ALTIA — Earnings Release 2019

Feb 13, 2020

Altia Plc’s Financial Statements Bulletin 2019: Solid Q4 supported full-year profitability improvement

Altia Plc’s Financial Statements Bulletin 2019: Solid Q4 supported full-year profitability improvement

Altia Plc  Stock Exchange Release  13 February 2020 at 8:30 am EET

Altia Plc’s Financial Statements Bulletin 2019: Solid Q4 supported full-year
profitability improvement

This release is a summary of Altia Plc's Financial Statements Bulletin 2019. The
complete report is attached to this release and is also available on the company
website at www.altiagroup.com/investors.

January–December 2019 compared to January–December 2018

· Reported net sales were EUR 359.6 (357.3) million
· In constant currencies, net sales grew by 1.5% compared to previous year
· Net sales of Finland & Exports segment declined to EUR 128.6 (133.8) million
· Scandinavia segment’s net sales were EUR 120.7 (117.7) million; in constant
currencies net sales grew by 5.3% compared to previous year
· Altia Industrial’s net sales were EUR 110.2 (105.8) million
· Comparable EBITDA was EUR 44.8 (40.0) million, 12.4% (11.2%) of net sales
· Comparable EBITDA without the impact from IFRS 16 standard was EUR 41.0
million, 11.4% of net sales
· Reported EBITDA was EUR 43.1 (34.0) million, 12.0% (9.5%) of net sales
· Net debt / comparable EBITDA was 0.6 (1.2), excluding the IFRS 16 impact,
the ratio was 0.4

October–December 2019 compared to October–December 2018

· Reported net sales were EUR 110.1 (110.9) million
· In constant currencies, net sales grew by 0.2% compared to previous year
· Comparable EBITDA was EUR 19.7 (15.9) million, 17.9% (14.3%) of net sales
· Comparable EBITDA without the impact from the IFRS 16 standard was EUR 18.8
million, 17.1% of net sales
· Reported EBITDA was EUR 19.8 (14.4) million, 18.0% (13.0%) of net sales

Dividend proposal by the Board of Directors

In line with Altia’s dividend policy, the Board of Directors proposes to the
Annual General Meeting that a dividend of EUR 0.42 per share be paid for the
financial year 2019.

Altia’s refined strategy

In the annual strategy process Altia’s long-term strategic focus areas and
growth ambitions were reviewed. The choices made in the refined strategy will
support Altia’s profitable growth ambitions towards its financial targets, and
strengthen Altia’s position as one of the most sustainable spirits companies and
a leading Nordic drinks house. The long-term financial targets remain unchanged.

Key figures

Q4 19 Q4 18 2019 2018
Net sales, EUR million 110.1 110.9 359.6 357.3
Comparable EBITDA, EUR 19.7 15.9 44.8 40.0
million
    % of net sales 17.9 14.3 12.4 11.2
EBITDA, EUR million 19.8 14.4 43.1 34.0
Comparable operating 15.2 12.2 26.8 25.6
result, EUR million
   % of net sales 13.8 11.0 7.5 7.2
Operating result, EUR 15.3 10.7 25.1 19.7
million
Result for the period, EUR 10.4 8.6 18.4 15.1
million
Earnings per share, EUR 0.29 0.24 0.51 0.42
Net debt / comparable 0.6 1.2 0.6 1.2
EBITDA
Average number of 648 701 682 718
personnel

Comparable EBITDA without 18.8 - 41.0 -
IFRS 16 impact, EUR
million
Net debt/comparable EBITDA - - 0.4 -
without IFRS 16 impact

This financial statements bulletin 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.
Reconciliation of alternative key ratios to IFRS figures is presented in the
appendix on page 38.

CEO Pekka Tennilä:

“Looking back at previous year, I am pleased to see our net sales in constant
currencies and our profitability to improve after a solid fourth quarter
performance. Scandinavia segment, especially Sweden, showed a strong sales and
profitability improvement supported by another successful Blossa season. We
continued to work on our sustainability roadmap with ambitious targets set for
the future. Furthermore, we have refined our strategy to support our profitable
growth ambitions towards our financial targets.

In 2019, our net sales in constant currencies grew by 1.5% driven by Scandinavia
and Altia Industrial segments. In the monopoly markets, Altia’s spirit sales
value grew in all three markets: Finland, Sweden and Norway. The growth in wine
was driven by a strong performance in Sweden. In the Altia Industrial segment
net sales growth was driven by higher prices and good volume development in
industrial products. In 2019, Altia’s net sales totalled EUR 359.6 million.

Within the Nordic core brands, especially our grain-based spirits brands such as
Koskenkorva Vodka and O.P. Anderson Aquavit have developed well during the year
supported by successful product launches. For the Christmas season, we had a
strong line-up of both traditional and novelty glöggs. Blossa had an exceptional
season driven by novelties such as the sparkling Blossa in Sweden as well as new
low and non-alcoholic glöggs.

Our profitability improved during the solid last quarter. In 2019, comparable
EBITDA grew to EUR 44.8 million. This positive development was supported by
efficiency initiatives and implemented price adjustments during the year.

I am especially pleased that our cash flow from operations significantly
improved to EUR 52.6 million. The strong cash flow and our solid financial
position enables a growing dividend payout. The Board of Directors proposes to
increase the dividend by EUR 0.04 to EUR 0.42 per share to the Annual General
Meeting.

Sustainability has for long been a strategic priority and key success factor for
Altia and forms an intregral part of our refined strategy. In December, we
published Altia’s Sustainability Roadmap extending to 2030, in which our key
goal is to make Altia’s production carbon-neutral by 2025. Importantly,
sustainability is also at the core of our brands such as Koskenkorva Vodka, and
guides our innovation work and packaging development.

In our annual strategy process, we have reviewed our long-term strategic focus
areas and growth ambitions. We build our refined strategy on our two core
strengths: the Nordic distillery that masters sustainable and high-quality grain
-based spirits, and the best route to market and channel excellence for our
brands and our partners. To strengthen our growth, we aim to take our brands to
new growing markets. We are committed to carbon neutral production by 2025 and
to develop more value-added products from barley.

Our financial targets remain unchanged. In the long-term, we aim for an annual
net sales growth of 2% and an comparable EBITDA margin of 15%. We also aim to
keep the net debt to comparable EBITDA ratio below 2.5x and to distribute at
least 60% of the result to our shareholders.

For 2020, we expect comparable EBITDA to be at the same level as or higher than
in 2019 (2019: EUR 44.8 million). 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.”

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.

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

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).

Annual General Meeting 2020

Altia Plc’s Annual General Meeting (AGM) 2020 is planned to be held on 25 March
2020 in Helsinki. The notice to and instructions for the AGM will be available
on Altia’s website.

Financial calendar 2020

The Annual Report 2019 including the financial statements, Board of Directors'
report, Auditor's report, the Corporate Governance statement and the
remuneration statement will be published in English and Finnish on Altia’s
website during week 10 (the week starting on 2 March).

Altia Plc will publish financial reports in 2020 as follows:

· 29 April: Business Review for January-March 2020
· 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
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 Financial Statements Bulletin 2019. To join the conference call,
please dial in and register 5–10 minutes earlier on the following numbers:

FI: +358 981 710 310

SE: +46 856 642 651

UK: +44 333 300 0804

US: +1 855 857 0686

PIN: 10900613#

To access the audio webcast go to: https://altia.videosync.fi/2019-q4
-teleconference

Presentation material can be found at: www.altiagroup.com/investors

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 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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