Anora: Cost savings support earnings growth in coming years

Translation: Original published in Finnish on 11/6/2025 at 7:00 am EET.

We raised our medium-term forecasts slightly after Anora announced its plans for the coming years. Following the estimate changes, we raise our target price to EUR 3.5 (was EUR 3.3) and reiterate our Accumulate recommendation. A good dividend yield and earnings growth in the coming years provide a reasonable expected return, but weak growth prospects and subdued return on capital reduce the stock's attractiveness. 

Anora updated its targets and aims for a 15 MEUR earnings improvement by 2028

Anora updated its strategy and financial targets and presented them at its Capital Markets Day. The company's strategy and targets for the coming years focus largely on improving profitability and the core business, and less on, for example, international growth or acquisitions. We consider this a good thing, given Anora's situation and its weak acquisition history to date. We commented on the targets earlier here. The company targets an adjusted EBITDA of 85-90 MEUR in 2028, which means an improvement of 15 MEUR compared to the 70-75 MEUR guided for this year. The company expects market development to remain negative for the coming years, which is a weaker view than our previous expectations. Positively, the company is targeting gross savings of 40 MEUR in 2026-27, which will support earnings improvement even in a declining market. There was no clear single theme or factor for achieving the savings, but they are being sought from several sources. However, the savings are targeted in such a way that there should be sufficient resources for supporting and developing the business.

One significant factor in the overall picture is the personnel savings previously announced by the company, which amount to 7 MEUR. We believe that the company will also make further personnel reductions during next year, as personnel costs account for almost half of its fixed costs. In our eyes, the targeted savings are relatively credible, as the company still has a surprising amount of room for efficiency improvements in its production network, IT systems, and procurement, following the merger of Altia and Arcus four years ago and the subsequent acquisition of Globus Wine.

We raised our medium-term earnings estimates

As Anora initiates quite strong savings measures, we believe these will support the company's earnings growth in 2026-27. We did not make changes to our 2025-26 operational forecasts, but we raised our 2027 forecasts by 3% for adjusted EBITDA and also our longer-term margin forecast. On the other hand, we lowered our expectations for revenue development. Our adjusted EBITDA forecast for 2028 is now 79 MEUR, so we do not believe Anora will achieve its earnings target, but it should still be able to achieve steady earnings growth in the coming years. Our forecast for this year is still at the lower end of Anora's guidance, so the risk of a profit warning remains.

Value creation still looks difficult

Although we believe Anora can improve its profitability by approximately 10 MEUR in the coming years, the company's return on capital will remain roughly at the level of our required return in our forecasts. The company's investment needs are small, and it continues to aim at freeing up working capital, which in our forecasts is only realized to a limited extent. The growth outlook for the longer term is also subdued, as we do not believe there is any growth in the alcohol market in sight.

Cash flow and dividend provide a sufficient expected return

Anora's 2025 P/E ~11x is at the midpoint of our acceptable multiple range. 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 3.5 per share.