OLVI PLC INTERIM REPORT 28 APRIL 2017 at 9:00 am
OLVI GROUP'S INTERIM REPORT, 1 JANUARY TO 31 MARCH 2017 (3 MONTHS)
INTERIM REPORT IN BRIEFOlvi Group's business development in the first quarter was good. The Group's sales volume, net sales and operating profit all improved on the previous year.
January to March 2017 in brief:Olvi Group's sales volume increased by 11.6 percent to 130.4 (116.9) million litres
The Group's net sales increased by 14.5 percent and amounted to 71.2 (62.2) million euro
The Group's operating profit increased by 40.9 percent and amounted to 6.2 (4.4) million euro
Olvi Group's earnings per share stood at 0.26 (0.14) euro per share
The equity ratio improved again, standing at 63.1 (58.7) percent
Olvi retains the outlook for 2017 presented in connection with the disclosure of the financial statements for 2016, and estimates that the Group's sales volume and net sales for 2017 will increase slightly compared to the previous year. Operating profit for 2017 is estimated to be on a par with the previous year.
CONSOLIDATED KEY RATIOS1-3/ 2017 | 1-3/ 2016 | Change % / pp | 1-12/ 2016 | |
Sales volume, Mltr | 130.4 | 116.9 | 11.6 | 609.4 |
Net sales, MEUR | 71.2 | 62.2 | 14.5 | 321.5 |
Gross margin, MEUR | 11.1 | 8.8 | 25.8 | 59.2 |
% of net sales | 15.6 | 14.2 | 18.4 | |
Operating profit, MEUR | 6.2 | 4.4 | 40.9 | 40.4 |
% of net sales | 8.7 | 7.1 | 12.6 | |
Net profit for the period | 5.5 | 2.7 | 104.8 | 32.8 |
% of net sales | 7.8 | 4.4 | 10.2 | |
Earnings per share, EUR | 0.26 | 0.14 | 85.7 | 1.57 |
Gross capital expenditure, MEUR | 4.4 | 5.5 | -21.0 | 20.5 |
Equity per share, EUR | 10.05 | 8.69 | 15.7 | 9.73 |
Equity to total assets, % | 63.1 | 58.7 | 4.4 | 62.0 |
Gearing, % | 3.7 | 18.9 | -15.2 | 2.1 |
Olvi Group's business has got off to a good start for 2017. In the first quarter, sales volume and net sales increased by more than 10 percent, and operating profit improved by more than 40 percent. According to the most important financial indicators, business development has been good across all of the Group's units. The business in Belarus has developed particularly well.
Positive development in Finland continued also in the first quarter. The sales volume increased by 19 percent on the previous year, the market share became even higher and profitability improved. Increased sales volumes enabled efficient operations also during the first months of the year, when sales volumes are generally lower.
The year has started well in the Baltic states seen as a whole. In Estonia, profitability has remained on a very good level, and Latvia and Lithuania have improved their results compared to the previous year.
Changes in the business environment add tone to the operations in the Baltic states. A substantial excise tax hike became reality in Lithuania in March. The planned excise tax hike in Estonia as of 1 July 2017 will probably result in a change of focus in volumes and consumption both from Estonia to the Latvian border and, to some degree, also from Estonia back to Finland. The effect of the change on the entire Olvi Group in 2017 is still difficult to estimate because there are several contributing factors, such as the pricing policies of companies doing business in harbours and on board after the excise tax changes. The change is also expected to cause a shift in Estonian sales during the summer season, giving more weight to the second quarter before the realisation of the tax hike.
Business development in Belarus in the first quarter was good. The sales volume increased by 17 percent, net sales increased by 31 percent, and earnings multiplied in comparison with the previous year. Sales have increased particularly through exports to Russia. Besides increased sales, positive earnings development was supported by more cost-efficient operations and appreciation of the local currency.
In addition to the good earnings development in the first quarter, other key figures also developed favourably. The Group's equity to assets ratio improved and indebtedness declined on the previous year.
Investments have been initiated according to plan. The largest individual investment in 2017 is the energy plant at Iisalmi. Factors leading to the project include cost savings and environmental aspects. Through this investment, we will be able to discontinue the use of heavy fuel oil and replace it with Finnish renewable energy.
SEASONAL NATURE OF THE OPERATIONSThe Group's business operations are characterised by seasonal variation. The net sales and operating profit from the reported geographical segments do not accumulate evenly but vary according to the time of the year and the characteristics of each season.
SALES DEVELOPMENTOlvi Group's sales volume increased by 11.6 percent to 130.4 (116.9) million litres. The sales volume increased particularly in Finland and Belarus. Aggregate sales in the Baltic states increased by some four percent, as the increases in individual companies' figures were affected by increased sales between the Baltic units.
Sales volume, million litres | 1-3/2017 | 1-3/2016 | Change % |
Finland (Olvi plc) | 42.0 | 35.2 | 19.4 |
Estonia (AS A. Le Coq) | 25.6 | 25.9 | -1.0 |
Latvia (A/S Cēsu Alus) | 18.2 | 13.1 | 39.8 |
Lithuania (AB Volfas Engelman) | 18.2 | 16.5 | 10.5 |
Belarus (OAO Lidskoe Pivo) | 34.9 | 29.8 | 16.9 |
Eliminations | -8.6 | -3.5 | -142.2 |
Total | 130.4 | 116.9 | 11.6 |
The Group's net sales increased by 14.5 percent and totalled 71.2 (62.2) million euro. The positive net sales development reflects increased sales volume, as well as the development of average net sales price.
Net sales, million euro | 1-3/2017 | 1-3/2016 | Change % |
Finland (Olvi plc) | 27.1 | 23.8 | 13.8 |
Estonia (AS A. Le Coq) | 16.6 | 16.1 | 3.1 |
Latvia (A/S Cēsu Alus) | 8.5 | 6.2 | 36.0 |
Lithuania (AB Volfas Engelman) | 8.5 | 6.8 | 24.8 |
Belarus (OAO Lidskoe Pivo) | 14.4 | 11.0 | 31.2 |
Eliminations | -3.9 | -1.7 | -126.3 |
Total | 71.2 | 62.2 | 14.5 |
The Group's operating profit for January-March increased by 40.9 percent and amounted to 6.2 (4.4) million euro, or 8.7 (7.1) percent of net sales. Operating profit in Finland improved by 0.4 million euro, aggregate operating profit in the Baltic states by 0.6 million euro, and operating profit in Belarus by 1.0 million euro.
Operating profit, million euro | 1-3/2017 | 1-3/2016 | Change % |
Finland (Olvi plc) | 1.6 | 1.2 | 32.6 |
Estonia (AS A. Le Coq) | 2.5 | 2.4 | 4.1 |
Latvia (A/S Cēsu Alus) | 0.7 | 0.4 | 62.7 |
Lithuania (AB Volfas Engelman) | 0.3 | 0.1 | 182.9 |
Belarus (OAO Lidskoe Pivo) | 1.2 | 0.2 | 424.9 |
Eliminations | 0.0 | 0.1 | -98.8 |
Total | 6.2 | 4.4 | 40.9 |
The Group's January-March profit after taxes doubled and amounted to 5.5 (2.7) million euro.
Earnings per share calculated from the profit belonging to parent company shareholders in January-March improved to 0.26 (0.14) euro per share.
BALANCE SHEET, FINANCING AND INVESTMENTSOlvi Group's balance sheet total at the end of March 2017 was 332.7 (309.0) million euro. Equity per share at the end of March 2017 stood at 10.05 (8.69) euro. The equity to total assets ratio was 63.1 (58.7) percent. The gearing ratio declined clearly to 3.7 (18.9) percent. The current ratio, which represents the Group's liquidity, was 1.1 (0.9).
The amount of interest-bearing liabilities at the end of March was 22.4 (40.8) million euro, including current liabilities of 10.7 (18.9) million euro.
Olvi Group's gross capital expenditure in January-March amounted to 4.4 (5.5) million euro. The parent company Olvi accounted for 1.9 million euro, the Baltic subsidiaries for 1.5 million euro and Lidskoe Pivo in Belarus for 1.0 million euro of the total.
PRODUCT DEVELOPMENT
Research and development includes projects to design and develop new products, packages, processes and production methods, as well as further development of existing products and packages. The R&D costs have been recognised as expenses. The main objective of Olvi Group's product development is to create new products for profitable and growing beverage segments.
NEW PRODUCTSOlvi American Cream Ale is the first beer of its type manufactured in Finland. The country's centennial is celebrated through Olvi Juhlaolut and Olvi Juhlamalja. Crook's Head Hoppy Bitter is a new long drink with hops. Sherwood Black Cider gets its black colour from malt. The Le Coq Cocktails range was complemented by the Mojito flavour. Garden Grove Spin is a novel member of the Kane's Soda Pop range. Apple-Blueberry was added to the Olvi Raikas juice drink range. The TEHO Sport product range was extended with BCAA beverages. Health Lab Superb is a new addition to the Health Lab range. It contains chia seeds and has no added sugar.
A. Le Coq of Estonia launched three new beers. A. Le Coq 1807 Pale Lager in a pyramid-shaped bottle is a tribute to the company's 210th anniversary. A dark version of Alexander was launched with the name Dunkel, and British Red Ale was added to the Brewer's Collection range. FIZZ Raspberry Smash is a new product in ciders. The Vinitto wine cooler range was launched in Estonia. G:N Long Drink Rumm'u Koola is a new long drink. In soft drinks, Kane's Garden Grove Spin was launched in glass bottles, and the apple and cola flavoured Hull Õun in plastic bottles. Strawberry-Basil is a new addition to the Aura Fruit range of waters. The Vitamineral Water range saw the introduction of the new product Wellness.
Smoothies were introduced as a completely new product group for A. Le Coq. Aura Smoothies in one-litre Tetra Paks are free of preservatives and contain no added sugar. The BCAA beverages and Crook's Head long drinks were also launched in Estonia.
Cēsu Alus of Latvia launched the Brūža Cherry Red beer containing 15% cherry juice. Latvia will celebrate the nation's centennial next year, and as a tribute, Senlatvju Alus was launched. It is an ancient Latvian beer in three different variations, flavoured with cranberry, juniper berry and meadowsweet. The Vinitto range was extended with Mellone. The Kane's Soda Pop and BCAA beverages were also launched in Latvia.
Volfas Engelman of Lithuania launched two new beers. Volfas Engelman Pasaulio Skonial ("Taste of the World") Kriek is a Belgian-type cherry beer. Volfas Engelman Bavarian is a German-type pilsner. The kvass Smetoniska Gira became available in a new version containing cherry juice.
Lidskoe Pivo in Belarus launched four new beers. Lidskae Kriek is a light cherry lager. American Black Ale was introduced into the Master's Collection range, Menskae 1067 is a light lager dedicated to the 950th anniversary of the city of Minsk, and Three Kings beer is sold in large plastic bottles. The Lidskae brand was extended to radlers, also known as shandy. The Le Coq Cocktails range saw the introduction of Bianco. Lidskij Kvass Light is flavoured with birch sap and raisins.
PERSONNELOlvi Group's average number of personnel in January-March was 1,742 (1,818). The Group's average number of personnel decreased by 76 people or 4.2 percent.
Olvi Group's average number of personnel by country:
1-3/2017 | 1-3/2016 | Change % | |
Finland | 309 | 290 | 6.6 |
Estonia | 327 | 321 | 1.9 |
Latvia | 189 | 202 | -6.4 |
Lithuania | 229 | 229 | 0.0 |
Belarus | 688 | 776 | -11.3 |
Total | 1,742 | 1,818 | -4.2 |
During the review period of January-April 2017, Olvi plc's Board of Directors consisted of Chairman Esa Lager, M.Sc. (Econ), LL.M., and other members Nora Hortling, M.Sc. (Econ), Jaakko Autere, M.Sc. (Econ), Elisa Markula, M.Sc. (Econ), and Heikki Sirviö, Honorary Industrial Counsellor, M.Sc. (Engineering).
The company's auditor is the authorised public accounting firm PricewaterhouseCoopers Oy, with Sami Posti, Authorised Public Accountant, as auditor in charge.
MANAGEMENTThe Management Group of Olvi plc consists of Lasse Aho, Managing Director (Chairman), Ilkka Auvola, Sales Director, Olli Heikkilä, Marketing Director, Pia Hortling, Product Development and Purchasing Director, Kati Kokkonen, Chief Financial Officer, Lauri Multanen, Production Director, as well as Marjatta Rissanen, Customer Service and Administrative Director.
The Managing Directors of the subsidiaries are: AS A. Le Coq, Tartu, Estonia - Tarmo Noop
A/S Cēsu Alus, Cēsis, Latvia - Eva Sietiņsone
AB Volfas Engelman, Kaunas, Lithuania - Marius Horbačauskas OAO Lidskoe Pivo, Lida, Belarus - Audrius Mikšys
The Managing Directors of the subsidiaries report to Lasse Aho, the Managing Director of Olvi plc. The Board of Directors of each subsidiary consists of Lasse Aho (Chairman), Pia Hortling, Kati Kokkonen and Lauri Multanen. The Management Group of each subsidiary consists of the corresponding Managing Director and two to four sector directors.
Olvi Oyj published this content on 28 April 2017 and is solely responsible for the information contained herein.
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