Olvi Oyj Unsp/Adr

Welcome. Welcome to the OLVI Q3 Interim Report. Before we start, a few usual disclaimers and then the important introductions. Tina-Liisa Liukkonen, our CFO, and myself, Patrik Lundell, very happy to host you this afternoon or noon here in Finland to share how we've been progressing this year. We thought indeed to start while looking at a few of the highlights for the first nine months of this year. And as you know, many of you may recall, we've started activating our new strategies. This is the first year of our new strategy, where we have a particular focus in 2024 on our people. We've also ensured that we can elevate our data usage and improve on our processes and paid particular attention on reinstalling our profits towards the levels pre-COVID. We're very pleased with our progress and importantly, our ability to retain market shares. We've been able to grow in many categories and markets in a very, very competitive marketplace, whilst at the same time improving our profitability. And this speaks volumes about the strength of our brands, the appeal of our portfolio and the successful launches of many new products, which have been recognized, several of them, as the most successful launch in the respective countries in this year. The work that we've been doing has been broad-based. We've done significant improvements in our efficiency, so working on our in-house efficiency in our own operations. We've also seen the inflation on packaging and raw materials subside, even pause in some areas, even slightly improved from our perspective, but they remain on a historically high level. Additionally, of course, here in the northern parts of Europe, we've enjoyed a long, warm summer, and this has helped in part to offset some of the softness in consumer demand. So overall, for the first nine months of the year, significant steps forward in our own operations and a solid improvement in our profitability. Looking at the third quarter now more specifically, we're pleased to share our EBIT improvement. And I really want to emphasize that to a large extent, this improvement is driven by improving our own operational efficiency, where as one example, a concrete tangible example, we can reference the improved availability, particularly in the beer category in Finland. We've also addressed our portfolio and our price mix, again, particularly in Finland and Denmark. And I'll come back to that on the next slide. I mentioned the weather, but it's also worth saying that we're overlapping a relatively soft base from last year. Now having a closer look at the segment performance in the third quarter. For Finland, I referenced an improved availability, particularly in beer. On the other hand, we made some portfolio choices that has reduced the total volume. It's important to bear in mind that we are not losing the market. We're not losing our position as the leader. We retain more than 50% share in the beer category, and we see significant growth across a number of categories, even in our home market, mentioning waters as one. When we look at the Baltic region, again, bear in mind, we're talking about the three Baltic markets and Denmark. Now in this segment, we want to call out Denmark, where again, we've made some portfolio choices with the intention to improve our profitability. This has been successful and we continue our work in that market. So these portfolio choices combined with all these internal efficiency improvement initiatives that we've successfully completed, we can see solid improvement in profitability across our segments. Also bear in mind on the Baltic Sea region, this is a market, especially in the Baltics, where we were able to address the inflation on raw materials and packaging more dynamically, and thereby the potential growth is competitively lower to that in Finland. Now in Belarus, the numbers are strong. The consumer demand in the market remains strong. In our case, we're tracking the market. We're also overlapping a soft quarter from last year, where we had some production constraints. I think that's it for the third quarter, Tina-Liisa, if we look at year to date with a few slides.

Yes, thank you. So, let's see the nine months performance in all the group level. Our volumes did not grow, but a set of market shares were kept. And even though the market situation has been very challenging, consumers' purchasing power has been under pressure, as all we know. Net sales increased as a result of changes in the product portfolio and this targeted an increase in sales prices. And then the profitability has grown for three reasons. The first one is that the efforts to improve our own production efficiency has been effective. Secondly, raw and packaging material prices have stabilized. And third, our average sales price has increased, and that's due to price and portfolio optimization, but also these targeted price increases. So as a result, adjusted EBIT grew almost 22% and the EBIT 53%. In the comparison period, you remember that the operating result was burdened by the fine imposed on the Belarusian subsidiary. And our final supposition, no big changes there, strong balance sheet and cash flow. And then if we look at the segment performance from the first nine months. In Finland, the volumes has decreased about 3% and net sales grew almost 4%. And without these portfolio choices, our volume would have been higher than last year, which was mentioned by Patrik. Our focus in Finland this year has been on improving profitability. As said before, the main drivers for profitability in Finland has been operational efficiency, raw material prices, product portfolio changes, and then the price increases. And the summer season, which was this year from May to September, as the September was very warm also, we succeeded very well. We were able to improve our delivery accuracy. We did some buffering for the products and we were able to increase our collection capacity. From the product category side, we succeed the most in waters. Olvivissu is the most popular vissu in the mineral water category, and our Kevytolo brand achieved the second place when it comes to the flavored waters. Then in the Baltic Sea, we know that in the Baltic countries, the whole year has been very challenging because the consumer purchasing power has developed weakly. And that has caused some intensified price competition. So volumes are in the minus side. But if we take into consideration these choices made in Denmark, that would be flat. But these choices in Denmark have helped to improve the profitability in Denmark. Then in Belarus, volumes increased as the local market is growing and our sales are long. Summer season weather was especially warm in Belarus, and that increased the non-alcohol sales. And what comes to the withdrawal from the Belarus market? The sales restrictions concerning Pellaras Company shares remain in force, and we do not have the permission for sale. And the payment of the dividends to Olvi is restricted now for years 2024 and 2025. According to our current understanding, the dividends are around 1 to 3 million euros annually. Then we got this question related to Olvi PLC dividend distribution capability. That will be decided by Olvi board and finally owners in annual general meeting in spring. But in general, Olvi PLC cash and financial position is in a good level and the estimate is good also for the near future. And then the summary. Our equity ratio is still very high. Earnings per share has returned to the more normal level and were 2.6 euros per share. Last year's figure was negatively impacted by the fine in Belarus. Cash position is improved after the summer season. But compared to the last year, cash flow from operating activities increased 54 million euros as a result of an increase in operating result and a change in the working capital, especially in accounts receivable. If you remember that last year, we dropped this factoring financing. Investment side, the total amount is 27 million. In Finland, about 14 million. And we have been communicating that we have these two big investments going on. Our warehouse and logistics center, that project is ongoing and proceeding as planned and will be then finalized next year. And the brew house investment has just started with the first construction works. In the Baltic Sea region, the investments were 10 million euros, and that focused on production line improvements. Belarus, 2.7 million through its own income financing and focusing on the necessity investments. And then in the sustainability side, We are very proud that Olvi has been chosen to participate in UN Global Compact Finland's Day peer learning group. Day is this diversity, equity and inclusion. The goal is to identify the best practices and tools for promoting the Day team within Olvi group. This is a very important part of our social agenda. And secondly, we have been also chosen to participate in UN Global Combat Finland's training program, focusing on science-based targets for nature. And that is related to the biodiversity. And our aim is to set goals also related to our nature agenda. So I think that was the first nine months summer.

Thank you. Very compact form. Now then, We hope many of you noted that on Monday we issued a change to our guidance and the new range is now estimated to land between 78 and 84 million euros in terms of our adjusted operating result for this running year. And that's a change versus our previous estimate, which sat at 74 to 80. We started by referencing the strategy and this being the first year of our new strategy. So we thought it'd be a good thing to also close on the strategy as a reminder of what it looks like. And here it is on a page. And we're particularly proud of our ability to deliver these moments of enjoyment. If you look at this year and the running rate, the volume divided per units, per people, we arrive at a fantastic figure of 7 million. 7 million times every day have our products being consumed across our markets and beyond. Let's remember, we also do exports. But this work could not have been done without our capable, committed people, our teams across the business, across each market. So if any one of you is listening in, please feel proud of these results that we've achieved together. And of course, we constantly continue to seek opportunities for improvement. But we couldn't be more proud and thankful for the great work that you're doing every day. So thank you, and let's carry on with that. But on this year, particularly, we chose four areas to focus on, and it all starts with the people I just referenced. We have to look after each other and ourselves, making sure that we strengthen our capabilities, that we invest in training, that we bring on board new important resources and functions to support the evolution of our business. whether it's in processes or data management or in the field of exports, where we're happy to share that we now have a new leader that joined our team recently. So this idea of seeking constant improvements is something that's in our DNA and it goes on. It will be on the agenda tomorrow and equally the day after. And again, a good reference and a data point, a proof point, is the improvements we've achieved year to date. And again, I emphasize the important contributions coming from our own operations in doing that. So we continue our journey towards the levels of profitability we enjoyed before COVID and before the war. We're not there, so we're not done. But we're done in terms of presenting. So thank you for listening. And now we move into potential questions. We have people in the room here and we have people online. So let's see, Tina-Leisa, if you want to lead the procedures in terms of answering questions. Thank you.