Olvi Oyj Unsp/Adr

Hi and welcome to our Q3 interim report. It's a pleasure to have you here and thank you to those joining us in the room. Before we get to the contents, I want to remind you of the disclaimers. Of course, whilst we're looking predominantly at the Q3 results, we'll also make references to our expectations going forward. And that always entails a certain degree of uncertainty. But before we get to the actual contents, I'm pleased to introduce you to Juha Kauppinen, who is our new CFO and taken over from Tiina-Liisa since a few weeks back, effectively from the beginning of October. Welcome, Juha. Thank you. Well, happy to be here. Great to have you. Let's get to it. So as you know, last week we had to issue a negative profit warning and I'm glad that we can be here today to share a bit more context with you as to why this is our expectation for the year. I want to start by emphasizing though that volumes are growing, net sales are growing, and this is to a great extent attributed by our acquisitions. Our profits are also doing well, but they're lagging behind, so catching up to our top-line performance. A few highlights. I want to start by pausing on our portfolio, our core business, which is doing really, really well. Our brands are strong. Our market shares are strong. We've introduced some new products in a number of markets. These launches have been successful. I believe we mentioned in one of our previous quarterly reviews the soft drinks launch in Finland, for instance. We've been able to take share here. Things are going well. This is also reflected in our margins. So our portfolio play when it comes to mix management has worked as planned and that has helped us cover some of the costs that are impacting our business. Now then, pausing on the acquisitions for a while. Four acquisitions are all completed, now included in our numbers from the third quarter. Integration work is of course ongoing. But already in this first year, they are contributing positively. Not only top line, but also on a profit level, albeit marginally. We will conclude these integrations by the end of the year and look for profits to start materializing through synergies from next year onwards, so starting with 2027. Now then, rest of Europe. This is the new segment that we call it, and in this quarter's report we have also wanted to help the market and the analysts by separating out organic and inorganic growth. But when we zoom in on rest of Europe, we want to highlight a few things. First, the Baltics. In the Baltics, performance is solid. We are growing both net sales and EBIT. The same impact and softness of market that we've experienced in Finland we also see to an extent in the Baltics. But we're performing in a competitive market. The negativity in the figures as it pertains to the segment of rest of Europe are unfortunately still driven by Denmark. So all our efforts to turn the market around have not yet carried the dividends that we're expecting. We hope that that will and expect that to change in the foreseeable future. Now then briefly on cost pressure. Cost pressure is of course driven by the geopolitical situation. We've spoken about that already for a number of years it feels like. This year it's been accelerated particularly around transport costs driven by the oil price which then spills over also on PET packaging material and aluminium and effectively a broad spectrum of our raw materials. So in essence, a key reason for the adjustment and the negative profit warning was a slower than expected recovery of the market. There's been some positive signals for some months already in the economies across our operating markets. But unfortunately that has not translated yet to increase in consumer spending and also we did not get a boost from weather this third quarter. Quite the opposite as we'll see when I get to Finland and we had the opposite effect. A few more words on the third quarter. The Värska integration, the final one to be completed, it was completed and the numbers were included from July onwards as we have shared. The full effect of that integration is materializing now as we've taken over distribution locally as well. Of course there's work on finalizing the integration and to get to those synergies which I mentioned will happen next year. The gross margin part. I think this really speaks to the relevance and the effect of our strategy more broadly. As you know, we've invested in analytics. We've improved our efficiencies across our factories. We've optimized our portfolio and we've strengthened our brand. And this clearly is resonating not only in terms of protecting gross margins, but also our share on shelf, so consumers are More and more choosing our products at the moment of truth there in stores and restaurants across our operating markets. So we believe that these places is really well for the future, enables us and allows us to continue driving sustainable growth also in the future. Now then briefly on the segments and the third quarter performance across the segments. I already made a reference to Finland. The numbers in isolation are quite negative. That's clear. But what I want to build as context is as well, if you refer to the brewers of the Finnish Brewers Association's numbers, you will see that in the third quarter, the whole market came down with 7%. So we're performing better than the market. Pia Johanna Hortling, Antti Airaksinen, Pia Johanna Hortling, Tiina-Liisa Liukkonen The model is not broken, consumption hasn't escaped, it's a weather effect. Now on the rest of Europe, already mentioned, acquisitions are driving performance and you see the positive number development. Importantly, the Baltics are growing also organically and Denmark continues to be an area of focus for us. Belarus on the other hand had pretty much a flat quarter when it comes to volume development. So that's on Q3 and now Juha, I'll give you the chance to talk to us through the full year or year to date.

Thank you, Patrik. Indeed, if we look at the year-to-date performance, January-September, we are showing strong growth supported by the acquisitions. Volumes have grown by 4.4%. However, organically, they declined and are behind our expectations due to the reasons Patrik already elaborated on, particularly in the third quarter. The market was soft. Net sales has grown 13% and that growth comes both from acquisitions and also organic growth. That is supported by our strong portfolio, our own product launches and the positive development of the average selling price. Year to date, we've delivered 70 million of EBIT that represents growth of 6.5% despite the headwinds we're seeing in inflation and despite the challenges we have in Denmark. If we then break down that year-to-date performance to the segments, in Finland, as Patrik elaborated, we had a softer third quarter and following the strong first half, the soft third quarter demand brings down the growth numbers in Finland. For the rest of your segment, there are basically three things happening. All in all, it's a positive development, but we see three different developments. First of all, solid performance and organic growth in the Baltic countries, albeit at a lower pace than we had earlier expected. Secondly, in Denmark, our efforts to turn around the business have not yet delivered. The profitability is still developing in the wrong direction. and thirdly we have the acquisitions which are driving volume, they are driving net sales growth and also having a positive EBIT contribution which we then expect to grow in the following years as the synergies start to materialize. In Belarus, we've grown by 4% in volumes and with the help of our strong local demand and our net revenue management actions, both the net sales and EBIT are growing by approximately 20%. Then turning on to look at some of the key performance indicators for the year to date, the equity ratio is still very strong at 52.9%. It is somewhat lower than last year due to the investments we've been doing, not only the acquisitions, but also the operational investments. The operational investments are roughly at last year's level and we've continued to strengthen our operational capabilities. The largest investments in this period go to Iisalmi and Lithuania where the High Bay warehouse is being built. Earnings per share is up to 2.33 euros. Headcount is growing due to the acquisitions. Operating cash flow remains strong and I should note that on operating cash flow we've now made an update to our estimate as to how much dividends we can pay from Belarus to the group. and as you know there are limitations as to the dividend payments from Belarus. This year we were only able to pay dividends locally in Belarus and we will not be able to repatriate them to Finland under the current restrictions. Management still expects that this will not have an impact on Olvi's ability to pay dividends. Lastly, our work on sustainability has earned us multiple awards, nominations and mentions, including very good results from Walk the Talk survey in Finland, which shows that our sustainability actions very much correspond to what we've said and targeted. They set ourselves as targets. We've had success in Bosnia and Herzegovina, both in the Young Energy Europe competition and the SDG Business Pioneers Awards. Lastly, but not least, our Alekok factory in Estonia was awarded the Estonia's most responsible factory of the year 2026. Now handing over back to Patrik to talk about the outlook. Great.

So indeed, near-term outlook, we referenced the change that we communicated last week and the negative profit warning that we had to issue. We hope you have captured the key items that led us to do this. And I'll just paraphrase them one more time. So we are growing organically, but at a slower pace than previously anticipated. And unfortunately, we don't expect the market to do a massive positive turnaround by the end of the year. So this brings our full year expectations down. But in that market we are performing well and holding strong. And then the second point is Denmark. Our efforts are continuing. We have done a lot in terms of improving our operations, our quality. Making sure we look after the brands that we have and driving growth in those. And we're now ready to take on board further volume, either supporting our own markets in Sweden and Finland, Sweden and Norway, the new markets we have their production for these markets, or then even broader in Europe. So we're really looking to unlock the opportunities of Denmark as we had originally planned. And then the cost pressure. The cost pressure is significant on our business and on our industries overall. So we're happy that we've taken the right initiatives to protect our gross margins, but the results are clearly impacted by that. Now then, concluding by referring again to our choices. And I think the brand performance, the gross margin in itself speaks a clear language. We've been able to retain our shares, even grown our shares in several categories. We're delivering, some of you may recall this slide at the bottom there, you have three categories. This is what we intended to focus on this year. So driving growth and especially non-alcohol. We are doing that. Our non-alcohol growth has accelerated. We've expanded our reach. So with these new acquisitions, we've entered four new countries. We're now servicing locally twice as many local consumers as we did at the end of 2025. Then on the development side, we continue in our efforts in net revenue management and data utilization. We're seeing results in Belarus already. We're working on the integrations. We want to grow as people. We want to make sure we invest in education internally as well to retain and develop the talent we have. And on the efficiency side, I can't under emphasize the importance of efficiencies in the way in which we use our assets, the way in which we improve our operations. and how we make sure that we have solid cost control. So with that in mind, for the next few months of this year, we intend to close the integration work, complete that so that next year we can be in full swing. We seek further synergies and efficiencies via even closer collaboration across the group and our markets. So we remain confident in the viability of our proposition and our ability to deliver solid, profitable growth also in the long term. Thank you. Now we move over to the questions part. Please, in the room.