Anora Q3’24 preview: Profit warning indicates a weak quarter

Translation: Original published in Finnish on 11/5/2024 at 06:30 am EET

‌Anora will report its Q3 results next Tuesday at around 8.30 am EET. ‌The company issued a profit warning in October, which suggests that the quarter had been weak. ‌We expect a slight decrease in both revenue and earnings. The guidance that was cut in connection with the profit warning (2024 adj. EBITDA 65-70 MEUR) is likely to be reiterated.

Revenue is expected to decrease due to the volume decline in the market

We predict that Anora's Q3 revenue will decrease by 4% year-on-year. The revenue decrease is especially due to the Industrial segment (-15%) because of decreased sales prices, but we also expect the revenue from beverage sales (Spirits and Wine segments) to have decreased by 3%. This is still affected by the declining market volumes, especially in Finland and Norway, which Anora also cited as a reason for its profit warning.

In forecasts, earnings turn downward again in Q3

Anora's performance weakened mainly in 2022-23, due to a number of challenges in the Wine segment (exchange rates, loss of partners, and poor performance of Globus Wine in Denmark). Earnings recovered in H1'24 especially through the improvement of the Wine segment's gross margin, as prices were increased in Sweden and Norway to offset the impact of weaker currencies. However, weak volume development seems to weigh more heavily on the result than previously expected and, in practice, reverses the benefits of both the improved gross margin and cost efficiency. We expect the Q3 result to decrease slightly with lower revenue, although we expect a clear increase in the gross margin from the comparison period. On a segment basis, we expect Q3 earnings to weaken mainly in the Industrial segment, where the comparison figure is good. Especially in the Wine segment, we previously expected a clear improvement from the comparison period figures, but now the forecasts for the rest of the year are only slightly above the level of the weakish comparison period.

The guidance cut in October will probably be reiterated

Anora downgraded its guidance in mid-October and now expects adjusted EBITDA of 65-70 MEUR, or about the 2023 level (68 MEUR), which we consider a weak year. This guidance is also likely to be reiterated in the Q3 report. Our forecast is close on 69 MEURQ4 is Anora’s most important quarter due to the Christmas season, and we believe that its volume development also has a major impact on the guidance for the whole year. ‌In our latest report‌‌,‌‌ we commented ‌‌in more detail on the profit warning.‌ ‌After a profit warning‌‌,‌‌ the company also announced‌‌ that Jacek Pastuszka, who had been CEO for only one year, would leave the position once a successor was found.‌