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Altia makes temporary job cuts as Q1 sales dip

Nordic drinks group Altia reported a net sales decline of 7.6% for its first quarter and has made a number of temporary staff layoffs as a result of the coronavirus crisis.

Altia operates the O.P. Anderson aquavit distillery in Sweden

Helsinki-headquartered Altia saw net sales reach €68.2 million (US$74.2m) for the first three months of 2020. Group net sales in constant currencies fell 6%.

The company said the decline was due to Altia Industrial’s contract manufacturing volumes and the barley price normalising after the previous year’s high price level.

Altia has implemented temporary layoffs and part-time work in Finland, Sweden and Norway. Last month, the Koskenkorva vodka producer said it was considering job cuts due to the impact of the coronavirus pandemic on the company.

The group has also adjusted its cross structure in the short term, including a freeze on marketing activities in travel retail and the on-trade.

CEO Pekka Tennilä said: “The outbreak of the Covid-19 turned into a global pandemic with governments issuing strict restrictions on the movement of people and policies for social distancing. This is affecting our operating environment and ways of working in a very significant way.

“We are continuously in close contact with our partners and suppliers to ensure the availability of products and raw materials – so far all our operations have run without any major disruptions. Due to the crisis, travel retail and on-trade channels, which account for about 20% of Altia’s consumer beverage sales, have been close to zero since mid-March.”

During Q1, the Finland and exports segment saw net sales dip by 4.6% “despite the higher volumes in the monopoly channel in the first quarter”. The decline was driven by the closure of travel retail and on-trade channels.

The group’s Scandinavian business grew 1.4% due to the “higher monopoly volumes in March” which offset the decline in the on-trade. The Altia Industrial unit fell 17.5%.

Spirits sales dropped by 1.3%, negatively impacted by the decline in travel retail.

Coronavirus impact

Altia also released an update on how the coronavirus pandemic could affect the group. Sales in travel retail, on-trade and exports channels are expected to be at, or close to zero in the second quarter.

In addition, sales to monopolies and the grocery trade are expected to remain “stable”. However, the group said “despite consumers shifting purchases of alcoholic beverages to monopolies, the sales in monopolies will not compensate the shortfall coming from travel retail, exports and on-trade”.

Altia said the uncertainty of sales in the monopoly channel is down to the market “remaining open and continuing normal operations which could be dependent on for example the health of the monopolies’ personnel and political decision-making”, as well as Altia’s ability to deliver products.

Tennilä said the group “will face the full impact of the crisis in our operations” during the second quarter.

He said: “We are focusing our sales and marketing efforts on the open sales channels with our digital platforms Viinimaa in Finland and folk-o-folk in Sweden playing an increasingly important role.

“The liquidity position of the group has remained stable throughout the crisis. We are pleased that we have had good access to funding in the challenging debt market. We will continue to focus on securing the liquidity during the upcoming months.”

Beyond the pandemic, Tennilä said the firm will “concentrate on executing monopoly tenders, creating novelties for the growing gin, liqueur and rum categories as well as developing low-alcoholic beverages for the grocery trade”. Altia will also work towards its long-term target of making all packaging 100% recyclable.

Altia has suspended its guidance for 2020 due to “uncertainties” over the coronavirus crisis. Tennilä said: “Visibility for the rest of the year is poor and forecasting the Covid-19 impacts on the operating environment reliably is difficult.”

The group will provide a new guidance “if the impacts of Covid-19 on the operating environment and business conditions can be assessed in a reliable manner”.

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