Anora Q3'25: Guidance can be achieved after a good Q3

Translation: Original published in Finnish on 11/03/2025 at 07:00 am EET

Anora’s Q3 result exceeded our expectations despite the revenue decrease. The company reiterated its guidance, and we raised our estimates to the bottom end of the guidance. The company will host a CMD this week, where it will discuss its strategy and targets for the coming years. We expect a small earnings improvement in the coming years, but the weak growth outlook for the alcohol market limits the company's opportunities. We reiterate our Accumulate recommendation and EUR 3.3 target price, as the expected return remains reasonable.

Earnings improved more than we expected despite the revenue decrease

Anora’s revenue decreased by 4% in Q3, while we expected the same level as in the comparison period. The decrease occurred in all three segments. According to Anora, market volumes decreased by over 3% in the Nordics in Q3, so Anora's overall development is broadly in line with market trends. Despite weaker-than-expected revenue development, Anora was able to improve its adj. EBITDA to 18 MEUR, while we expected 16.5 MEUR. However, the beverage segments' earnings were in line with our estimates, and the positive surprise came from the Industrial segment. We commented on the result in more detail here.

Guidance was reiterated, our estimates rose to the bottom end

Anora reiterated its full-year guidance, expecting an adjusted EBITDA margin of 70-75 MEUR, while it was 69 MEUR in the comparison period. For the first nine months, the company is exactly at the comparison period's level of 40 MEUR. Therefore, the guidance suggests that Q4 earnings will be 30-35 MEUR, while the comparison period was 29 MEUR. With a better-than-expected Q3, our estimate rose to the lower end of the guidance, i.e. to 70 MEUR. A higher EBITDA estimate and lower financial cost estimates raised the 2025 EPS estimate by almost 20%. The changes in the earnings forecast for 2026-27 were marginal.

CMD this week

Anora will host a CMD on November 5, where it will provide more information about its actions and strategy update. We also expect the company to update its financial targets in this context. The strategy will target 2028, meaning it is for a shorter period than the company's current strategy, published in 2022, where the target year was 2030. Anora has so far targeted an adj. EBITDA margin of 16% and 3-5% growth (including acquisitions, but mainly organic). Both targets appear challenging, and we believe the company will decrease and/or reformulate its targets. Our estimates include only a slight margin improvement for the coming years, and the target for 2028 will likely be significantly above our estimates.

We expect an earnings improvement in the coming years, but value creation is difficult

While we believe Anora can improve its profitability in the coming years, we don't see it reaching a significantly higher earnings level than currently. This is partly due to the sluggish growth outlook for the alcohol market (and the risk of further market decline) and, in our view, the company's limited ability to significantly reduce its costs. We expect that Anora's returns on capital will remain at approximately the level of our required return in the coming years, so we do not expect the company to create value.

Cash flow and dividends provide a sufficient expected return

Anora's 2025 P/E ~10x is at the bottom of our acceptable multiples. Anora's expected return is higher than our required return, supported by dividend and earnings growth. Dividend plays a significant role and it alone reaches close to our required return. However, a modest growth profile and return on capital weaken the risk/reward ratio. The value of our DCF model is in line with the target price at EUR 3.3 per share.