Anora Q2'24 flash comment: Result in line with our expectations with strong revenue, guidance unchanged

Translation: Original comment published in Finnish on 8/20/2024 at 9:14 am EEST.

Anora's Q2 revenue was better than we had expected, but the result remained in line with our forecasts, i.e. the margin was weaker. However, the better-than-expected revenue development in the beverage segments, which were in line with the comparison period, was a positive sign in a declining market. Anora reiterated its full year guidance, i.e. full year adjusted EBITDA in the range of 75-85 MEUR, while our forecast is 76 MEUR. At first glance, we do not see any need for material changes to our forecasts. 

Revenue better than expected in beverage segments

Anora’s revenue decreased by 3% year-on-year, significantly less than we expected. The decline was due to a deterioration of the Industrial segment (albeit less than we had expected), but the beverage segments Wine and Spirits managed to perform at around the same level as in the comparison period, while we had expected a decline of around 5%. Anora's Wine segment both outperformed the declining monopoly markets and increased its market share in Denmark. In addition, sales were supported by the entry of wine with 8% alcohol content in the shops in Finland. In the Spirits segment, growth came particularly from Sweden and market shares remained stable, according to the company.

Result met our expectations

Anora's result improved slightly from the comparison period and was almost in line with our expectations in terms of adj. EBITDA. Higher than forecast revenue meant that the margin fell short of our expectations. By segment, Wine was in line with our expectations, Spirits and Industrial slightly exceeded our expectations, while the Others line was more negative than we expected. The comparison period was particularly weak in the Wine segment, while the beverage segments improved their profit and margin in comparison and Industrial's result deteriorated as expected due to lower prices and volumes. Gross margin was slightly below our expectations in all segments. In connection with the results, Anora also announced a change in the head of its Industrial segment.

Anora's cash flow from operating activities was 4 MEUR negative due to the increase in working capital. The figure for the comparison period (44 MEUR positive) was significantly boosted by the sale of trade receivables. Anora's net debt/adj. EBITDA was 2.8x at the end of the quarter, close to the company's target level (below 2.5x). 

Guidance unchanged, our estimate is at its lower end

Anora reiterated its full-year outlook and expects an adjusted EBITDA margin of 75-85 MEUR in 2024 (vs. 68 MEUR 2023). The company also reiterated its market outlook, expecting volumes in key markets to be "slightly lower" than in 2023. In Finland, Anora believes that the decline in Alko sales will be "mostly compensated" by wine sales to retailers. For the last 12 months, the group's adjusted EBITDA is around 72 MEUR, so the trend of improving results needs to continue throughout the year to reach the guidance. Our forecast for the full year's adj. EBITDA is 76 MEUR, which at first glance does not appear to be under any material pressure to change.