Altia Annual Report 2010
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Altia Annual Report 2010 1 Altia’s year 2010 2 CEO’s review 4 Operating environment 6 Strategy 8 Comprehensive product portfolio 10 Brands 11 Trading 12 Industrial Services 13 Supply Chain 14 Expertise in alcoholic beverage business 24 Growing and responsible Altia 26 Financial responsibility 27 Environmental responsibility 30 Social responsibility 34 Board of Directors 35 Executive Management Team 36 Contact details Altia’s year 2010 The Group operated according to the renewed strategy and operating model. Resulting from the business acquisition, Altia became the leading actor in its operating area. Operating profit tripled. Altia’s year 2010 Your 1st Choice Altia is the leading wine and spirits company offering quality brands in the Nordic and Baltic countries. Altia produces, delivers, markets, sells, imports and exports alcoholic beverages in these markets. Altia’s own brands such as Blossa, Chill Out, Explorer, Grönstedts, Koskenkorva, Jaloviina, O.P. Anderson, Renault and Skåne Akvavit have a strong market position and many of them a long heritage to cherish. Altia’s partner brands represent both local and international brands from all over the world, such as Codorníu, Drostdy-Hof, Hardy’s, Jack Daniel’s, Bowmore, Nederburg, Ravenswood and Robert Mondavi. Altia serves its customers, partners and consumers close to markets with its wide production, sales and logistic set-up. Key Ratios for Altia Group 2010 2009 2008 Net sales, EUR million 487.9 407.3 463.3 Operating profit, EUR million 32.6 15.6 9 (% of net sales) 6.7 3.8 1.9 Profit before taxes, EUR million 29.6 9.4 9.9 (% of net sales) 6.1 2.3 2.1 Profit for the period, EUR million 25.7 5.3 6.1 (% of net sales) 5.3 1.3 1.3 Balance sheet total, EUR million 581.1 398.4 402.2 Return on equity, % 17.2 4.3 4.7 Return on invested capital, % 10 4.2 6.8 Equity Ratio, % 29.6 34.3 30.3 Gearing, % 76.3 55.5 87.4 Capital expenditure, EUR million 106.5 6.7 14.7 FINLAND total 30.2% Average number of personnel 1,122 1,042 1,108 NORWAY spirits 54.4% total 7.3% wines 29.3% spirits 4.6% wines 7.9% Altia market shares 2010, % SWEDEN total 9.2% ESTONIA In monopoly markets, (Finland, Sweden and Norway) spirits 29.7% total 13.0% market share means monopoly sales. In open markets, wines 16.7% spirits 19.0% (Denmark, Estonia and Latvia) market share is an estimate. wines 6.0% The market share of Sweden is for the latter half of the LATVIA year 2010, during which the acquired brands were total 9.5% included in reporting. spirits 8.0% wines 13.0% DENMARK total – spirits 3.5% wines 2.0% CEO’s review CEO’s review I am pleased to announce that Altia Group’s profits Dear reader, have improved substantially compared to last year and we have also achieved the financial and operational goals we set ourselves for 2010. We continued to execute our strategy as planned. I would like to extend my thanks to all our staff for their excellent work and strong commitment to the Group during the year. Altia Group’s net sales amounted to EUR 487.9 (407.3) million in the reporting period. Operating profit grew substantially from the previous year and totalled EUR 32.6 (15.6) million. Return on invested capital increased to 10% (4.2%) and return on equity increased to 17.2% (4.3%). Profit improvements have been generated through enhanced efficiency across the Group, profitable growth, efficient utilisation of capacity and opera- tional improvement in Sweden. The units that were already performing well, particularly in Finland and Norway, have continued their stable performance and provided a valuable contribution to the Group. The integration of the business acquired in Sweden and Denmark proceeded as planned and we succeeded in achieving the goals set for the first year after the acquisition. All those involved in the project, both new and existing employees of Altia, have made a significant contribution to this success. We have achieved remarkable integration benefits during the year, which will continue in future years. Following the acquisition, Altia has become the biggest wine and spirits producer and importer in the Swedish market, and we now have an excellent opportunity to become the leading wine and spirits producer and importer in our operating area. In Sweden, our largest market, the development and efficiency improvements made in 2009 have been highly successful and we achieved substantial operational and financial improvements compared to the previous year. At the same time, we have created a strong basis for operational growth in this market. 2 Altia Annual Report 2010 In Denmark, we increased our market share as years, thanks to excellent cooperation between our a result of the acquisition and our strategy is to product development, marketing, sales and produc- continue strengthening our market position. In tion professionals. This will create a strong basis for Norway, we embarked on an efficiency improve- growth in the future. ment project during the year. The competitive We continue in 2011 guided by our strategy landscape between importers continues to be In 2011, we will continue to execute our strategy. exceptionally tough, but we believe that we are well Together with operational efficiency improvements, placed to strengthen our market position. our strategy work will concentrate on growth In the Baltic countries, market volume stabilised and developing competencies required in strategy during the year but was clearly below the level of realisation. Our goal is to grow faster than the 2008. The benefits of our efficiency improvement markets, and we will seek growth both organically project will be delivered in 2011. Once the overall and through acquisitions. economic situation improves, we will be able to leverage our strong market position in these countries. In Finland, our performance was substantially affected by alcohol tax increases, which caused a Antti Pankakoski decrease in the market volume of spirits of approxi- CEO mately 7%. Despite this, our financial performance was at the same level as last year due to our programme of operational efficiency improvements. We achieved remarkable cost savings in production, purchasing and logistics operations during the year, which increased supply chain efficiency, and we also achieved a high capacity utilisation rate. In 2010, we acquired the Renault cognac trademark, which supplements our product portfolio and gives us significant efficiency benefits within the cognac business. Revised operating model reflects our strategy Our operating model comprising three business areas (Brands, Trading and Industrial Services) has turned out to be highly successful. All business areas have created their own competition strategies and operating models best suited to them. We have already been able to find substantial synergy opportunities through better cooperation between the supply chain and business areas, which will give us remarkable efficiency and competitive advan- tages in the future. During the reporting period, we have brought more new products to market than in previous 3 Altia Annual Report 2010 Operating environment Altia’s knowhow is emphasised at divergent market areas National celebrations, beverage and food culture have their own history and idiosyncracies, which in turn affect Altia’s strategic choices. Although the countries in our areas of operation are geographically close to each other, cultural and drinking habits differ significantly between each market. Finns have their own tradition of spirits, but beer Norwegian wine market continues. In Estonia constitutes more than 50% of alcohol consumed and Latvia, where the alcoholic beverage trade is and the growth of wine consumption has stabilised. characterised by a strong grey economy, the wine Cognacs and brandies are popular drinks in both market is growing, although the volumes are small. Finland and Norway. In the Danish, Swedish and In Finland, the wine market has potential for Norwegian drinking cultures, aquavit plays an growth. important part. The Danes, who drink almost as Consumers interested in responsibility much wine per capita as the inhabitants of the and environmental issues traditional South European wine countries, also Across all our markets, a noticeable trend empha- drink beer and bitters. Swedes favour light wines sising responsibility and environmental themes is and whisky from spirits. In Norway, the popularity engaging consumers’ interest, for example towards of wine has grown steadily. Estonia and Latvia are organic and fair trade wines, recyclable plastic clearly vodka countries where wine consumption is bottles, bag-in-boxes and lighter glass bottles. The low. economic recovery is gradually increasing demand The markets are expected to for the more expensive product categories, such as develop favourably finer cognacs and malt whiskies. The development of Altia’s operating environment Combining alcohol beverages, especially wine and in 2010 and the anticipated future trends create food, together stronger than earlier shows changes prerequisites for the execution of the company’s in lifestyle. As living standards rise, consumers growth strategy. Despite continuing economic naturally associate a variety of different alcoholic uncertainty, each of Altia’s markets is expected to beverages with celebration and everyday situations. experience growth during the current year. Altia aims to provide the most appropriate products Growth expected in wine markets for these situations across all its markets. Looking ahead, spirits sales are expected to grow Looking ahead, the cocktail culture and the in Estonia and Latvia. In Denmark and Norway, popularity of ready-made cocktail drinks is spirits markets are expected to remain at the current expected to rise. Consumers are interested in new, level. In Finland and Sweden, increased taxation exotic flavours and shot drinks. In Norway and of alcohol has resulted in the decline of spirits sales Denmark, the so-called old world wines are valued, and the trend is expected to continue.