Olvi Group’s sales volumes and net sales continued to grow in all of the Group’s geographical areas. Operating profit fell slightly short of the previous year, while relative profitability remained on a good level.
January-September in brief:
- Olvi Group’s sales volume increased by 9.9 percent to 402 (365) million litres
- The Group’s net sales increased by 8.8 percent to 224.3 (206.1) million euro
- The Group’s operating profit stood at 25.2 (27.7) million euro, which was 11.2 (13.4) percent of net sales
- Devaluation of the Belarusian rouble hampered the Group’s earnings
KEY RATIOS
| 1-9/2011 | 1-9/2010 | Change % | 1-12/2010 | |
| Net sales, MEUR | 224.3 | 206.1 | +8.8 | 267.5 |
| Operating profit, MEUR | 25.2 | 27.7 | -8.9 | 30.5 |
| Gross capital expenditure, MEUR | 31.5 | 17.1 | +83.9 | 24.5 |
| Earnings per share, EUR | 0.62 | 1.08*) | -42.6 | 1.21*) |
| Equity per share, EUR | 5.63 | 5.97*) | -5.7 | 6.13*) |
| Equity to total assets, % | 49.7 | 54.1 | 54.7 | |
| Gearing, % | 48.0 | 33.8 | 29.5 | |
*) The per-share ratios have been adjusted for comparability.
Lasse Aho, Managing Director of Olvi plc, said the following in connection with the disclosure of the accounts: ”We succeeded in retaining a good level of earnings and strengthening our overall market position in Finland. In Estonia, our operating profit improved on the previous year. In Belarus, sales developed well but earnings weakened due to heavy devaluation of the local currency. Our equity to total assets ratio remained on a healthy level. We continued to make investments related to growth.”
OLVI GROUP’S SALES VOLUME, NET SALES AND EARNINGS IN JANUARY-SEPTEMBER 2011
Olvi Group’s sales from January to September 2011 amounted to 402 (365) million litres. This represents an increase of 37 million litres or 9.9 percent. Sales volumes improved in all operating areas.
In January-September, sales in Finland increased by 10 million litres, sales in the Baltic states by 19 million and sales in Belarus by 13 million litres.
The Group’s net sales from January to September amounted to 224.3 (206.1) million euro. This represents an increase of 18.2 million euro or 8.8 percent. Net sales increased in all of the Group’s operating areas thanks to good sales development.
Domestic net sales amounted to 90.7 (83.8) million euro. The Baltic subsidiaries generated net sales of 111.1 (100.8) million euro, while net sales in Belarus amounted to 34.9 (31.2) million euro. Net sales in Finland increased by 6.8 million euro or 8.2 percent, in the Baltic states by 10.3 million euro or 10.2 percent, and in Belarus by 3.7 million euro or 11.9 percent.
The Group’s operating profit for January-September stood at 25.2 (27.7) million euro, or 11.2 (13.4) percent of net sales. The operating profit declined by 2.5 million euro or 8.9 percent on the previous year.
Earnings per share calculated from the profit belonging to parent company shareholders amounted to 0.62 (1.08) euro per share and declined by 42.6 percent on the previous year because exchange rate losses due to devaluation of the Belarusian rouble were recognised in financial expenses, and this burdened the Group’s earnings for January-September and was also reflected in earnings per share. The recognition of exchange rate losses had no impact on the Group’s cash flow.
Operating profit in Finland increased by 8.5 percent to 11.7 (10.8) million euro. The operating profit in Finland includes 1.5 (0.6 in 2010) million euro of sales gains from the sales of decommissioned production machinery. Commensurate operating profit remained on a par with the previous year.
Aggregated operating profit in the Baltic states declined by 0.5 million euro to 12.5 (13.0) million euro. Operating profit in Belarus was 2.6 million euro and fell 2.0 million euro short of the previous year mainly due to devaluation of the rouble.
The Group’s profit after taxes in the period under review was 12.6 (22.6) million euro. The change was due to exchange rate losses arising from the devaluation of the Belarusian rouble.
OLVI GROUP’S SALES VOLUME, NET SALES AND EARNINGS IN JULY-SEPTEMBER 2011
Olvi Group’s sales in the third quarter amounted to a total of 147 (144) million litres. Sales increased by 3 million litres or 2.7 percent. Sales in Finland increased by 3 million litres to 40 (37) million litres, sales in the Baltic states declined by one million litres to 78 (79) million litres, and sales in Belarus increased by 3 million litres to 41 (38) million litres.
The Group’s net sales from July to September amounted to 82.6 (79.8) million euro. Net sales improved by 2.8 million euro or 3.5 percent. Net sales in Finland amounted to 32.3 (30.8) million euro, net sales in the Baltic states to 40.4 (40.3) million euro, and net sales in Belarus to 15.0 (13.3) million euro.
The Group’s operating profit for the third quarter stood at 11.4 (14.3) million euro, or 13.8 (18.0) percent of net sales. The operating profit declined by 2.9 million euro on the previous year. Operating profit in Finland was almost on a par with the previous year at 4.6 (4.9) million euro. Operating profit in the Baltic states declined by 1.2 million euro to 5.7 (6.9) million euro, and operating profit in Belarus declined by 1.5 million euro to 1.1 (2.6) million euro due to devaluation of the Belarusian rouble.
SALES VOLUME, NET SALES AND EARNINGS BY GEOGRAPHICAL SEGMENT IN JANUARY-SEPTEMBER AND JULY-SEPTEMBER 2011
PARENT COMPANY OLVI PLC (Olvi)
January to September 2011
According to statistics, the Finnish beverage market grew by one percent in January-September compared to the previous year (Finnsih Federation of the Brewing and Soft Drinks Industry, September 2011). The sales of beers increased by two percent, long drinks one percent and mineral waters three percent. The sales of soft drinks remained on a par with the previous year, while the sales volume of ciders declined by almost two percent.
Olvi’s domestic sales in the reporting period grew faster than the industry average, representing an increase of nine percent on the previous year. The domestic sales volume in January-September was 108 million litres.
When viewed by product group, growth was strongest in long drinks and beers, with growth rates of 20 percent and 16 percent respectively. The favourable sales development in long drinks was attributable to the successful launch of OLVI Mojito Long Drink, as well as continuing good demand for Grapefruit, Cranberry and Gold Long Drinks. The sales of mineral waters increased by two percent on the previous year. The sales of ciders and soft drinks declined on the previous year.
Olvi’s domestic market share in mild alcoholic beverages in the reporting period increased from the previous year’s less than 22 percent to 24 percent. The market share in non-alcoholic beverages was seven percent.
Olvi’s exports and tax-free sales increased by 6.5 percent on the previous year, making up 3.2 (3.3) percent of total sales.
Olvi’s total sales volume from January to September amounted to 112 (103) million litres, representing an increase of 9 million litres or 9.6 percent.
The parent company’s net sales from January to September amounted to 90.7 (83.8) million euro, representing an increase of 6.8 million euro or 8.2 percent.
The operating profit stood at 11.7 (10.8) million euro, which was 12.9 (12.9) percent of net sales. The operating profit improved by 0.9 million euro or 8.5 percent. The operating profit includes 1.5 (0.6 in the previous year) million euro of sales gains from the sales of decommissioned production machinery. Commensurate operating profit excluding non-recurring sales gains remained on a par with the previous year.
July to September 2011
The parent company’s sales in the third quarter increased by 3 million litres or 7.3 percent to 40 (37) million litres. Net sales stood at 32.3 (30.8) million euro, an increase of 1.5 million euro or 4.6 percent.
Operating profit for July-September stood at 4.6 (4.9) million euro, or 14.3 (15.8) percent of net sales. The operating profit declined by 0.3 million euro or 5.1 percent in the third quarter.
AS A. LE COQ (A. Le Coq)
January to September 2011
In September 2011, the Estonian subsidiary A. Le Coq received an award as the country’s most competitive food industry company in an annual competition arranged by the Estonian Chamber of Commerce and Industry.
The company’s sales in January-September amounted to 105 (98) million litres. Sales increased by 7 million litres or 7.5 percent.
The Estonian beer, cider and long drink markets are growing well. A. Le Coq strengthened its market position in the most important beverage groups. The company’s sales of beers increased by some 4 percent, and long drinks by 11 percent in January-September. The sales of ciders also increased slightly on the previous year.
The company is the Estonian market leader in ciders and superior market leader in long drinks. Fizz is Estonia’s largest cider brand. The beer market has two equally strong players who hold the market leader’s position in turns.
The sales of the company’s juices increased by 26 percent on the previous year. The company is the clear market leader in the Estonian juice market.
In soft drinks and mineral waters, the company is the number two player in Estonia. The sales of mineral waters increased by some 7 percent in January-September but the sales of soft drinks declined by some 4 percent.
The company had a market share of 40 (41) percent in beers, 38 (48) in ciders and 52 (55) in long drinks. The market share in juices (tetrapacks) was 29 (17) percent, in soft drinks 32 (32) and in mineral waters 16 (16) percent (Nielsen, June-July 2011).
The company’s exports and tax-free sales increased by more than 29 percent on the previous year. Exports and tax-free sales represented 4.3 (3.6) percent of total sales.
The company’s net sales from January to September amounted to 59.9 (55.0) million euro, representing an increase of 4.9 million euro or 8.9 percent.
The operating profit for January-September increased by 1.2 million euro or 11.9 percent to 11.1 (9.9) million euro, which is 18.4 (18.0) percent of net sales. The earnings improvement was made possible by increased sales volume and, above all, cost-efficient operations.
July to September 2011
A. Le Coq’s sales in July-September declined by one million litres or 3.0 percent on the previous year, amounting to 37 (38) million litres.
However, the company’s net sales and operating profit improved on the previous year. Net sales from July to September amounted to 21.3 (21.2) million euro. Net sales improved by 0.1 million euro or 0.6 percent.
The company’s third-quarter operating profit stood at 4.5 (4.4) million euro, or 21.3 (20.7) percent of net sales. The operating profit improved by 0.1 million euro or 3.3 percent.
A/S CESU ALUS (Cesu Alus)
January to September 2011
From January to September, the sales of Cesu Alus operating in Latvia totalled 60 (55) million litres. Sales increased by 5 million litres or 8.0 percent.
In the reporting period, the Latvian beer market was growing while the cider and long drink markets declined (Nielsen, June-July and July 2011). The sales of beer and long drinks declined by one percent during the period. The sales of ciders increased by more than 30 percent. The sales of soft drinks (including kvass) were on a par with last year.
The company’s market share in the Latvian beer market was 27 (31) percent, in ciders 52 (45) and in long drinks 53 (48) percent (Nielsen, June-July 2011). The company is a clear market leader in ciders and long drinks and the number two player in beers (Nielsen, July 2011).
The company’s net sales from January to September amounted to 28.1 (25.4) million euro, representing an increase of 2.8 million euro or 10.9 percent.
Operating profit in January-September stood at 0.9 (1.7) million euro, which was 3.1 (6.8) percent of net sales. The operating profit declined by 0.8 million euro or 49.1 percent. Despite increased net sales, earnings declined due to increases in the costs of raw materials and packaging.
July to September 2011
Cesu Alus’s sales in the third quarter declined by one million litres or 5.1 percent to 21 (22) million litres. Net sales amounted to 10.4 (10.7) million euro. Net sales declined by 0.3 million euro or 2.6 percent compared to the previous year.
The company’s operating profit for July-September stood at 0.5 (1.3) million euro, or 4.8 (12.6) percent of net sales. The operating profit declined by 0.8 million euro or 63.3 percent compared to the previous year.
AB VOLFAS ENGELMAN (Volfas Engelman)
January to September 2011
From January to September, the sales of Volfas Engelman operating in Lithuania increased by 7 million litres or 16.0 percent to 53 (46) million litres. The sales of beers increased by as much as 28 percent, ciders by 2 percent and long drinks by 6 percent. The sales of soft drinks and kvass were on a par with last year.
The company’s overall position in the Lithuanian beverage market has become stronger. The company had a market share of 10 (10) percent in beers, which is the largest product group. The company is the market leader in ciders with a market share of 38 (41) percent and in long drinks with a market share of 30 (31) percent. The company is also the clear market leader in the kvass market with a market share of 29 (31) percent (Nielsen, June-July 2011).
The company’s net sales from January to September amounted to 23.0 (20.4) million euro, representing an increase of 2.6 million euro or 12.6 percent. The company’s net sales grew less than the sales volume due to intense price competition in Lithuania and the company’s active promotional operations aimed at increasing market shares.
The company’s operating profit from January to September amounted to 0.5 (1.4) million euro. The operating profit declined by 0.9 million euro. In spite of increased sales volume and net sales, the company’s earnings declined on the previous year. Earnings were hampered by a decline in the average price of net sales due to price competution, as well as increased marketing costs arising from the launch of the new company name and a long-term brand-building programme.
July to September 2011
Volfas Engelman’s sales from July to September amounted to 20 (19) million litres, representing an increase of one million litres or 4.5 percent. Third-quarter net sales stood at 8.7 (8.4) million euro, representing an increase of 0.3 million euro or 3.3 percent.
Third-quarter operating profit amounted to 0.7 (1.1) million euro. The operating profit declined by 0.4 million euro. The deteriorated third-quarter operating profit was due to the same reasons as the drop in cumulative earnings.
OAO LIDSKOE PIVO (Lidskoe Pivo)
January to September 2011
The economic situation in Belarus has been unstable during the entire year 2011. The availability of foreign currency has been scarce and the Belarusian rouble has devaluated by more than 90 percent if comparing the exchange rate in September 2011 with the rate in December 2010.
The day-to-day operations of Lidskoe Pivo in Belarus have developed well in spite of the difficult economic situation prevailing in the country. The company’s sales in the reporting period amounted to 101 (88) million litres, representing an increase of 13 million litres or 15.4 percent. The sales of beers increased by 23 percent, soft drinks and kvass by 5 percent and mineral waters by 85 percent. There was a 6 percent decline in the sales of juices. The sales of Fizz cider, which was launched in the end of 2010, developed well during the period.
The company is the clear market leader in kvass with a market share of 50 (53) percent. The market share in beers is 10 (9) and in juices 31 (29) percent (Nielsen June-July 2011).
The company’s exports in the reporting period increased by 46 percent on the previous year. Exports made 6.8 (5.4) percent of the company’s total sales. The main destinations for exports were Russia and Lithuania.
Lidskoe Pivo’s net sales for the reporting period amounted to 34.9 (31.2) million euro, representing an increase of 3.7 million euro or 11.9 percent. The increase in net sales was cut by the devaluation of the Belarusian rouble. The net sales increase calculated in local currency was excellent, 74.1 percent on the previous year. The positive development in net sales was attributable particularly to increased manufacturing capacity. In addition to volume growth, favourable development was affected by improved average price of net sales and successful product launches.
The operating profit for the period stood at 2.6 (4.6) million euro, which was 7.5 (14.7) percent of net sales. The operating profit declined by 2.0 million euro or 42.6 percent compared to the previous year. Operating profit calculated in local currency (BYR) declined by 10.8 percent on the previous year. The negative operating profit development was affected by heavy devaluation of the local currency during the reporting period, due to which the prices of many raw materials, packaging supplies and other production factors have increased substantially.
July to September 2011
The company’s sales in the third quarter amounted to 41 (38) million litres, representing an increase of 3 million litres or 7.5 percent.
The company’s net sales increased by 1.6 million euro or 12.3 percent to 15.0 (13.3) million euro in spite of the devaluation of the rouble. Net sales calculated in local currency increased in the third quarter by an excellent 95.7 percent. The increase in net sales was particularly attributable to a clear improvement in average price of net sales, as well as successful launches of new product groups and products.
Lidskoe Pivo’s operating profit in the third quarter amounted to 1.1 (2.6) million euro. The operating profit declined by 1.5 million euro. Operating profit calculated in local currency diminished by 24.1 percent due to increased costs.
FINANCING AND INVESTMENTS
Olvi Group’s balance sheet total at the end of September 2011 was 237.0 (232.6) million euro. Equity per share in January-September stood at 5.63 (5.97) euro, a change of -0.34 euro per share on the previous year (the last year’s per-share ratios have been adjusted for comparability with this year’s figures). The equity to total assets ratio of 49.7 (54.1) percent declined by 4.4 percentage points on the previous year but improved in the third quarter by 5.8 percentage points compared to January-June.
The amount of interest-bearing liabilities was 62.5 (50.3) million euro, including current liabilities of 28.7 (10.4) million euro. The balance sheet figures and key ratios also reflect the impacts of devaluation of the Belarusian rouble.
During the period under review, the Group’s gross capital expenditure amounted to 31.5 (17.1) million euro. The parent company Olvi accounted for 7.6 million euro and the subsidiaries in the Baltic states for 4.1 million euro of the total. Lidskoe Pivo’s gross capital expenditure in January-September was 19.8 million euro.
The largest investments in Finland in 2011 consist of the modernisation of wine separation and filtering equipment, an extension to the tank cellar and improvements in the efficiency of the filling halls and storehouse logistics.
In the Baltic states, A. Le Coq’s investments are focused on labelling machines for the filling lines, as well as systems for the processing of malt and water. Cesu Alus will modernise its bottle formats and build an extension to the yeast tank cellar. Volfas Engelman’s investments comprise an extension to the pressure tank cellar and fermentation tanks, as well as some filling line equipment and machinery.
Realisation of Lidskoe Pivo’s investment programme continued with increases in production and storage capacity.
RESEARCH AND 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 PRODUCTS
Finland
OLVI Christmas Beer will once again be on sale during the Christmas season. Christmas Beer is available in two different package sizes, 0.33-litre glass bottles in 6-packs and 0.5-litre single cans.
Subsidiaries
A. Le Coq, Cesu Alus and Volfas Engelman are jointly investing in a new 2-litre PET bottle model, which is the Group’s response to the developing trend towards larger beer packages in the Baltic states. The companies will launch their beer brands in the new bottle model in a rolling schedule along the autumn and winter.
Cesu Alus will launch a new flavour for the Cēsu Džons product family in November, G&Tonic in 0.5-litre bottles. Cēsu Džons WinterPuch 5% in 1.5-litre bottles and Cēsu Winter Porter 6.2% beer will be available again during the winter season, and the latter will also be available in 0.5-litre cans this year.
Volfas Engelman launched the new Fortas Tradicinis 6.1% beer in 0.5-litre cans in October.
PERSONNEL
Olvi Group’s average number of personnel in January-September was 2,069 (2,071). At the end of September, Olvi Group employed a total of 2,029 (2,069) people.
Olvi Group’s average number of personnel by country:
1-9/2011 1-9/2010
Finland 389 (385)
Estonia 316 (315)
Latvia 222 (209)
Lithuania 206 (194)
Belarus 936 (968)
Total 2,069 (2,071)
GROUP STRUCTURE
In July-September 2011, the parent company Olvi increased its holding in Cesu Alus by 0.01 percent. Between January and September, Olvi has acquired a total of 447 shares in Cesu Alus, which is 0.16 percent of share capital. At the end of September 2011, Olvi Group’s holding in Cesu Alus was 99.53 percent, in A. Le Coq 100.0 percent, in Volfas Engelman 99.57 percent and in Lidskoe Pivo 91.58 percent.
SHARES AND SHARE MARKET
The total number of shares at the end of September 2011 was 20,758,808, of these 17,026,552 or 82.0 percent being publicly traded Series A shares and 3,732,256 or 18.0 percent Series K shares. Olvi held 1,124 of its own Series A shares on 30 September 2011 as treasury shares. Each Series A share carries one (1) vote and each Series K share carries twenty (20) votes. Treasury shares held by the company itself are ineligible for voting. Olvi’s share capital at the end of September 2011 stood at 20,758,808 euro.
The Olvi A share was quoted on Nasdaq OMX Helsinki (Helsinki Stock Exchange) at 15.22 (15.20) euro at the end of September 2011. In January-September, the highest quote for the Series A share was 19.86 (15.73) euro and the lowest quote was 13.49 (12.01) euro.
At the end of September 2011, the market capitalisation of the entire stock was 315.9 (315.5) million euro and the market capitalisation of Series A shares was 259.1 (258.8) million euro. In January-September 2011, a total of 2,296,430 Series A shares were traded, representing 13.5 (13.1) percent of the total number of Series A shares. The value of trading was 48.5 (30.5) million euro.
The number of shareholders at the end of September 2011 was 9,006 (7,908). Foreign holdings plus foreign and Finnish nominee-registered holdings represented 18.4 (18.9) percent of the total number of book entries and 6.3 (6.4) percent of total votes. Foreign and nominee-registered holdings are reported in Table 5, Section 9 of the tables attached to this interim report, and the largest shareholders are reported in Table 5, Section 10.
The company did not receive any flagging notices during the reporting period.
BUSINESS RISKS AND THEIR MANAGEMENT
Risk management is a part of Olvi Group’s everyday management and operations. It increases corporate security and contributes to the achievement of operational targets. The objective of risk management is to operate proactively and create operating conditions in which business risks are managed comprehensively and systematically in all of the Group companies and all levels of the organisation. In addition to the company itself, risk management benefits its personnel, customers, shareholders and other related groups.
The objective of risk management is to ensure the realisation of the company’s strategy and secure the continuity of business. Olvi Group identifies, assesses, manages and monitors its crucial risks regularly. With regard to identified risks, the effects, scope and probability of realisation are assessed together with the means of eliminating or reducing the risk. Furthermore, risk management aims to identify and utilise any business opportunities that may arise.
Olvi Group’s strategic risks refer to risks related to the characteristics of the company’s business and strategic choices. The Group’s operations are located in several countries that differ substantially in terms of their social and economic situations and the phases and directions of development. For example, strategic risks relate to changes in tax legislation and other regulations, the environment and foreign exchange markets. If realised, strategic risks can substantially hamper the company’s operational preconditions. The Group’s most substantial identified risks relate to Belarus, particularly the situation in the country’s national economy.
The Group’s most substantial identified operational risks relate to the procurement and quality of raw materials, the production process, markets and customers, personnel, information security and systems, as well as changes in foreign exchange rates.
Procurement of raw materials
Economic development and annual fluctuations in crop yield may affect the prices and availability of major raw materials used within Olvi Group. Disruptions in raw material deliveries may hamper customer relations and business operations. Contracts with raw material supplies are made in writing and, whenever possible, cover a long period of time. All units emphasise the significance of the quality of raw materials and other production factors in the overall production chain.
Production process
The aim is to minimise production risks through clear documentation of processes, increasing the degree of automation, compliance with quality management system and the pursuit of clear operating methods in relation to decision-making and supervision. The efficiency and applicability of processes and methods are monitored using internal indicators. The monitoring and development of production efficiency includes, among other things, the reliability and utilisation rate of production machinery, development of the working environment and factors related to people’s work. The Group has a property and loss-of-profits insurance programme covering all of the operating areas, and its coverage is reviewed annually.
Markets and customers
The Group’s business operations are characterised by substantial seasonal variation. The net sales and operating profit from the reported geographical segments do not accumulate evenly but vary substantially according to the time of the year and the characteristics of each season.
Negative changes in the economy may impact consumers’ purchasing behaviour and hamper the liquidity of hotel and restaurant customers in particular. All Group companies employ efficient credit controls as a major method for minimising credit losses.
Legislative changes and other changes in the operations of authorities may affect the demand for products and their relative competitive position.
Personnel
Risks related to personnel include risks in obtaining labour, employment relationship risks, key person risks, competence risks and risks arising from insufficient well-being at work.
Crucial focal points in HR management include maintaining and developing a good employer image, as well as ensuring the availability and commitment of personnel. Other focal points include maintaining and developing well-being and safety at work, management, training and incentive schemes, as well as the construction and maintenance of backup personnel systems.
Information security and IT
Olvi Group employs an information security policy pertaining to all of the companies. It defines the principles for implementing information security and provides guidelines for its development.
Risks related to information technology and systems are manifested as operational disruptions and deficiencies, for example. The availability and correctness of data is ensured through the choice of operating methods and various technical solutions. A risk analysis pertaining to information security and the operation of information systems is carried out annually.
Financing risks
The Group operates in an international market and is therefore exposed to foreign exchange risk due to changes in exchange rates. Foreign exchange risk consists of sales, purchases and balance sheet items in foreign currency (transaction risk), as well as investments and loans in foreign subsidiaries (valuation risk). Foreign exchange risk is reduced by the fact that most of the Group’s product sales and purchases of raw materials are denominated in euro.
The objective of financing risks management is to protect the Group against unfavourable changes in the financial markets and to secure the Group’s earnings development, liquidity and equity. The parent company’s financial management bears central responsibility for the Group’s financing and the management of financing risks in accordance with principles confirmed by the Group’s Board of Directors. The objectives of centralisation include optimisation of cash flows, cost savings and efficient risk management.
Financing risks are described in more detail in the Investors section of the corporate Web site.
BUSINESS RISKS AND UNCERTAINTIES IN THE NEAR TERM
Uncertainties related to economic development, particularly a potential increase in the unemployment rate, may affect consumers’ purchasing behaviour. Cost cuts in the public economy may contribute to the development of consumer demand.
The greatest uncertainty related to exchange rates is the value of the Belarusian rouble (BYR) in relation to the euro. During the reporting period, BYR devaluated by approximately 90 percent, of which approximately 80 percent during the first half of the year. After the end of the reporting period, the external value of BYR was devaluated by 51 percent as of 21 October 2011. Due to the devaluation, the costs of raw materials and packaging procured from abroad will increase. The devaluation has a negative impact on Lidskoe Pivo’s profitability in the short term because increased costs of manufacture will be reflected in consumer prices with a delay. Furthermore, the devaluation increases the valuation risk of equity and debt investments made by the parent company in its subsidiary. On the other hand, devaluation of the currency improves the competitiveness of products made in Belarus for export markets. The Group has initiated an adaptation and efficiency programme in the Belarusian company for the purpose of minimising the earnings impact of the exchange rate change.
In Finland, the excise tax on beers, long drinks and ciders will increase by 15 percent, and the excise tax on soft drinks will increase from 7.5 cents to 11 cents per litre as of the beginning of 2012. The change is estimated to increase private imports of alcoholic beverages.
EVENTS AFTER THE REVIEW PERIOD
On 20 October 2011, the Belarusian Central Bank announced a devaluation of the Belarusian rouble (BYR) by 51 percent. The new official exchange rate entered into force on 21 October 2011. The impacts of the devaluation on the operations of Lidskoe Pivo in Belarus and the entire Olvi Group are described above under “Business risks and uncertainties in the near term”.
NEAR-TERM OUTLOOK
The full-year sales volumes and net sales level are estimated to be higher than the previous year. The operating profit is estimated to remain on a healthy level but fall slightly short of the previous year mostly due to devaluation of the Belarusian rouble.
Further information:
Lasse Aho, Managing Director
Phone +358 290 00 1050 or +358 400 203 600
OLVI PLC
Board of Directors
TABLES:
- Statement of comprehensive income, Table 1
- Balance sheet, Table 2
- Changes in shareholders’ equity, Table 3
- Cash flow statement, Table 4
- Notes to the interim report, Table 5
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Key media
| OLVI GROUP | TABLE 1 | ||||
| INCOME STATEMENT | |||||
| EUR 1,000 | |||||
|
7-9/ 2011 |
7-9/ 2010 |
1-9/ 2011 |
1-9/ 2010 |
1-12/ 2010 |
|
| Net sales | 82602 | 79820 | 224268 | 206090 | 267509 |
| Other operating income | 86 | 31 | 337 | 392 | 717 |
| Operating expenses | -67019 | -60890 | -186006 | -164849 | -219101 |
| Depreciation and impairment | -4265 | -4623 | -13373 | -13952 | -18640 |
| Operating profit | 11404 | 14338 | 25226 | 27681 | 30485 |
| Financial income | 46 | -427 | 132 | 267 | 514 |
| Financial expenses | -1753 | -411 | -10080 | -1663 | -1831 |
| Financial expenses - net | -1707 | -838 | -9948 | -1396 | -1317 |
| Earnings before tax | 9697 | 13500 | 15278 | 26285 | 29168 |
| Taxes *) | -2585 | -1874 | -2727 | -3717 | -3909 |
| NET PROFIT FOR THE PERIOD | 7112 | 11626 | 12551 | 22568 | 25259 |
| Other comprehensive income items: | |||||
| Translation differences related | |||||
| to foreign subsidiaries | -1242 | -2516 | -13603 | -47 | 557 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 5870 | 9110 | -1052 | 22521 | 25816 |
| Distribution of profit | |||||
| - parent company shareholders | 7115 | 11571 | 12916 | 22265 | 24954 |
| - minority | -3 | 55 | -365 | 303 | 305 |
| Distribution of comprehensive profit: | |||||
| - parent company shareholders | 5958 | 9233 | 242 | 22163 | 25405 |
| - minority | -88 | -123 | -1294 | 358 | 411 |
| Ratios calculated from the profit belonging to parent company shareholders: | |||||
| - earnings per share, EUR | 0.34 | 0.56**) | 0.62 | 1.08**) | 1.21**) |
| *) Taxes calculated from the profit for the review period. | |||||
| **) The per-share ratios have been adjusted for comparability with this year’s figures. | |||||
| OLVI GROUP | TABLE 2 | ||
| BALANCE SHEET | |||
| EUR 1,000 | |||
| 30.9.2011 | 30.9.2010 | 31.12.2010 | |
| ASSETS | |||
| Non-current assets | |||
| Tangible assets | 124963 | 123583 | 124857 |
| Goodwill | 14083 | 17169 | 17169 |
| Other intangible assets | 1273 | 1162 | 1134 |
| Financial assets available for sale | 544 | 288 | 545 |
| Other non-current assets available for sale | 56 | 0 | 333 |
| Loan receivables and other non-current receivables | 138 | 137 | 137 |
| Deferred tax receivables | 2447 | 1552 | 1682 |
| Total non-current assets | 143504 | 143891 | 145857 |
| Current assets | |||
| Inventories | 39959 | 39000 | 35124 |
| Accounts receivable and other receivables | 47537 | 41992 | 47270 |
| Liquid assets | 6000 | 7743 | 7891 |
| Total current assets | 93496 | 88735 | 90285 |
| TOTAL ASSETS | 237000 | 232626 | 236142 |
| SHAREHOLDERS’ EQUITY AND LIABILITIES | |||
| Shareholders’ equity held by parent company shareholders | |||
| Share capital | 20759 | 20759 | 20759 |
| Other reserves | 1092 | 1092 | 1092 |
| Treasury shares | -8 | -222 | -222 |
| Translation differences | -17075 | -4955 | -4402 |
| Retained earnings | 112022 | 107061 | 109750 |
| 116790 | 123735 | 126977 | |
| Minority interest | 942 | 2223 | 2277 |
| Total shareholders’ equity | 117732 | 125958 | 129254 |
| Non-current liabilities | |||
| Loans | 31843 | 37996 | 35607 |
| Other liabilities | 1999 | 1917 | 1755 |
| Deferred tax liabilities | 1915 | 1775 | 1847 |
| Current liabilities | |||
| Loans | 27714 | 9579 | 7578 |
| Accounts payable and other liabilities | 55797 | 55401 | 60101 |
| Total liabilities | 119268 | 106668 | 106888 |
| TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 237000 | 232626 | 236142 |
| OLVI GROUP | TABLE 3 | |||||||
| CHANGES IN OLVI GROUP’S CONSOLIDATED SHAREHOLDERS’ EQUITY | ||||||||
| Treasury | ||||||||
| Share | Other | shares | Transl. | Accrued | Minority | |||
| EUR 1,000 | capital | reserves | account | diff. | earnings | interest | Total | |
| Shareholders’ equity 1 Jan 2010 | 20759 | 1092 | -222 | -4853 | 92746 | 2764 | 112286 | |
| Payment of dividends | -8345 | -8345 | ||||||
| Acquisition of minority interest | 395 | 395 | ||||||
| Total comprehensive income for the period | -102 | 22568 | 55 | 22521 | ||||
| Share of profit belonging to the minority | -303 | 303 | 0 | |||||
| Change in minority interest | -899 | -899 | ||||||
| Shareholders’ equity 30 Sep 2010 | 20759 | 1092 | -222 | -4955 | 107061 | 2223 | 125958 | |
| Treasury | ||||||||
| Share | Other | shares | Transl. | Accrued | Minority | |||
| EUR 1,000 | capital | reserves | account | diff. | earnings | interest | Total | |
| Shareholders’ equity 1 Jan 2011 | 20759 | 1092 | -222 | -4402 | 109750 | 2277 | 129254 | |
| Payment of dividends | -10660 | -10660 | ||||||
| Transfer of treasury shares | 214 | -214 | 0 | |||||
| Gains from transfer of treasury shares | 216 | 216 | ||||||
| Total comprehensive income for the period | -12673 | 12551 | -930 | -1052 | ||||
| Share of profit belonging to the minority | 365 | -365 | 0 | |||||
| Profit arising from the acquisition of minority shares | 14 | 14 | ||||||
| Change in minority interest | -40 | -40 | ||||||
| Shareholders’ equity 30 Sep 2011 | 20759 | 1092 | -8 | -17075 | 112022 | 942 | 117732 | |
| Other reserves include the share premium account, legal reserve and other reserves. | ||||||||
| OLVI GROUP | TABLE 4 | ||
| CASH FLOW STATEMENT | |||
| EUR 1,000 | |||
|
1-9/ 2011 |
1-9/ 2010 |
1-12 2010 |
|
| Net profit for the period | 12551 | 22568 | 25259 |
| Adjustments to profit for the period | 16650 | 17889 | 22253 |
| Change in net working capital | -14007 | -5447 | -1489 |
| Interest paid | -1398 | -1267 | -1848 |
| Interest received | 86 | 125 | 514 |
| Taxes paid | -4408 | -2334 | -2767 |
| Cash flow from operations (A) | 9474 | 31534 | 41922 |
| Investments in tangible assets | -21243 | -11568 | -17419 |
| Investments in intangible assets | -643 | -470 | -522 |
| Sales gains from tangible and intangible | |||
| assets | 4446 | 175 | 376 |
| Expenditure on other investments | 1 | 0 | -257 |
| Cash flow from investments (B) | -17439 | -11863 | -17822 |
| Withdrawals of loans | 30772 | 25000 | 25000 |
| Repayments of loans | -14314 | -36999 | -41288 |
| Increase (-) / decrease (+) in current interest- | |||
| bearing business receivables | -2 | 0 | -2 |
| Dividends paid | -10382 | -8331 | -8321 |
| Cash flow from financing (C) | 6074 | -20330 | -24611 |
|
Increase (+)/decrease (-) in liquid assets (A+B+C) |
-1891 | -659 | -511 |
| Liquid assets 1 January | 7891 | 8402 | 8402 |
| Liquid assets 30 Sep/31 Dec | 6000 | 7743 | 7891 |
| Change in liquid assets | -1891 | -659 | -511 |
OLVI GROUP TABLE 5
NOTES TO THE INTERIM REPORT
The accounting policies used for this interim report are the same as those used for the annual financial statements 2010.
The accounting policies are presented in the Annual Report 2010 which was published on 17 March 2011. The information disclosed in the interim report is unaudited.
The interim report information is presented in thousands of euros (EUR 1,000). For the sake of presentation, individual figures and totals have been rounded to full thousands, which causes rounding differences in additions.
The Group has adopted the following new or revised standards in 2011:
- IAS 24 (Revised), Related Party Disclosures
- IAS 32 (Amendment), Classification of Rights Issues
- IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
- IFRS 14 (Amendment), Prepayments of a Minimum Funding Requirement
| 1. SEGMENT INFORMATION | |||||||
| SALES BY GEOGRAPHICAL SEGMENT (1,000 litres) | |||||||
|
7-9/ 2011 |
7-9/ 2010 |
1-9/ 2011 |
1-9/ 2010 |
1-12/ 2010 |
|||
| Olvi Group total | 147470 | 143647 | 401509 | 365297 | 471913 | ||
| Finland | 40106 | 37387 | 112380 | 102571 | 136832 | ||
| Estonia | 36498 | 37620 | 105368 | 98009 | 124772 | ||
| Latvia | 21423 | 22563 | 59565 | 55147 | 68705 | ||
| Lithuania | 19958 | 19106 | 53305 | 45960 | 59075 | ||
| Belarus | 40831 | 37993 | 100989 | 87520 | 111323 | ||
| - sales between segments | -11346 | -11022 | -30098 | -23910 | -28794 | ||
| NET SALES BY GEOGRAPHICAL SEGMENT (EUR 1,000) | |||||||
|
7-9/ 2011 |
7-9/ 2010 |
1-9/ 2011 |
1-9/ 2010 |
1-12/ 2010 |
|||
| Olvi Group total | 82601 | 79820 | 224268 | 206090 | 267509 | ||
| Finland | 32258 | 30833 | 90671 | 83834 | 110989 | ||
| Estonia | 21307 | 21171 | 59940 | 55016 | 69935 | ||
| Latvia | 10391 | 10665 | 28145 | 25384 | 31448 | ||
| Lithuania | 8701 | 8422 | 23025 | 20446 | 26379 | ||
| Belarus | 14991 | 13350 | 34919 | 31197 | 40769 | ||
| - sales between segments | -5047 | -4621 | -12432 | -9787 | -12011 | ||
| OPERATING PROFIT BY GEOGRAPHICAL SEGMENT (EUR 1,000) | |||||||
| 7-9/ 2011 | 7-9/ 2010 | 1-9/ 2011 | 1-9/ 2010 |
1-12/ 2010 |
|||
| Olvi Group total | 11404 | 14338 | 25226 | 27681 | 30485 | ||
| Finland | 4611 | 4859 | 11709 | 10790 | 11702 | ||
| Estonia | 4532 | 4385 | 11053 | 9878 | 11905 | ||
| Latvia | 495 | 1347 | 877 | 1722 | 1714 | ||
| Lithuania | 701 | 1127 | 523 | 1448 | 1423 | ||
| Belarus | 1123 | 2631 | 2626 | 4577 | 4444 | ||
| - eliminations | -58 | -11 | -1562 | -734 | -703 | ||
| 2. PERSONNEL ON AVERAGE | 1-9/2011 | 1-9/2010 | 1-12/2010 |
| Finland | 389 | 385 | 378 |
| Estonia | 316 | 315 | 312 |
| Latvia | 222 | 209 | 207 |
| Lithuania | 206 | 194 | 195 |
| Belarus | 936 | 968 | 959 |
| Total | 2069 | 2071 | 2051 |
| 3. RELATED PARTY TRANSACTIONS | |||
| Employee benefits to management | |||
| Salaries and other short-term employee benefits to the Board of Directors and Managing Directors | |||
| EUR 1,000 | |||
| 1-9/2011 | 1-9/2010 | 1-12/2010 | |
| Managing Directors | 844 | 516 | 668 |
| Chairman of the Board | 129 | 171 | 225 |
| Other members of the Board | 92 | 81 | 109 |
| Total | 1065 | 768 | 1002 |
| 4. SHARES AND SHARE CAPITAL | ||
| 30.9.2011 | % | |
| Number of A shares | 17026552 | 82,0 |
| Number of K shares | 3732256 | 18,0 |
| Total | 20758808 | 100,0 |
| Total votes carried by A shares | 17026552 | 18,6 |
| Total votes carried by K shares | 74645120 | 81,4 |
| Total number of votes | 91671672 | 100,0 |
The General Meeting of Olvi plc on 7 April 2011 decided to implement a free issue (split) in which one Series A share produced one free Series A share, and one Series K share produced one free Series K share. 8,513,276 Series A shares and 1,866,128 Series K shares were issued. After the issue, the number of Series A shares is 17,026,552 and the number of Series K shares is 3,732,256. The total number of shares is 20,758,808.
All shareholders registered in the list of shareholders on the record date 12 April 2011 were entitled to the new shares issued. The new Series A shares were included in public trading and the book-entry system on 13 April 2011, at which time they carried shareholders’ rights.
Votes per Series A share 1
Votes per Series K share 20
The registered share capital on 30 September 2011 totalled 20,759 thousand euro. Olvi Group’s General Meeting of 7 April 2011 decided to amend Article 3 of the Articles of Association by eliminating the reference to nominal value of shares.
Olvi plc’s Series A and Series K shares received a dividend of 1.00 euro per share for 2010 (0.80 euro per share for 2009), totalling 10.4 (8.3) million euro. The dividends were paid on 19 April 2011. The new shares issued in the free issue decided by the General Meeting of 7 April 2011 did not entitle to dividends paid for 2010.
The Series K and Series A shares entitle to equal dividend. The Articles of Association include a redemption clause concerning Series K shares.
5. SHARE-BASED PAYMENTS
The share-based incentive scheme for Olvi Group’s key personnel is described in the interim report published on 11 August 2011.
6. TREASURY SHARES
Olvi plc held a total of 1,124 of its own Series A shares on 30 September 2011, and the total acquisition price was 8.5 thousand euro.
Series A shares held by the company as treasury shares represented 0.005 percent of the share capital and 0.001 percent of the aggregate number of votes. The treasury shares represented 0.007 percent of all Series A shares and associated votes.
The decisions made by the Annual General Meeting of 7 April 2011 with regard to the distribution of dividends, a free issue and authorisations granted to the Board of Directors for acquiring and transferring treasury shares are described in the stock exchange release published on 7 April 2011.
The Board of Directors of Olvi plc has not exercised the authorisation to acquire Series A shares granted by the General Meeting between January and September 2011.
| 7. NUMBER OF SHARES *) | 1-9/2011 | 1-9/2010 | **) | 1-12/2010 | **) | |
| - average | 20749272 | 20734008 | 20734008 | |||
| - at end of period | 20757684 | 20734008 | 20734008 | |||
*) Treasury shares deducted.
**) The numbers of shares have been adjusted for comparability with the numbers for 2011.
| 8. TRADING OF SERIES A SHARES ON THE HELSINKI STOCK EXCHANGE | ||||
|
1-9/ 2011 |
1-9/ 2010 |
1-12/ 2010 |
||
| Trading volume of Olvi A shares | 2296430 | 2237376*) | 3256516 | *) |
| Total trading volume, EUR 1,000 | 48535 | 30464 | 45735 | *) |
| Traded shares in proportion to | ||||
| all Series A shares, % | 13.5 | 13.1 | 19.1 | |
| Average share price, EUR | 23.27 | 13.56*) | 14.03 | *) |
| Price on the closing date, EUR | 15.22 | 15.20*) | 15.35 | *) |
| Highest quote, EUR | 19.86 | 15.73*) | 15.73 | *) |
| Lowest quote, EUR | 13.49 | 12.01*) | 12.01 | *) |
| *) The figures have been adjusted for comparability with the figures for 2011. | ||||
| 9. FOREIGN AND NOMINEE-REGISTERED HOLDINGS ON 30 SEPTEMBER 2011 | ||||||
| Book entries | Votes | Shareholders | ||||
| qty | % | qty | % | qty | % | |
| Finnish total | 16934403 | 81.58 | 85903795 | 93.71 | 8956 | 99.44 |
| Foreign total | 850827 | 4.10 | 2794299 | 3.05 | 44 | 0.49 |
| Nominee-registered (foreign) total | 398 | 0.00 | 398 | 0.00 | 1 | 0.01 |
| Nominee-registered (Finnish) total | 2973180 | 14.32 | 2973180 | 3.24 | 5 | 0.06 |
| Total | 20758808 | 100.00 | 91671672 | 100.00 | 9006 | 100.00 |
| 10. LARGEST SHAREHOLDERS ON 30 SEPTEMBER 2011 | ||||||
| Series K | Series A | Total | % | Votes | % | |
| 1. Olvi Foundation | 2363904 | 896332 | 3260236 | 15.71 | 48174412 | 52.55 |
| 2. Hortling Heikki Wilhelm *) | 901424 | 155124 | 1056548 | 5.09 | 18183604 | 19.84 |
| 3. The Heirs of Hortling Kalle Einari | 187104 | 25248 | 212352 | 1.02 | 3767328 | 4.11 |
| 4. Hortling Timo Einari | 165824 | 34608 | 200432 | 0.97 | 3351088 | 3.66 |
| 5. Hortling-Rinne Marit | 102288 | 2100 | 104388 | 0.50 | 2047860 | 2.23 |
|
6. Skandinaviska Enskilda Banken, nominee reg. |
1409665 | 1409665 | 6.79 | 1409665 | 1.54 | |
| 7. Nordea Bank Finland plc, nominee register | 1332765 | 1332765 | 6.42 | 1332765 | 1.45 | |
| 8. Ilmarinen Mutual Pension Insurance Company | 903235 | 903235 | 4.35 | 903235 | 0.99 | |
| 9. Autocarrera Oy Ab | 460000 | 460000 | 2.22 | 460000 | 0.50 | |
| 10. Kamprad Ingvar | 425200 | 425200 | 2.05 | 425200 | 0.46 | |
| Other | 11712 | 11382275 | 11393987 | 54.88 | 11616515 | 12.67 |
| Total | 3732256 | 17026552 | 20758808 | 100.00 | 91671672 | 100.00 |
*) The figures include the shareholder’s own holdings and shares held by parties in his control.
| 11. PROPERTY, PLANT AND EQUIPMENT | |||
| EUR 1,000 | |||
| 1-9/2011 | 1-9/2010 | 1-12/2010 | |
| Increase | 31278 | 16678 | 23044 |
| Decrease | -4622 | -3086 | -4405 |
| Total | 26656 | 13592 | 18639 |
| 12. CONTINGENT LIABILITIES | 30.9.2011 | 30.9.2010 | 31.12.2010 |
| EUR 1,000 | |||
| Pledges and contingent liabilities | |||
| For own commitments | 3511 | 4215 | 4453 |
| For others | 134 | 810 | 810 |
| Leasing liabilities: | |||
| Due within one year | 512 | 496 | 748 |
| Due within 1 to 5 years | 852 | 861 | 672 |
| Due in more than 5 years | 0 | 0 | 0 |
| Total leasing liabilities | 1364 | 1357 | 1420 |
| Package liabilities | 3778 | 5421 | 3648 |
| Other liabilities | 1980 | 1980 | 1980 |
13. CALCULATION OF FINANCIAL RATIOS
Equity to total assets, % = 100 * (Shareholders’ equity held by parent company shareholders + minority interest) / (Balance sheet total – advances received)
Earnings per share = Profit belonging to parent company shareholders / Average number of shares during the period, adjusted for share issues
Equity per share = Shareholders’ equity held by parent company shareholders / Number of shares at end of period, adjusted for share issues
Gearing,% = 100 * (Interest-bearing debt – cash in hand and at bank) / (Shareholders’ equity held by parent company shareholders + minority interest)
