Olvi Oyj Unsp/Adr

Welcome. It's our pleasure to welcome you here for our session today to go through the Q4 and full year results of 2024. Before we start, the usual disclaimer. We will be referring to our future estimates, so therefore there are certain uncertainties associated with that. So we can't, of course, promise that everything will go according to plan, but we promise to do our best. Some of you have met us before. For those who haven't, Tino Liseliukkonen, our CFO and CEO, and myself, Patrik Lundell, have the pleasure of hosting you. I have the pleasure of starting, and I wanted to really pause on the year of 2024 and bring up some of the highlights. We're particularly proud about the progress that we've made. We've taken solid steps forward on a strategic journey, and we've delivered results across all our key measures. None of this could have, of course, been achieved without our great teams across the respective markets. The broad portfolio is proving resilient. It's been able to hold its share and grow in many, many categories at the same time. We have sharpened our focus on processes, data and analytics. There's even something quite exceptional with 2024. And if I think back to the year 1878 and when the company was first founded in Iisalmi and the brewery was opened on the shores of Lake Porovesi, We have always retained a focus on the environment, making sure that we don't let anything flow into the lake or otherwise harm the environment. And this year we have been recognized as one of the top 500 most sustainable growth companies in the world by Time Magazine. This is quite an achievement. Additionally, we were recognized by Ecovadis as one of the top five best performing sustainable companies in the world. So a lot to be proud of. Then looking at some of the focus areas, I touched on them already and maybe delving in a bit further. We looked at four of our six key focus areas with more rigor this year. And I closed on the previous slide on the sustainability topics. And that's one that remains center for us. And we're quite proud to be recognized as a global forerunner in this space. our people remains our strength. We've invested a lot in training, in bringing in new talent, and we remain committed to that space. Data is a key area of ours in terms of focus, where we will be able to do a lot more even this year as we move forward, providing our team with the best tools and sharpening our processes so that we can continue to seek margin expansion, continue to build up profitability in a sustainable way over the years. And the results really speak for themselves. I'll soon hand over to Tina-Liisa to talk about them in more detail, but on a top line, We're particularly proud of the results we've delivered and honored to continue the great heritage that was left for us by the previous generations and deliver indeed the ninth year of consecutive growth. This can also be translated into moments of enjoyment. And I'm quite proud to say that in 2024, we were able to deliver 7 million moments of enjoyment each day. But now, Tina-Liisa, why don't you show us in more detail what happened during the quarters of last year? Thank you.

Yes, thanks, Patrik. So I have a pleasure to share the performance with you, and we will start with the Quartal 4 and building then forward. Let's start with Finland. We are happy that this last quarter we were able to make positive volume growth. And that came mainly because of the non-alcoholic categories like waters and energy drinks. And you can also see that the average price has been growing, so that the net sales growth is bigger than the sales volume growth. And what comes to the profitability, you can see almost 66% improvement compared to last year. This is a cumulative effect of all the changes that we have done during this year. And the profitability improvement came almost all the categories and sales channels. So it's kind of reflected the power that we have been able to kind of implement our plans this year. And now it's fully shown in the quarter four. In the Baltic Sea region, this volume growth is flat, but if we divide that to the Baltic countries and Denmark, so the volume grew in the Baltics, but in Denmark, due to the changes in this portfolio, this volume declined there. This adjusted EBIT is... smaller than last year, and that is due to two reasons. First one is the Denmark, where that is the cause of the decreased volumes. And the second one is coming from Latvia because the price competition has been intensified. In Belarus, we see that the volumes and net sales increase were supported by the market growth and strong consumer demand. And that has been going there almost all year. So it differs a little bit from the other markets where we are operating. And the EBIT also is higher than last year, but the profitability is a little bit lower when we compare to the net sales growth, and that is due to the higher cost of goods sold, and then also higher fixed costs, for example, in sales and logistics. So then in total, the Quartal 4 main KPIs, As said, we are very happy that we have been able to grow the sales volume now in quarter four. And the net sales increased more than the growth in sales volume because of the improvement in the average price that we have been working the whole year. Profitability continues to improve, as we saw, especially in Finland, and that's thanks to the stabilization of the increase in the raw materials, the development of the product range, and then the market-specific price increases. But then the whole year, so when we are including this Quartal 4 to the other Quartals, we can see that in Finland the volume decreased, but that is the result of changes made in the beer category, mainly in retail. But there's no... Don't worry in a way, because the market share is still very strong and over 50% in Finland for the beers. And also, we have been quite successful in water categories. Our Kevyt Oulu and Vissu brands are very strong in the market. And also, we have been able to grow further our hard seltzers, even though there has been more competition in the market currently. And now the whole year this EBIT improvement is over 47%. And that is coming improved production efficiency, the stabilization of the cost increases, changes in the product range, and then the price increases. So many kinds of reasons together. In the Baltic Sea region, volumes remained at last year's level, except Denmark. Also, the Baltics have been suffering from weak development of consumer purchasing power, and that has kind of limited the volume growth in 2024. And then in Denmark, the reason is that there have been changes in the product portfolio. So there is also a decrease in volumes because of that. And then the adjusted EBIT of Baltic Sea region. We are happy that even though the volumes are a bit declining and the net sales remained in the last year level, we were able to increase the profitability. So there are similar kind of changes. Costs were no longer increasing, measures were taken to improve the production efficiency, and targeted price increases were implemented. The profitability development of the segment came from the Baltic countries. So in Denmark, we still need to improve the profitability and increase the sales to improve the whole kind of situation and the profitability of that company. And in Belarus, the market grew as the consumer demand has developed quite well. Especially in non-alcoholic segments, the demand for our products has been very strong. And then the EBIT grew along the net sales. Also, we earlier announced that there are restrictions on the distribution of profits to the parent company, and those are valid still until the end of this year, so year 2025. The management view is that this temporary restriction on the payment of dividends does not impair the parent company's ability to pay dividends out to the shareholders. And then I have to kind of repeat the message that we do not have permission to sell the shares in our Belarusian subsidiary, but we are monitoring the legislative situation actively and also evaluating the situation and options for operating in the market. So in total, Patrik already showed you what was the full year picture, but just to summarize here, despite the intensified competition and the weak purchasing power development, we were able to increase the sales volume in both retail and Horeca. and as well as maintaining and increasing our market shares. And then, thanks to the good average price development, in the third and fourth quarter, especially, net sales increased. And then this profitability has improved in all reporting segments, mainly as a result of these four factors that we have discussed already. The stabilization of the increase in production cost. Secondly, selection and price optimization. Third, the warm weather in summer season, because that supported the business in general and also kind of made the product mix better for our sales. And then the fourth one is the improved efficiency of our own operations. So the operating margin improved above the 12%, which is our strategic target already in 2024. So we were able to return the profitability closer to the level before the cost crisis caused by COVID and the Ukrainian war. And that's the good kind of ground to go forward and continue gradually then now the profitability improvements. So this full year summary, our financial position has remained very strong. Equity ratio is now over 60%. Earnings per share were almost three euros. And just a reminder that last year, this comparison figure includes the penalty that we paid in Belarus. Operating cash flow has increased 58 million euros compared to the last year. And that is, of course, the result of improved profitability and the result making, but also that we have been improving the networking capital, especially in Finland. Investments were in total almost 44 million euros. So there is an increase of 19 million. And 24 million from that was related to Finland. So you remember that we have been talking about our big investment projects. So we have this high bay warehouse that we are building and that should be ready in the spring and support our delivery accuracy for the next summer season. And then that we have started our brew house renovation or kind of building the new brew house in Iisalmi. And then about 14 million of these investments came from Baltic Sea region and less than 6 million from Belarus. There were these necessity investments done by the or through the subsidiaries cash flow financing. Then personal small growth there. As Patrik said that we have been strengthening, of course, our organization to implement better the strategy. And also there is because the business is growing, especially in Belarus, so that requires more kind of people power behind. Then this sustainability number, so the reduction of the CO2 emissions was not in the report, but we just found out, and this will be, we are telling more about this one in our annual report, that we were able to decrease 14% our own emissions. So it means scope one and two. And that comes especially from Denmark and then Belarus. You remember that, for example, in Finland, we are carbon neutral already. And then I think hopefully this is a good news for the shareholders. So all report has made the dividend distribution proposal for the annual meeting, and they are proposing the dividend of 1.3 euros per share, which is a 10 cents more than previous year. And that is of course possible because we have been able to improve our profitability. So that was, I think, the numbers.

Great. Then I guess a short peek into the future. So as we started last year with giving a range, we intend to do this year as well. So we provided the outlook for the fiscal year of 2025. And we believe we'll be able to deliver between 82 and 90 million in terms of profits this year. so it gives you a range. I believe this is very much in line with expectations. Now it's worth repeating some of the key messages that Tina-Liisa shared here in terms of the segment performance, the drivers in Finland on one hand, you spoke about the efficiency in the factory, the healthier portfolio mix, some of the pricing we've taken, but importantly the consumer relevance and attractiveness of our offering. that remains strong. So we intend to build off this stronger base now. We intend to drive growth whilst protecting our profitability. So we really see opportunities for us to leverage the strength, whether it's in non-alcoholics like water or then our solid leadership in beers and the growth that we're generating in some subcategories like hard Celsius. Then in the Baltics, usually we haven't opened up that much on the markets, but Tina-Liisa referred to some of the challenges in Denmark. So this remains one of our focus areas for this year across the Baltics. Sorry, I meant the Baltic Sea segment when referring to Denmark, but in the Baltics specifically. And the market has been quite pressured. We sense certain elements of hope in some of the key markets, but on the other hand, also taxation is being intensified. Price levels are creeping up. So it's a tough market. It's a very competitive market, but we're holding strong. And this is where our multi-local approach really carries dividends. We know the consumers, we have the oldest brewery in the Baltics, we provide the locally relevant propositions which attract the consumers. And then finally the Belarusian segment performance has been strong during 2024. In 2025 we expect things to continue if all things are equal. The uncertainties relate really to the domestic demand from consumers and then on the other hand the evolution of the exchange rate. So these are the uncertainties in that region. But perhaps then to close we can just state that we remain very much committed to our long-term targets and aspirations and we have full confidence in our team's ability to deliver another strong year in 2025. With that we close the actual presentation. And based on some feedback we got last year, we've reserved a bit more time for questions. So we have a moderator in the room who will be conveying some of the questions that you have put into the chat box. And then we have also people present here live. So dear moderator, please take us away. I'll leave this slide up. That's a good slide.