Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Olvi Oyj (STU:OVI, Financial) has successfully retained its market share across various categories and markets, despite a competitive environment.
- The company has improved its profitability significantly, with adjusted EBIT growing by almost 22% and EBIT by 53% compared to the previous period.
- Operational efficiency improvements have been a major driver of profitability, alongside stabilized raw and packaging material prices.
- Olvi Oyj (STU:OVI) has successfully launched new products, recognized as the most successful in their respective countries.
- The company has benefited from favorable weather conditions, which have helped offset some consumer demand softness.
Negative Points
- Despite improvements, Olvi Oyj (STU:OVI) has not yet returned to pre-COVID profitability levels.
- The company's volumes did not grow over the nine-month period, indicating challenges in expanding market reach.
- Inflation on packaging and raw materials remains historically high, posing ongoing cost challenges.
- The Baltic region faces intensified price competition, impacting volume growth and necessitating strategic adjustments.
- In Belarus, Olvi Oyj (STU:OVI) faces uncertainties due to currency fluctuations and a challenging operating environment.
Q & A Highlights
Q: What is the current status of Olvi Oyj's withdrawal from the Belarus market?
A: Patrik Lundell, CEO, explained that the withdrawal process began in 2022 following the war. A law prohibiting sales was enacted later that year. Although new laws now allow sales with a permit, Olvi Oyj has not yet received such a permit, so there is no further progress to report.
Q: How has the change in Finnish law regarding alcohol content affected Olvi Oyj?
A: Patrik Lundell, CEO, noted that the law change allowed fermented products with up to 8% alcohol content to be sold in grocery stores. This enabled Olvi Oyj to introduce some of its strong brands to a broader market, resulting in increased volumes. However, this segment represents less than 1% of total volume, so while beneficial, it is not a major change.
Q: When will the pricing actions in Finland be fully reflected in the financial statements?
A: Patrik Lundell, CEO, stated that most pricing interventions have been implemented. The positive impact is primarily due to operational improvements and portfolio management rather than just price increases. The company aims to return to pre-COVID profitability levels, with significant progress already visible in financial statements.
Q: What is the outlook for pricing power in the Baltic region given the competitive environment?
A: Patrik Lundell, CEO, mentioned that price competition is intensifying in the Baltic region. Olvi Oyj is actively participating to protect its market share and volumes. This trend has been ongoing since summer, and no major changes are expected in the fourth quarter.
Q: How is the market outlook in Belarus for Olvi Oyj's relevant categories?
A: Patrik Lundell, CEO, reported increased demand for non-alcoholic products during the summer. However, uncertainties remain, particularly regarding currency fluctuations and the operating environment. The economic development in Belarus differs from other markets, and while stable so far, future outlooks are uncertain.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
