cash flow from -4.4 45.3 -49.0 49.0 135.3
operating activities
Net working capital -21.1 12.1 -21.1 12.1 -79.2
Net debt/comparable EBITDA, 2.8 3.9 2.8 3.9 2.0
rolling 12 months
Personnel end of period 1,256 1,300 -3.4% 1,256 1,300 -3.4% 1,219

CEO Jacek Pastuszka:

"During the second quarter, we stayed firmly on the course of improving our profitability and strengthening the balance sheet by increasing the share of margin accretive businesses, price increases, cost efficiencies and net working capital reduction. Also, lower raw material prices supported our performance.

Our comparable EBITDA grew by 16.9 percent and amounted to EUR 15.2 (13.0) million or 8.6 percent of net sales in the second quarter. Both Wine and Spirits segments delivered notable EBITDA growth and significant margin enhancements. We are satisfied with the continued turnaround of the Wine segment, with a gross margin improvement of 490bps. The performance of Spirits also remained on a positive trajectory, with comparable EBITDA up by 16.6 percent and gross margin up by 420bps from the previous year. The Industrial segment still had as negative impact on our year-on-year financial performance, due to lower production volumes and price erosion in side-product sales.

Net sales in the second quarter declined by 3.1 percent to EUR 177.1 million, solely due to a decrease in the Industrial segment, as the combined Wine and Spirits segment beverage sales were slightly up. In the Wine segment, we launched a wide range of products for grocery stores in Finland in June as the legislative amendment to Finland's Alcohol Act came into effect. The amendment allows the sale of alcoholic beverages containing up to 8% ABV alcohol in grocery stores. As the country's market-leading wine company with local production facility at Rajamäki in Finland, we are uniquely positioned to harness this opportunity. The launch of our 8% ABV wines started well in Finnish grocery retailers resulting into market leadership in June. In May, we acquired the market leading Danish glögg brand Blomberg from Orkla Denmark. While small in absolute and relative terms, this brand acquisition solidifies our already strong position in seasonal sales in the Nordics. In the Spirits segment, Sweden and Norway delivered net sales growth, whereas the net sales declined especially in Finland, Baltics and Global Travel Retail. The Industrial segment net sales was negatively impacted by lower contract manufacturing volumes combined with lower side product sales prices.

In the monopoly markets the shoppers are still trading down and volumes are eroding slowly. In Finland, the monopoly market sales declined rapidly as expected, as the sale of alcoholic beverages containing up to 8% ABV alcohol was allowed in grocery stores. Against this challenging background, our gross margin improved to 42.3 (38.8) percent of net sales and our gross profit increased by 5.5% to EUR 74.8 million, giving good testimony to our efforts in mix and revenue management.

Among other key priority areas for this year, we further reduced net debt leverage compared to the corresponding period last year. At the end of the quarter our cash and cash equivalents amounted to EUR 141.1 million, supported by lower working capital due to inventory reduction and the Larsen divestment. This resulted in lower net debt of EUR 200.7 million, while our net interest-bearing debt / comparable EBITDA ratio was 2.8.

We remain focused on improving the marginality of our beverage business and overall profitability of Anora business through active mix and revenue management and on strengthening our cash position and balance sheet via reduced working capital and improved inventory turns. We seek to restore organic net sales growth in the Wine and Spirits segments by focusing our efforts on the largest brands and partnerships. I am convinced that these actions and the progress achieved so far in 2024 will allow us to execute on our post-merger transformation strategy and deliver on our long-term financial targets."

Outlook and guidance for 2024

Market outlook

In 2024, the volumes in our key markets are expected to be slightly lower than in 2023 due to challenging economic conditions.

Finnish monopoly sales are expected to decline, at least temporarily, during the second half of 2024, due to the alcohol legislation change effect from 10 June 2024, allowing up to 8% ABV alcoholic drinks to be sold in grocery stores. This is expected to result in less customer visits in Alko stores. The drop is expected to be mostly compensated by sales of up to 8% ABV wines in the Finnish grocery channel. This outlook is dependent on consumer acceptance of the new products and the retailers' actions in developing the category.

Guidance

In 2024, Anora's comparable EBITDA is expected to be EUR 75-85 million (2023: EUR 68.2 million).

Anora's financial reporting for the year 2024

Anora will publish its interim report for January-September 2024 on 7 November 2024.

Anora applies a silent period of 30 days before the publication of financial reports.

ANORA GROUP PLC

Further information:

Jacek Pastuszka, CEO

Stein Eriksen, CFO

Contacts:

Milena Hæggström, Director, Investor Relations

tel. +358 40 5581 328

milena.haeggstrom@anora.com

Results presentation:

CEO Jacek Pastuszka and CFO Stein Eriksen will present the report today at 11:00 am EEST. 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 (https://teams.microsoft.com/l/meetup-join/19%3ameeting_YWUwNzVlNzctNTFjNy00YWVjLThhNDQtNDc3MzM1NjU2NmUw%40thread.v2/0?context=%7b%22Tid%22%3a%22c32b30ff-5871-4a7d-a29e-6f63e6b0ebfd%22%2c%22Oid%22%3a%2298127208-0d9a-4acb-ab65-80cfc9f4fff6%22%7d).

It is also possible to dial-in to the meeting about 5 minutes earlier at the following numbers:

FI: +358 9 2310 6678
NO: +47 21 40 41 04
SE: +46 8 502 428 54
DK: + 45 32 72 56 80
UK: +44 20 7660 8309
US: +1 917-781-4622

Conference ID 971 754 661#

Q&A

Questions to the management can be sent through the Teams chat.

Presentation material and on-demand recording

The presentation material will be shared in the online meeting and it can be downloaded at: www.anora.com/en/investors. Recording of the presentation will also be available on Anora's website.

Distribution:

Nasdaq Helsinki

Principal media

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