ALTIA — Earnings Release 2019

Aug 15, 2019

Altia Plc January-June 2019: Good net sales growth in first half, initiatives to improve profitability in progress

Altia Plc January-June 2019: Good net sales growth in first half, initiatives to improve profitability in progress

Altia Plc Stock Exchange Release 15 August at 8:30 am EET

Altia Plc Half-Year Report January-June 2019: Good net sales growth in first
half, initiatives to improve profitability in progress

This release is a summary of Altia Plc's Half-Year Report January-June 2019. The
complete report is attached to this release and is also available on the company
website at www.altiagroup.com/investors.

January–June 2019 compared to January–June 2018

· Reported net sales grew by 2.7% to EUR 165.0 (160.6) million
· In constant currencies, net sales grew by 3.5%
· The Finland & Exports segment’s net sales were EUR 59.6 (62.5) million
· The Scandinavia segment’s net sales were EUR 50.7 (49.9) million; in
constant currencies net sales grew by 4.1%
· Altia Industrial’s net sales were EUR 54.7 (48.2) million
· Comparable EBITDA was EUR 13.7 (13.8) million, 8.3% (8.6%) of net sales
· Comparable EBITDA without the impact from IFRS 16 standard was EUR 11.7
million, 7.1% of net sales
· Reported EBITDA was EUR 13.5 (9.3) million, 8.2% (5.8%) of net sales
· Net debt / comparable EBITDA (rolling 12 months) was 2.0 (1.8), excluding
IFRS 16 impact ratio was 1.8

April–June 2019 compared to April–June 2018

· Reported net sales were EUR 91.2 (87.1) million
· In constant currencies, net sales grew by 5.4% compared to last year
· Comparable EBITDA was EUR 9.4 (8.7) million, 10.4% (9.9%) of net sales
· Comparable EBITDA without the impact from IFRS 16 standard was EUR 8.5
million, 9.3% of net sales
· Reported EBITDA was EUR 9.2 (8.3) million, 10.1% (9.5%) of net sales
· The timing of Easter in the second quarter affected the year-on-year
comparison

· Guidance remains unchanged

Key figures

+----------------------------------+-----+-----+-----+-----+-----+
| |Q2/19|Q2/18|H1/19|H1/18|2018 |
+----------------------------------+-----+-----+-----+-----+-----+
|Net sales, EUR million |91.2 |87.1 |165.0|160.6|357.3|
+----------------------------------+-----+-----+-----+-----+-----+
|Comparable EBITDA, EUR million |9.4 |8.7 |13.7 |13.8 |40.0 |
+----------------------------------+-----+-----+-----+-----+-----+
|    % of net sales |10.4 |9.9 |8.3 |8.6 |11.2 |
+----------------------------------+-----+-----+-----+-----+-----+
|EBITDA, EUR million |9.2 |8.3 |13.5 |9.3 |34.0 |
+----------------------------------+-----+-----+-----+-----+-----+
|Comparable operating result, EUR |5.0 |5.2 |4.7 |6.8 |25.6 |
|million | | | | | |
+----------------------------------+-----+-----+-----+-----+-----+
|    % of net sales |5.5 |5.9 |2.9 |4.2 |7.2 |
+----------------------------------+-----+-----+-----+-----+-----+
|Operating result, EUR million |4.8 |4.8 |4.5 |2.3 |19.7 |
+----------------------------------+-----+-----+-----+-----+-----+
|Result for the period, EUR million|3.6 |3.6 |4.0 |1.7 |15.1 |
+----------------------------------+-----+-----+-----+-----+-----+
|Earnings per share, EUR |0.10 |0.10 |0.11 |0.05 |0.42 |
+----------------------------------+-----+-----+-----+-----+-----+
|Net debt / comparable EBITDA, |2.0 |1.8 |2.0 |1.8 |1.2 |
|rolling 12 months | | | | | |
+----------------------------------+-----+-----+-----+-----+-----+
|Average number of personnel |705 |742 |701 |723 |718 |
+----------------------------------+-----+-----+-----+-----+-----+
| | | | | | |
+----------------------------------+-----+-----+-----+-----+-----+
|Comparable EBITDA without IFRS 16 |8.5 |- |11.7 |- |- |
|impact, EUR million | | | | | |
+----------------------------------+-----+-----+-----+-----+-----+
|Net debt/comparable EBITDA, |- |- |1.8 |- |- |
|rolling 12 months without IFRS 16 | | | | | |
|impact | | | | | |
+----------------------------------+-----+-----+-----+-----+-----+

The Half-Year Report has been prepared in accordance with the International
Financial Reporting Standards (IFRS) and IAS 34 Interim Financial Reporting as
approved by the EU. The figures in the report are unaudited. A reconciliation of
alternative key ratios to IFRS figures is presented in the Half-Year Report on
page 35.

CEO Pekka Tennilä:

“We are pleased to see reported net sales growing by 2.7% to EUR 165.0 (160.6)
million during the first half of 2019. In constant currencies, net sales grew by
3.5% compared to last year. In the second quarter, reported net sales grew by
4.7% to EUR 91.2 (87.1) million and in constant currencies by 5.4%. In the
Scandinavia segment, growth in wine and price increases are contributing to net
sales growth. We are especially pleased with the development in the Scandinavia
segment in the second quarter with net sales growing by 7.8% in constant
currencies. Also Altia Industrial’s net sales grew mainly driven by price
increases following the high barley cost and good volume development.

Our cash flow from operating activities has improved in the second quarter and
first half of the year as a result of measures taken to manage working capital
more efficiently. In January–June, cash flow from operating activities was EUR
-4.0 (-26.7) million.

In January–June, comparable EBITDA was EUR 13.7 (13.8) million and when
excluding the impact from the adoption of the IFRS 16 standard comparable EBITDA
was EUR 11.7 (13.8) million. The cost of barley, fx rates and the declining
volumes in all the monopolies have negatively affected profitability development
during the period. As an immediate action, we have implemented strict cost
savings measures throughout the organisation.

As previously communicated, we are working on initiatives that support topline
growth and create further efficiencies. Within revenue management, we made
further price adjustments in both Finland and Norway in all categories in the
second quarter. We have also proceeded with the optimisation of the alcohol by
volume (ABV) levels of selected spirits products, and the first new products
were introduced in the Finnish monopoly at the end of the second quarter. We are
expanding with new innovations in growing categories and in grocery trade. Some
of the recent novelties include for example Rum Ö, Explorer candy shots and
Koskenkorva Ginger. On the efficiency side, we focus on consolidation and
centralisation within procurement and further simplification of the supply
chain. Also, we are working with SKU management focusing especially on non
-profitable products.

The total wine and spirits volumes in all three monopolies declined during the
first half of the year. Specifically in Finland the volume decline has not
flattened out, as we previously have anticipated, rather the decline of 3.5% is
steeper than in the same period last year. The wine markets have also declined
in the Swedish and Norwegian monopolies, while we see a more positive
development in spirits in both countries.

The Koskenkorva distillery was included on the list of the most interesting and
inspiring companies in the circular economy compiled by the Finnish future fund
Sitra – we use 100 per cent of the barley used as a raw material in our
distillery. With the Green Company of the Year award received in 2018, this
shows that we are the frontrunners in the industry. Sustainability is important
for Altia and for our brands such as Koskenkorva Vodka, and we will continue to
build on this strength both in our home markets and in exports.

The passenger imports of spirits from the Baltics to Finland have been
increasing. Following the successive decisions by the Estonian and Latvian
governments to decrease alcohol taxes, it is expected that passenger imports
will continue to increase. The Finnish government’s plans to further increase
excise taxes in Finland would accelerate the decline of domestic alcoholic
beverage sales volumes, and consequently jeopardise the industry’s capacity to
invest in international growth.

The latest grain harvest forecast expects the total harvest to exceed last
year’s volumes, and the outlook for the barley harvest is also positive compared
to last year. The high barley cost continues to put pressure on Altia’s
profitability until the new harvest this autumn. The harvesting period has
started but the quality of the harvest will be clarified at the end of the third
quarter.

We repeat our guidance for 2019. We expect the comparable EBITDA to improve from
the 2018 level. The guidance assumes a normal barley harvest, a flattened out
market development in Finland, and growing markets in Sweden and Norway. In
addition, the impact from the implementation of the new IFRS 16 standard is
expected to improve comparable EBITDA by EUR 3-4 million.”

Outlook for 2019

Market outlook

The development of the Group’s business operations and profitability are
affected by the competitive environment, the overall economic outlook, imports
by consumers and changes in alcohol taxation. Uncertainty related to changes in
consumer buying behaviour and consumer demand continues.

Seasonality

Substantial seasonal fluctuations in the consumption of alcoholic beverages
affect Altia’s net sales and cash flow. The company typically generates large
amounts of its revenue and cash flow during the fourth quarter of the year, and
significantly lower amounts during the first quarter. In addition, excise taxes
related to the high season at the end of the year are paid in January, resulting
in large cash outflows at the beginning of the year.

Guidance

Guidance as published on 7 February 2019 remains unchanged: The comparable
EBITDA is expected to improve from the 2018 level.

The positive trend of Altia’s Nordic core brand portfolio is expected to
continue. Market development in Finland is expected to flatten out in comparison
to 2018 and the markets in Sweden and Norway are expected to grow. The negative
impact of the increased barley cost will be reflected in high raw material costs
especially in the first quarters of the year. The guidance assumes a normal
harvest in 2019.

In addition, the impact from the implementation of the new IFRS 16 standard is
expected to improve comparable EBITDA by EUR 3-4 million.

Financial calendar 2019

Altia will publish the Q3 Business Review for January–September 2019 on 7
November 2019.

Helsinki, 14 August 2019

Altia Plc

Board of Directors

Additional information:

Pekka Tennilä, CEO

Niklas Nylander, CFO

Contacts:

Analysts and investors: Tua Stenius-Örnhjelm, Investor Relations, tel. +358 40
7488864

Media: Petra Gräsbeck, Corporate Communications, tel. +358 40 767 0867

Conference call and audio webcast:

Altia will host a conference call and audio webcast for analysts and investors
in English today at 11 am EET. CEO Pekka Tennilä and CFO Niklas Nylander will
present the Half-Year Report. To join the conference call, please dial in and
register 5–10 minutes earlier on the following numbers:

Finland: +358 981 710 310

Sweden: +46 856 642 651

United Kingdom: +44 333 300 08 04

United States: +185 585 706 86

Pin: 54934041#

The conference call can also be followed online. To access the audio webcast and
the presentation material please go to: www.altiagroup.com/investors

A recording of the audio webcast will be available later the same day on Altia’s
website.

Distribution:

Nasdaq Helsinki Ltd

Principal media

www.altiagroup.com
Altia is a leading Nordic alcoholic beverage brand company operating in the
wines and spirits markets in the Nordic and Baltic countries. Altia wants
to support a development of a modern, responsible Nordic drinking
culture. Altia’s key exports brands are Koskenkorva, O.P. Anderson and Larsen.
Other iconic Nordic brands are Chill Out, Blossa, Xanté, Jaloviina, Leijona,
Explorer and Grönstedts. Altia’s net sales in 2018 were EUR 357.3 million and
the company employs about 700 professionals. Altia’s shares are listed on Nasdaq
Helsinki.  www.altiagroup.com (https://emea01.safelinks.protection.outlook.com/?u
rl=http://www.altiagroup.com/&data=02|01|tua.stenius
-ornhjelm@altiacorporation.com|2585bdb59e634e3166bb08d68cc5cb74|c32b30ff58714a7da
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ugAvHBM=&reserved=0).

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