Hello, all. Anora reported their Q3 this morning, and we have here for interview CEO Kirsi Puntila and CFO Stein Eriksen, as usual. Hi. Hello. Hello. Welcome. So let's start with the usual easy and simple question. How did the Q3 go from your perspective?

Yeah. Listen, I mean, if you've been given a task to create a turnaround strategy for the company, and then you start seeing the execution becoming successful, you have to be happy, right? But in all seriousness, there are two takeouts that we would like to have after this Q3. First and foremost, the fact that this was the first quarter since Q2 2022 when we actually saw top line growth, modest, yes, 0.5%. But still, we celebrate every victory in this company. And secondly, this is fundamentally a profitability strategy. And now since our Capital Markets Day a year ago, we've been able to demonstrate double-digit growth in EBITDA every quarter. So that, of course, one has to consider a success, with EBITDA at €20.2 million, which is 12.5% up from last year. So those are the two key measures of success, I would say.

But on top of that, gross margin percentage keeps on delivering and is at a record high. And it's a very broad-based improvement in all of the segments: wines, spirits, and industrial. And then at the same time, our balance sheet is getting stronger and stronger. Our net debt was down to €188 million. And inventories are down again by 9%. So in most of the parameters that we're following, I would consider Q3 to be successful. And we're very happy about it. Yeah. Good.

The improvement came mainly from the Industrial segment if we look at the EBITDA level. So Stein, can you open up a bit? You have some different businesses and components there. What's happening there, and what was driving the improvement?

Industrial can be a little bit difficult. A difficult segment to understand, right? But I try to split it up into three parts. First of all, in industrial, we are doing contract manufacturing, mainly of Finlandia vodka for Coca-Cola Hellenic. So the volumes there have been pretty good both in Q3 and year to date. So that's point number one. Also, when we produce a lot of ethanol, then we also produce a lot of side products. So that also means that the sales of starch and ethanol feed have been good. So that's point number one.

Point number two, we have factories, and especially the Koskenkorva factory has been running very efficiently and well, so that's point number two. And point number three, we have a logistics operation in Norway, namely Vectura, that has also continued to perform well both in the quarter and year to date. So those are mainly the three elements for the improvement in industrial.

So basically all the parts of the business have basically.

Yes. Yeah. Yeah. Easily said, yes. Yes.

Very, very good. Yes. How about then if we look at the Wine & Spirits segment? They are both in Q3 and year to date roughly at last year's levels. Is that kind of in line with your targets and expectations, or did you expect them also to kind of contribute to the overall improvement?

Well, very much in line. I mean, in spirits, I said gross profit was improving in all of the segments and across. But in terms of top line, this was the last quarter when we see some comparisons with spirits so that we see the earlier lost partners. Partner loss is still impacting, but it should be now done with. So that's one thing.

And then the wines. The truth of the story is that we still have some work to do there. I mean, we see some encouraging steps in terms of the market shares. I mean, market share in Sweden for wines has been already very, very strong in the past few quarters. And we continue to keep the number two position in Sweden. But there are also glimpses of hope elsewhere. I mean, Finnish market shares in wine in the monopoly channel are showing some very encouraging figures. But there's still some work to be done, obviously, in wines. Yeah. Okay. Okay.

Clear then. Earlier this month, you concluded the Bacardi distribution deal, which we talked about already last quarter. So can you elaborate on how that will impact and how the deal is kind of structured? Is it kind of that you are building the organization and the inventories yourself, and you're not acquiring anything from the previous manager?

Maybe I can start. I mean, yeah, we are ready to rock. So as of mid-November, we will start dealing with Bacardi portfolio business in Sweden and in Norway. And we're ready. We're ready to start. I mean, we're taking over the on-trade contracts, and everything is sort of, from the support point of view, ready to go. We're ready to go.

Then of course, we are building up the inventory gradually to get ready to sell the bottles. And finally, we have opened up some positions so that we can work with the increased volumes, but contractually, no, we did not hand over any people as such.

No, exactly. And does that kind of ramp-up of the business incur any meaningful cost for you, or is it basically business as usual?

Business as usual. And as we've said.

Officially as well, we're expecting up to €5 million net sales for Q4. So we don't see material impact on that business yet towards the end of the year. But then next year, for sure.

Next year is €25 million to €30 million. And then in Q4, we probably will build up inventory of around €5 million. Yeah. Yeah, exactly.

Good. Okay. Then if we look back a bit on your Fit, Fix & Focus program, which you announced a year ago, and then you targeted €20 million in cost savings already during this year, or starting already last year, end of last year. How has that now progressed? Is that kind of fully on your books already?

It's not fully in our books. I think from a run-rate perspective, we have achieved around 80% of the cost savings in procurement and rightsizing of the organization. Absolutely. We start to see effects. We'll also see some more effects going forward.

But especially when it comes to procurement, we will see most effects in 2027 because first of all, for example, glass bottles, you buy them in, you need to use the old ones, and then it needs to go through the inventory. So we will first see most effects in 2027. But like also mentioned in the analyst call, of course, we also see increased input costs. So that potentially can affect negatively. Yeah. Especially what we see so far this year is transportation and logistics cost and energy cost. So that's a little bit worrying. Yeah, yeah, yeah, yeah.

I was coming to that next. So how is that looking? If we look at the timeline, obviously we saw now we had a spike in the oil price and energies in the spring. And then it came down, and now we're getting into fall. So yes, I would guess it would also be kind of more pronounced towards next year rather than Q4, or how is it for you?

Yeah. So the first half, then we didn't see such big effects from that, but absolutely. Now in Q3, we start to see effects. And of course, I fear that we will see more negative effects into Q4 and especially going into 2025.

Yeah.

So unfortunately, we don't manage necessarily to take it out in prices immediately because we only have two pricing windows in Finland and Sweden, and three in Norway.

So yeah, yeah, I think you mentioned freight and energy now already. Yes. Yeah, exactly. Yes. I presume it will also hit your packaging at some point.

PET bottles and also glass bottles. Yes, yes, yes.

Can you open up kind of what kind of contracts there are? Do you have a long time before your packaging contracts renew to the higher prices, or how should we see it?

Half a year. So yeah.

So some delays.

Yes. Some delays. Yeah, yeah, yeah.

Good. Great. Then the outlook, you maintain the guidance for the full year. You are now already quite a bit ahead for nine months. And the full year guidance actually indicates that the lower end indicates that Q4 could be even below last year, even though you have been improving throughout this year. So why is that? What kind of risk do you see for Q4? Yeah.

Well, one has to remember that Q4 is 44%, 45% of the full year. So I think we want to be rather conservative than building up the expectations, because one has to remember that it is a huge quarter. And first and foremost, our key markets are still in decline, especially if you look at the monopoly channels in Finland and Norway in particular. So that outlook is still fairly negative. And secondly, as I mentioned, we have the energy and transportation costs now hiking up. So that will eventually then of course affect our cost structure.

And then thirdly, we are, good and bad, very dependent on our glögg sales. Thank you. Stein. And it's a little bit of a wild card always, in a way that, I mean, so far the weather has been way too warm for our liking. So typically when the Celsius degrees go below zero, then the glögg sales start to go up, and now it's been double-digit plus numbers. So that really remains to be seen, but we keep the guidance in the bracket. We've said €74 million to €75 million comparable EBITDA. And that's what we are committed to delivering.

Yeah, 45% of our result is in Q4. So we really need to deliver. Yeah, yeah, yeah, yeah.

That's logical. Okay. Let's see how the end of the year goes. Good luck for the important season for you. And thank you for the interview.

Thank you so much. Thank you.