ALTIA — Earnings Release 2020

Apr 29, 2020

Altia Plc January-March 2020: Profitability improved in a solid Q1, uncertainty for the rest of the year, guidance is suspended

Altia Plc January-March 2020: Profitability improved in a solid Q1, uncertainty for the rest of the year, guidance is suspended

Altia Plc  Stock Exchange Release  29 April 2020 at 8:30 am EET

Altia Plc Business Review January-March 2020: Profitability improved in a solid
Q1, uncertainty for the rest of the year, guidance is suspended

This release is a summary of Altia Plc's Business Review January-March 2020. The
complete report is attached to this release and is also available on the company
website at www.altiagroup.com/investors.

January–March 2020 compared to January–March 2019

· Reported net sales were EUR 68.2 (73.8) million
· In constant currencies, net sales declined by 6.0% in comparison to previous
year
· Net sales of Finland & Exports segment were EUR 23.8 (25.0) million
· Scandinavia segment’s net sales were EUR 22.0 (21.7) million; 6.7% growth in
constant currencies
· Altia Industrial’s net sales were EUR 22.4 (27.1) million
· Comparable EBITDA was EUR 5.5 (4.3) million, 8.1% (5.8%) of net sales
· EBITDA was EUR 5.4 (4.3) million, 8.0% (5.8%) of net sales
· Net debt / comparable EBITDA (rolling 12 months) was 1.1 (2.2)

· Altia suspends its guidance for 2020 due the uncertainties related to COVID
-19. A new guidance is provided if the impacts of COVID-19 on the operating
environment and business conditions can be assessed in a reliable manner.

Key figures

                                             Q1 20  Q1 19   2019

Net sales, EUR million 68.2 73.8 359.6
Comparable EBITDA, EUR million 5.5 4.3 44.8
    % of net sales 8.1 5.8 12.4
EBITDA, EUR million 5.4 4.3 43.1
Comparable operating result, EUR million 1.1 -0.3 26.8
   % of net sales 1.6 -0.4 7.5
Operating result, EUR million 1.0 -0.3 25.1
Result for the period, EUR million 1.3 0.3 18.4
Earnings per share, EUR 0.04 0.01 0.51
Net debt / comparable EBITDA, rolling 12 months 1.1 2.2 0.6
Average number of personnel 642 698 682

CEO Pekka Tennilä:

“The outbreak of the COVID-19 turned into a global pandemic with governments
issuing strict restrictions on the movement of people and policies for social
distancing. This is affecting our operating environment and ways of working in a
very significant way. Our key priorities now are the health and safety of our
employees and business continuity. We are following the recommendations and
instructions from the governments and health authorities of the countries we
operate in. Those of our employees who have the possibility to work remotely
have been doing so since mid-March. At the production facilities where personnel
is needed on-site, we have further strengthened the hygiene measures and
routines. As a company, our important contribution to the society in these
exceptional times is providing denatured ethanol for hand sanitizers to critical
fields such as the medical and healthcare sectors. I am very proud of our
employees who make all this possible and we will continue to deliver as much
denatured ethanol as possible to the critical sectors in terms of security of
supply. In addition, we are continuously in close contact with our partners and
suppliers to ensure the availability of products and raw materials – so far all
our operations have run without any major disruptions. Due to the crisis, travel
retail and on-trade channels, which account for about 20% of Altia’s consumer
beverage sales, have been close to zero since mid-March.

During the first quarter of 2020, Altia’s net sales declined by 6.0% in constant
currencies. The decline was due to the phasing of Altia Industrial’s contract
manufacturing volumes and the barley price normalising after the previous year’s
high price level. In the Finland & Exports segment, net sales declined despite
the higher volumes in the monopoly channel in the first quarter. The decline was
driven by the closing of travel retail and on-trade channels. In the Scandinavia
segment the good development from last year has continued and in constant
currencies net sales grew by 6.7%. The higher monopoly volumes in March have
offset the decline in on-trade. We see a negative impact from the weak SEK and
NOK, and the business transfer in Denmark last year.

Profitability improved in the first quarter compared to the previous year. At
the initial phase of the outbreak of COVID-19 we saw a positive impact related
to channel mix and exceptionally high volumes of denatured ethanol for hand
sanitizers. In addition, the normalisation of the barley price has impacted
profitability positively. Comparable EBITDA was EUR 5.5 (4.3) million, which is
8.1% (5.8%) of net sales.

As of the second quarter, we will face the full impact of the crisis in our
operations. We assume the travel retail, exports and on-trade channels to be at
or close to zero in the second quarter. We have seen consumers shifting their
purchases of alcoholic beverages to the monopolies, but this will not compensate
the shortfall. As a response to the changes in our operating environment, we
have taken measures to adjust our cost structure. We have frozen marketing
activities in closed sales channels and have implemented strict cost saving
measures in all functions. We are also implementing temporary lay-offs or part
-time work in Finland, Sweden and Norway. In the second quarter, we are focusing
our sales and marketing efforts on the open sales channels with our digital
platforms Viinimaa in Finland and folk-o-folk in Sweden playing an increasingly
important role.

The liquidity position of the Group has remained stable throughout the crisis.
We are pleased that we have had good access to funding in the challenging debt
market. We will continue to focus on securing the liquidity during the upcoming
months.

Looking beyond the crisis, we are continuing to implement our strategy and are
focusing on selected strategic choices. In innovations we concentrate on
executing monopoly tenders, creating novelties for the growing gin, liqueur and
rum categories as well as developing low-alcoholic beverages for the grocery
trade. In packaging development, we are working towards our long-term target of
making all packaging 100% recyclable.

Visibility for the rest of the year is poor and forecasting the COVID-19 impacts
on the operating environment reliably is difficult. Therefore, we are suspending
our guidance for 2020. We will provide a new guidance if the visibility improves
and the impacts of COVID-19 on Altia’s operating environment and business
conditions can be assessed in a reliable manner.”

Outlook for 2020

Market outlook

The development of the Group’s business operations and profitability are
affected by the competitive environment, the overall economic outlook and
changes in alcohol taxation and regulation. Uncertainty related to changes in
consumer buying behaviour and consumer demand continues. In addition, overall
fluctuations of direct product costs affect the Group’s profitability.

COVID-19 update: Uncertainty in the operating environment is high. The recovery
of the market depends on the duration of the governmental restrictions,
limitations on movement and travelling as well as the recommendations on social
distancing. The pace of recovery is difficult to estimate and is expected to
vary across sales channels.

Seasonality

There are substantial seasonal fluctuations in the consumption of alcoholic
beverages impacting the net sales and cash flow of Altia. The company typically
generates large amounts of its revenue and cash flow during the fourth quarter
of the year, whereas the first quarter of the year is significantly lower. 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

Altia suspends its guidance for 2020 due the uncertainties related to COVID-19.
A new guidance is provided if the impacts of COVID-19 on the operating
environment and business conditions can be assessed in a reliable manner.

The restrictions and instructions from governments and health authorities have a
significant impact on Altia’s operating environment. Visibility for the rest of
the year is poor and forecasting the COVID-19 impacts on the operating
environment reliably is difficult. Uncertainty in the economy remains at a high
level and the risk of an economic slowdown is high.

The recovery of the consumer beverage sales depends on the duration of the
governmental restrictions, limitations in movement and travelling as well as the
recommendations on social distancing. The pace of recovery is difficult to
estimate and is expected to vary across sales channels: on-trade channels could
be expected to recover faster than travel retail.

Previous guidance published on 13 February 2020:

The continued decline in market volumes in Finland puts pressure on
profitability growth. The uncertainties in global travelling impacts border
trade and travel retail regionally and in Asia. Guidance assumes a normal barley
price level following the 2020 harvest. Industrial services are impacted by
phasing of volumes between the years.

The comparable EBITDA is expected to be at the same level as or higher than in
2019 (2019: EUR 44.8 million).

Financial calendar for 2020

Altia will publish financial reports in 2020 as follows:

· 19 August: Half-Year Report for January-June 2020
· 6 November: Business Review for January-September 2020

Additional information:

Pekka Tennilä, CEO

Niklas Nylander, CFO

Contacts:

Analysts and investors: Tua Stenius-Örnhjelm, Investor Relations, tel. +358
40 748 8864

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

Results presentation:

The Q1 results presentation will be held at 11:00 am as a Microsoft Teams
Meeting. We recommend that participants join the event using the online meeting
option. Call-in option is also available.

Option A: Online meeting

Access meeting online here: Altia's Q1 results
presentation  (https://teams.microsoft.com/l/meetup
-join/19%3ameeting_ODc0MzQ5ODgtZTAzNS00MDA1LWJjNzgtOGVkYzg3ZWU0OWVj%40thread.v2/0
?context=%7b%22Tid%22%3a%22c32b30ff-5871-4a7d-a29e
-6f63e6b0ebfd%22%2c%22Oid%22%3a%22d962bdab-ca8e-4e3f-9cc3-2f868d5a7ef3%22%7d)

Remember to keep your microphone on mute.

Option B: Call-in

Call into the meeting about 5 minutes earlier at the below numbers. Remember to
mute your microphone.

FI: +358 9 2310 6678

SE: +46 8 502 428 54

UK: +44 20 3443 9579

US: +1 917-781-4622

Conference ID: 800 886 687#

Presentation material and on-demand recording

The presentation material will be shared in the online meeting and it can be
downloaded on Altia’s website at: www.altiagroup.com/investors. A recording of
the event will be available later at 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 flagship 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 2019 were EUR 359.6 million and
the company employs about 650 professionals. Altia’s shares are listed on Nasdaq
Helsinki.  www.altiagroup.com (https://emea01.safelinks.protection.outlook.com/?u
rl=http%3A%2F%2Fwww.altiagroup.com%2F&data=02%7C01%7Ctua.stenius
-ornhjelm%40altiacorporation.com%7C2585bdb59e634e3166bb08d68cc5cb74%7Cc32b30ff587
14a7da29e6f63e6b0ebfd%7C0%7C1%7C636851178498173052&sdata=ieSBZyTDawyVcCqpF1RCYITo
I%2Bk%2FEosQeClTugAvHBM%3D&reserved=0).

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