Q2 2022: Strong acquisition-driven growth and stable Nordic markets

April – June 2022

• Net sales increased by 27.8% to SEK 999 (782) million.
• Operating profit fell by 6.0% to SEK 68 (72) million. Operating margin was 6.8% (9.2).
• EBITA, adjusted, increased to SEK 96 (79) million. EBITA margin, adjusted, was 9.6% (10.1).
• Market share increased in Sweden to 25.2% (25.0), in Finland to 15.7% (14.9) and in Norway to 5.2% (3.8).

January – June 2022

• Net sales increased by 27.3% to SEK 1870 (1469) million.
• Operating profit fell by 8.1% to SEK 133 (145) million. Operating margin was 7.1% (9.9).
• EBITA, adjusted, increased to SEK 191 (157) million. EBITA margin, adjusted, was 10.2% (10.7).
• Market share increased in Sweden to 25.4% (25.2), in Finland to 16.2% (15.6) and in Norway to 5.3% (3.6).

Significant events during the quarter

• The acquisition of MyTaste & Food AB (Vinklubben) was completed according to plan with a transaction date of 1 April.
• The Board's proposals for an ordinary dividend of SEK 1.50 per share and the election of Lars Ljungälv as a full Member of the Board were adopted by the Annual General Meeting on 20 May.
• 81 procent of the shares in Viva Global AB (Viva China) was divested to Vin och Vind AB, a company that is closely related to Viva Wine Group, on 1 June.

Significant events during the period

• A contract was signed with Speqta AB for acquisition of all the shares in MyTaste & Food AB (Vinklubben), Sweden’s largest online community for wine. The purchase price was SEK 120 million on a cash and debtfree basis. The transaction was completed on 1 April.

Emil Sallnäs, CEO comments:

STRONG ACQUISITION-DRIVEN GROWTH AND STABLE NORDIC MARKETS
The Nordic monopoly markets continued to show stable performance in the second quarter, while the eCom segment continues to have high comparatives driven by the pandemic. Cost increases put temporary pressure on profitability.

ACQUISITION-DRIVEN GROWTH
We can look back on an active year, with several acquisitions contributing to our growth. The rate of growth in the quarter was 28 percent, largely attributable to the acquisitions of Vicampo, Norwegian Beverage Group, Pietro di Campo and Vinklubben. We continue to outperform the market in Sweden, Finland and Norway, and we are also starting to see more normal comparative periods as the effects of the pandemic wear off. We gained market share in all monopoly markets compared to the previous year, and Norway once again performed very strongly in the quarter. In the eCom segment, we continue to have high comparatives but we continue to see strong interest in online wine shopping. With our differentiated e-commerce concepts targeting different price categories, we are well equipped to respond to changes in e-commerce consumer buying patterns.

TEMPORARY PRESSURE ON MARGINS
The war in Ukraine has created a global shortage of glass and certain other key input materials, leading to increased costs and, in some cases, longer lead times. The war, combined with rapidly rising inflation and increased transport costs, has temporarily impacted our margins. The weakness of the Swedish krona has also negatively impacted our margins due to our heavy cost exposure to the Euro. We are hedging our foreign exchange exposure and see significant positive effects from our hedges in net financial income in the quarter and half year.

The second quarter is typically our most active period, with many product launches and customer activities driving marketing costs. Cost increases will be offset by price increases, but there is a time lag. Unlike the e-commerce market, price adjustments in monopoly markets can only be made two to three times a year at timed pricing windows, and we made a first price adjustment in March. We intend to implement further price increases on future occasions, but this will mean a certain delay before profitability is restored.

OPERATIONAL EXCELLENCE
For us, operational excellence means, among other things, efficient operation with substantial synergies and as few unnecessary costs as possible. In the Nordic monopoly markets, our new COO has targeted increasing synergies and optimising everything from product development to logistics solutions. This will not only improve profitability, it will also make the integration of future acquisitions much smoother and allow us to attain synergistic benefits more quickly.

We have clarified our strategy to focus on our core business, and as part of this we divested our operations in China during the quarter. We see that the Nordic monopoly markets and the e-commerce market in Europe offer enough growth opportunities.

TURMOIL CREATES OPPORTUNITIES
The first half year of 2022 has been turbulent in many ways and we have faced a number of challenges, but overall we are confident about the outlook. We are working hard to streamline our operations while growing both organically and through acquisitions. Our underlying business is stable and we will gradually strengthen profitability through price adjustments and synergies. We also see interesting acquisition opportunities in the long term.

Emil Sallnäs, CEO Viva Wine Group
Stockholm, August 2022

Please see the full report in the attached pdf.

Publication and presentation
Viva Wine Group's interim report for the second quarter 2022 will be published on 25 August 2022 at 8:00 a.m. On the same day at 11:00 a.m. CET a webcast telephone conference will be held with CEO Emil Sallnäs and CFO Linn Gäfvert. The webcast can be accessed here: https://financialhearings.com/event/44427. The presentation will also be made available at https://investors.vivagroup.se/reports-presentations/

For more information, please contact:
Mikael Sundström, Director Sustainability, Communications & Investor Relations
Tel: +46 70 943 22 26
Email: mikael.sundstrom@vivagroup.se