Anora Q1'25 preview: The timing of Easter depresses Q1 figures

Translation: Original published in Finnish on 05/05/2025 at 07:00 am EEST

Anora will publish its Q1 results on May 7. The quarter will be subdued as the timing of Easter weakens volume development. We lowered our  Q1 forecasts in this report, while the estimates for the whole year remain unchanged. We reiterate our Accumulate recommendation and EUR 3.5 target price. We published an extensive report on Anora a couple of weeks ago, which can be found here.

We moved estimates from Q1 to Q2 due to the timing of Easter

The Nordic alcohol monopoly chains (Finland, Sweden, Norway) have reported volume declines of 5-20% in Q1, depending on the product group and country.
 The timing of Easter has a clear negative impact, although last year's legislative amendment in Finland, the weak economic situation, and/or the declining alcohol consumption trend also depress sales. Although sales by monopoly chains are not exactly the same as Anora's sales, we believe that the timing of Easter will have a greater impact than we previously anticipated. Therefore, we have lowered our Q1 estimates in this report and now expect adjusted EBITDA roughly at the level of the comparison period (8.5 MEUR).  We expect revenue has decreased by about 5% to 139 MEUR, meaning that we expect the margin to have improved in the seasonally weakest quarter due to, e,g,, price increases and efficiency measures. The lower Q1 forecasts are largely offset by raising the forecasts for Q2, and thus our full-year forecasts remain unchanged.

The guidance will be reiterated in the Q1 report

We expect full-year adjusted EBITDA to be 70 MEUR, which is at the bottom of the company’s guidance (70-75 MEUR). We expect the company to reiterate its guidance in the Q1 report. Anora expects market volumes to remain relatively unchanged, but assumes it will win market shares. We view Anora's assumptions as somewhat optimistic, as market development was negative at the beginning of the year, even considering the timing of Easter. Due to the effects of the timing of Easter, a comparable view of the company's performance against last year will not be available until the Q2 figures.

The first earnings release under the new CEO

The company changed its CEO in November, when Kirsi Puntila, who previously headed the Spirits segment, took over as CEO of the entire Group, replacing Jacek Pastuszka, who had been in charge of the company for only 1.5 years. We commented on Pastuszka’s departure earlier here and Puntila’s appointment here.We believe the company will evaluate its strategy and targets this year following the change in management. We hope to hear Puntila's thoughts on the company's future direction and, in particular, on actions to improve profitability. However, we do not think there is reason to expect very concrete actions at this stage.

We expect an earnings improvement but value creation is difficult

While we believe Anora can improve its profitability in the coming years we don't see it reaching a significantly higher earnings level than currently. This is partly due to the sluggish growth outlook for the alcohol market (and the risk of further market decline) and, in our view, the company's limited ability to significantly reduce its costs. We expect that Anora's returns on capital will remain at approximately the level of our required return in the coming years, so we do not expect the company to create value.

Cash flow and dividend provide a sufficient expected return

Anora's 025 P/E ~11x is in line with our acceptable multiples. Anora's expected return at the current valuation is higher than our required return, supported by dividend and earnings growth. Dividend plays a significant role and it alone reaches close to our required return. However, a modest growth profile and return on capital weaken the risk/reward ratio. The value of our DCF model is in line with the target price at EUR 3.5 per share.