Anora plans job cuts as Q3 sales drop

Nordic drinks group Anora has reported stagnant spirits sales for the third quarter of 2023 and a new operating model that could result in the loss of 40 jobs.

Anora’s spirits division reported sales of €57.2 million (US$61.1m) for the three months to September 2023 (Q3), the same amount as last year. However, spirits sales rose by 1.9% to €164.5m (US$175.8m) for the first nine months of 2023, led by global markets.

Third-quarter sales were flat due to the weak Norwegian and Swedish currency exchange rates, and a volume decline in the two monopoly markets.

The group noted that Koskenkorva Vodka (which represents 15% of its total spirits sales) continued to grow but more slowly than in the ‘very strong’ first half of the year.

In Sweden, spirits sales fell by 2.6% in the third quarter, with market share in vodka growing strongly while gin struggled.

Sales of spirits in Norway declined by 9.1%, while Finland reported an increase of 5.3%, led by the grocery channel.

In international markets, the Baltics reported double-digit growth for spirits and a sales decrease in Denmark.

The wine segment struggled with sales down by 8.3% in the third quarter of this year. The industrial arm also fell by 9.2% in the same period.

In total, Anora’s sales grew by 7.1% to €515.3m (US$550.8m) for the nine months but declined by 4.9% in the latest quarter. It followed a sales increase of 14.4% for the first six months of 2023.

Jacek Pastuszka, who joined Anora as CEO last month, said: “Towards the end of Q3, we carried out major price adjustments in the monopoly pricing window. We started to see the first results from the initiated price increases and also previously announced cost cuts.

“However, we still experienced a negative impact on sales and profitability due to lost partners in wine and weaker currencies. The estimated impact of weaker currencies, particularly in the wine segment, was about €3.4 million [US$3.6m] in Q3 and €9.5 million [US$10.1m] during the first nine months.”

Pastuszka noted that the cost-saving programme launched in the second quarter, with the aim of saving €6m (US$6.4m), has seen two-thirds of the goal reached by the end of the latest quarter.

“Looking ahead to the rest of this year, our full-year guidance remains valid,” he continued.

“We remain highly focused on executing our strategy and improving our profitability and efficiency. This includes the savings programme, price adjustments and a focus on reducing net working capital and improving inventory turnover.”

In August, Anora lowered its earnings before interest, tax, depreciation, and amortisation (EBITDA) guidance for 2023 to €70m-€78m (US$77m-US$83m).

A month later, the group agreed to sell its Larsen Cognac brand to ThaiBev’s International Beverage division for €54.1m (US$58m).

Operating model change

As part of the company’s strategy to improve profitability, Anora is planning to develop its operational model and structure with changes across its three divisions (spirits, wine and industrial).

The change negotiations, which will start in November, could affect approximately 650 employees. It would mean changes to the commercial operations in Anora’s wine and spirits segments in its key Nordic markets, and its industrial arm in Finland.

Anora has estimated that the changes would result in redundancies of around 40 roles and savings of €3m to €4m (US$3.2m-US$4.3m).

The group said the restructure aims to strengthen the commercial focus on growth categories, reduce complexity and find further synergies in line with Anora’s 2030 strategy.

New organisations are expected to be in place by January 2024, when the negotiations are due to end.