Hello all, Anora Group quarter two this morning, and we have here for an interview. CEO Kirsi Puntila and CFO Stein Eriksson, as usual. Great, so let's start with the usual question. I think maybe with Kirsi, how did Q2 go from the company's perspective? Be very pleased.

With Q2, and I think most importantly the fact that our mid-term strategy, Fit for Focus, which we launched and communicated last year in November in our Capital Markets Day, is starting to show its power at the moment, and from the numbers perspective the parameter that is the most important for us is the comparable EBITDA, and that rose by 14.6%. Resulting in 60 million euros, which is in fact 2 million better than last year, and secondly the gross profit percentage was also at a very strong level at 46.7%, and what makes us really glad is that this improvement in profitability is throughout all our segments, spirits, wine and industrial, which in fact makes the first half year of 2024 the strongest in the history by Anora, so that of course makes us really happy. If you then move away from the P&L to the balance sheet,

there also the net debt decreased to 177 million euros, and as we promised at the Capital Markets Day that we're aiming at leverage being below 2.5. So that's what we did, the leverage is 2.4, and then now continuous work on the inventory reductions, which continue very strongly, but having said that, in all transparency of course the one element that we are still working hard on is the top line and net sales, which minus 3%, although it was slightly less decline than it has been the past quarters, but still that is definitely something that we need to focus on, that is growth and it is winning market share from the competition, so that's something we still need to work on, but overall we are very, very pleased with the quarter, good.

Then maybe Steinbeck. The next one, market was still going down quite a bit actually, and now how do you see now? There is one, we had some story impacts in between the quarters, but if you look at H1 in totality, has it been in line with your expectations, or even weaker, or how would you describe it?

I think what we communicated there in the Capital Markets Day, the 5th of November last year, there is that we expected spirits to be down 3.3% and wine down 2.3%. That being said, we see now that spirits is a little bit better, wine is a little bit worse, but I think overall it's pretty aligned with our expectations.

Then regarding the Q2 numbers, at least to me the industrial segment was kind of the clear surprise, with quite strong earnings. How would you describe that? Is it structurally getting to a better profitability compared to what it has been, or is it some kind of quarterly variation which we are seeing?

No, I think right now we see very good progress in the industrial area, of course. It is dependent on several factors. First of all, as you know, we have a big contract manufacturing contract, of course partly dependent on that, but if I would look at the underlying improvements in the industrial area in our factories and also in our logistics business in Norway, I would say that's a sustainable level, good.

Then in wine, maybe. Kirsi, you commented that you have gained market share in Sweden, but then you have lost volumes and I think market shares also in Finland and Norway. So how is the overall market share in the Nordics developing now?

If you look at all the.

segments, wine, spirits and industrial, you can basically describe Q2 as industrial and spirits being the winners of the quarter, and we are still struggling with wine, majority of the decline coming from Denmark, then of course the earlier lost Filler business volumes in wines and then the spirits partner business, but market share-wise. Yes, we are strengthening our number two position in Sweden, so that's where we are gaining market there, but yes, as you can see from the monopoly reports, we are losing a little bit of market share in Finland and Norway still, so those are areas where we are working on trying to find innovations to fill the white gaps that we still have in the portfolio, so that's something that the teams are now working really hard on, and yes.

Right, and then continuing on wine, the EBITDA was down and all that, you had a quite nice improvement in the gross profit. So it seems you are not able to adapt fixed costs to the lower volumes, and all the work continues.

Obviously. Wine is probably one of the key areas of improvement in the Fit for Focus as well, and we have a new SVP for that since four months ago now. Anna Möller in Sweden, who is working really hard with her team to work on different aspects of the wine. So it takes a little bit more time, but obviously the ambition is high and we want to improve not only the profitability, but also the market share and top line with wine.

Then maybe the next one to Stein again, you did really comment the cost inflation pressure or impact of that in the report, only that it did not have any material impact in Q2, but how do you see going forward kind of all price impact to the logistics, freight and packaging? What will they have? An extremely good question.

If I can comment, of course. We are very happy with the gross margin improvement that Kirsi mentioned, but that being said, in first half we have seen inflation in two areas. And that is mainly transportation, logistics costs, as well as energy costs. I think exactly those two areas going forward, with everything that is happening in the world,

we still believe that we will have some cost inflation in the second half, but maybe I'm a little bit less worried now than what I was after Q1, and then of course, as you know, we are buying one third of all Finnish barley that comes out for sale, of course. We are very exposed to Finnish barley. So far it looks fairly okay, but then again you have the wheat transportation that is blocked now from Ukraine in the Black Sea, and then also you have the African swine fever that potentially can affect our prices going forward, so we still say it's where we are vulnerable, but so far I would say we are in control of it.

Some increase in pressure, but nothing material.

No, and we have managed to absorb that also in the industrial area very nicely, I'd say.

That's very clear. Then we had in the summer in Finland some changes in the alcohol legislation, and a couple of things actually changed. So can you maybe describe how that will impact your business? So.

Indeed, the government now ratified the new alcohol law and there are basically four elements. One is the home delivery, so now basically the retail channels are allowed to start delivering home alcohol beverages which are under 8% alcohol by volume. Second element was the distance sales, which has been legal up until now, but now the law was clarified on that. Thirdly, Alko, as they have communicated themselves, has expanded opening hours. Expanded opening hours, you can open on Sundays and until nine o'clock. And then the fourth element is liberalization of the alcohol marketing regulation, and none of them are really breaking the bank for us, and we've been on top of all these changes all along, but on the short term, in the short term,

I think it's the marketing legislation which is affecting us the most, as we can now finally communicate about our beautiful brands such as Koskenkorva and Jaloviina also for the Finnish audiences in social media channels, which the competition has been able to do already up until now, so we feel that now we are on a level field with our competition, so that's something in the short term that affects us the most.

You don't see any of these, sorry, this combined, having any material impact on the market or competitive situation?

To me, the law will come into effect only first of January next year, and we are closely observing how the consumers are reacting. It obviously depends on the price point, where the price will land. We have the capabilities, we have a channel in Astore app for example, so if needed we can ramp up the webshop immediately, so that is not a problem at all, but we're not going to make any massive changes because of that. We will see how the consumer reacts.

Then you also announced today a pretty big partner deal, or intent at this point, with Bacardi in Sweden and Norway, so can you describe a bit that valid.

Was exactly what you said, it was only a letter of intent, so of course we're very happy about that. We have been in close dialogue with the Bacardi team for a while already, and of course, we hope to be able to sign the contract eventually, but right now it is only a letter of intent for Sweden and Norway as mentioned, in all channels except the ready-to-drink, I believe, in Norway.

And how should investors think about that deal? It's a fairly sizable increase in net sales, obviously, and the profitability is limited in distribution, but based on the future business do you need to increase some costs when you take a big deal like that, or is it kind of easy to just do with the current organization?

All I can say. Of course. The portfolio is absolutely fantastic, and that would further strengthen our position as a number one wine and spirits player here in the Nordics, so of course. It is an incredible portfolio, and the brands that Bacardi presents are perfectly fitting the white spots that we have at the moment, so it's a beautiful portfolio, but still, as said, we are still in negotiation process, so we don't comment anything on people side, and that remains to be seen. We will communicate as soon as we know more, OK.

That's clear. Then finally maybe, Stein, your take, the last one on outlook. You made in the guidance you are 5 million ahead for H1 and guiding maybe something similar to H2, but can you just say, are there some changes in the underlying assumptions, or what are you seeing? We talked about the costs a bit, but you know, we kept.

We kept the guidance of 74 to 79 million. Like you say, we are a little bit above last year, 2.8 million to be specific, but also then remember that H1 is only one third of the full-year annual EBITDA, so we still have two thirds left, and given also the uncertainty like we did talk about with potentially more cost increases, we still keep the guided level. And Kirsi, if you have any. No, exactly.

I think one has to remember that markets are still fairly soft, and we don't see any changes in them in the upcoming months, and the bracket that we are guiding is actually quite wide anyway, so we strongly believe that it's somewhere there, no need to change that just yet.

This was clear, thank you very much for the interview, all the best for the rest of the year. Thank you.