Hey, good morning, everyone. It's now 11:01 A.M., so I think we are most here. Let's start with the conference call. Good morning and warm welcome to Anora's Q1 results. My name is Milena Häggström. I'm the head of investor relations here at Anora. Our presenters today are our CEO, Jacek Pastuszka, and our CFO, Sigmund Toth. After their presentations, we will start with the normal Q&A session. You can also start posting questions during the presentations through the chat. After the presentations, you can unmute yourself to ask a question. But now, please go ahead, Jacek.
Yes, thank you very much, Milena. Good morning to everybody on the call. As always, I will spend the first 15-20 minutes going through our overall performance with focus on the P&L management and the commercial agenda. And then Sigmund will take over for more details, and then we'll be open for questions. To put things in perspective, which is obviously not new news to any of you, this is the smallest, by far the smallest quarter of the year. It is inconclusive for the full year as far as the full year performance is concerned, which we have seen also last year where the biggest drop in performance was coming in the second and third quarter. I want to reassure you that our performance in the first quarter was in line with our internal projections, with our internal expectations and forecast.
Therefore, we are confirming the full year guidance at the level communicated before, between EUR 75 million and EUR 85 million. The turnaround may be smaller than expected by the market, but we strongly believe that it comes in the right places. I will focus on those right places throughout my presentation in this call. Also, our performance is illustrative both of our current priorities and also of our current challenges, or maybe I should rather call them future priorities. Let me start with the current priorities. As we have communicated before in these calls, our priority, the management team's priority right now, is to improve the profitability, the marginality, especially the gross marginality of our business, and improve working capital, cash generation, strengthen the balance sheet, reduce net debt leverage. Generally improve the financial fundamentals of the company.
The progress we are making on this front, I believe, is underlined very strongly, especially by the margin enhancement, by the margin expansion in the first quarter of around 280 basis points, with strong contribution from both beverage segments. Both of them were around 250 basis points above last year, which by any standard is a significant margin expansion. I will talk a little bit more in a second about how we are accomplishing that. And also, our priorities are underscored by double-digit EBITDA growth versus last year, with again, a good contribution from both beverage segments. And this double-digit growth was delivered despite significant industrial shortfall, which I will also discuss in more detail later.
So the key activity behind our margin expansion, which I also indicated in the past, is active management of our mix, of our product brand segment mix in a way that increases the share of margin-accretive businesses in our overall mix. Obviously, on top of that comes the revenue management, especially the price increases, cost reductions. And then specifically in Q1, what also supports our performance is lower raw material prices, although it's a double-edged sword when we look at the industrial numbers. And also currency hedging, especially now in the face of weakening of the Norwegian krone, the fact that we are hedged is also quite helpful. As a result of this focus or this priority on margin expansion, on profitability, we have managed to deliver comparable EBITDA growth of 12.1% versus Q1 2023, supported by strong performance from both wine and spirits.
This balanced delivery from both of these businesses is important for us because we could see what the lack of this balance has done to our P&L performance last year. It is offset, negatively offset or negatively adversely affected by the industrial delivery, which was significantly below last year. I will get to it later. This is the current priority. In terms of challenges or the future priorities, obviously generating profitable margin equitable revenue growth is a challenge. You can see it in our Q1 numbers where we have declined by 7.9% versus last year. However, I would like to break it down into smaller pieces to make it more granular for us to understand where this decline in revenue in net sales is coming from. So again, net revenue is down by 7.9% or in absolute terms, EUR 2.5 million or EUR 2.6 million. It is a letdown.
It is more than we and the market expected. But let me again break it down into smaller manageable pieces. 40% of this decline, 40% of this decline is in industrial sales. It is mostly lower sales of side products, so starch, animal feed, and ethanol, exacerbated also by pricing pressure. It's this double sword I was talking about before, lower price of barley because of the pricing formulas that they use on the industrial side is resulting from depressed pricing for the side products from ethanol production, which is then having a negative impact on our net revenue. So that's 40%. 10% of this year-on-year decline in net revenue is in the spirits segment. However, when you double-click on this one, it's only international plus a little bit of impact from Larsen.
Monopolies, the Monopoly market, actually all four Nordic markets, including Denmark, are delivering high single-digit net revenue growth, net sales growth in the spirits segment. So the core of the business is very healthy. This is international that was not particularly strong on the net revenue side in the first quarter of this year. It is reflecting the delivery patterns to distributors in the international markets. We are operating through distributors. And then how they take the product from us, how we deliver the product has impact and can produce some shifts between quarters. In this case, making these deliveries was especially difficult given the harbor strikes and generally a strike situation in Finland. But anyway, the spirits impact on the decline in net revenue was marginal.
Then the biggest drop in decline, 50% of the total decline, so half of this EUR 12.5 million I talked about before, is in the wine segment. Half of this 50% is the impact from this terminated large partner contract in Sweden. François Lurton or Les Fumées Blanches was discontinued in March of last year. So we were still cycling a full quarter with this partner business in our base. This is the last quarter. But it clearly was difficult for us to match these volumes. This was our largest by far wine partner. 30% of the wine decrease is discontinuation of some of the low-margin filler business in Køge. As we are optimizing our production network as part of the Centre of Excellence execution, we are moving volumes around, as you know, to optimize the profit picture or the cost picture behind it.
As we moved more profitable own brand or partner brand contract filling to Køge, we have also reduced some of the low-profit volumes in these locations, losing net revenue but improving profitability. Then the remaining part of the wine deficit is in smaller things, including the out-of-stock situation that we have faced at the end of the months just before Vappu in Finland, again, due to the strike situation. This is the breakdown of the net revenue. I think there are two more things that I would like to mention here. One is Easter. We were expecting a bit of a positive Easter impact. It didn't come. It apparently was quite favorable for the sell-out.
It was not definitely favorable for the sell-in, mostly because of the delivery days being lost, 2-3, depending on the market of delivery days, fewer in March than in March of the previous year. So Easter was neutral in terms of impact on revenues. And then the last underlying trend, which obviously is not disappearing, is that the Monopoly volumes are soft year-on-year. They continue to be softer and softer. Consumer demand for strong alcohol products is declining. Now, as somebody who is observing the alcohol, first beer, and now spirits and wine business over many years, I get the impression that the Dry January is becoming drier and drier every year. And it's also extending gradually to the first quarter. So the underlying consumer sentiment and consumer demand is not strong. And it will probably not change dramatically.
It requires from us to adjust our business model to this. To summarize the net revenue part, and I will get to more details in a second, all four Nordic markets are up in net revenue in spirits. Every single spirits monopoly and Denmark, so all Nordic markets are up mid-single digit. Then three out of four Nordic markets are up in wine in net revenue. The only exception is Sweden, where we are cycling this lost business, which will not be the case from the second quarter. Maybe that's the right moment to go into specific segment comments. Can we flip the slide? Very good. Thank you. Let me start with wine. To start with numbers and then a bit of more commentary, net revenue -9%. I described the reasons before. Gross profit flat on decreasing net revenue.
Gross margin improving to above 30%. Gross margin right now is 30.3%. It's plus 270 basis points. So significant margin expansion on the wine business, which is critical for us going forward, especially as we enter the second part of the year. Comparable EBITDA 2.6 versus 1.2. And the margin also obviously low in this time of the year, but significantly higher than in the first quarter of 2023. So despite the fact that we are cycling these high volumes, high net revenue, and also relatively high profit from the Lurton business, we are delivering strong bottom-line performance in the wine segment, underscoring the message and the trend and the trajectory, which we established already in Q4 and with which we expect to go through the full year. I mentioned also this discontinuation of low-margin filler business in Køge, in Denmark, in the former Globus Wine location.
It has impact on net revenue. We have low single-digit net revenue net sales growth in both Norway and Finland, and decline in Sweden for the reasons I discussed before. We had strong continued market share development in Denmark. We continue to win in this important and still relatively new for us as far as wine is concerned market. We also see margin expansion across all markets. We are also continuing to sign up new partners and strengthen in collaboration with the large existing ones. I believe our partners recognize the unique combination that we offer of Pan-Nordic commercial reach, our filling and packaging capabilities, especially given the fact that they reflect the sustainability agenda of the requirements or demands of the Monopolies. They also appreciate our multi-channel distribution model in which we are giving quite a lot of attention to on-trade.
They also appreciate the fact that with our Vingruppen and experts, we are providing tailored local perspective from people who are passionate about the category and also very knowledgeable about the wine category. What should be, I believe, also important for our partners is that our ability to invest in brand development is improving together with our gross margin expansion because any consumer goods business that has healthy gross margins has more flexibility in terms of investing in the commercial agenda. So that much on the wine. Can we jump to spirits? Spirits -3% in net revenue, gross profit +2%, gross margin 44%. So even in this highly profitable segment of our business, we were able to expand margins by 240 basis points, which again, I view as a very strong development. EBITDA EUR 6.8 million +17% versus last year.
Margin also in a relatively small quarter, obviously, where margins are depressed but significantly ahead of last year, again, 250 basis points margin expansion on EBITDA, which is a strong development. As I mentioned before, all four Nordic markets deliver net revenue growth versus last year mid-single digit. International was weak for the reasons I described before, mostly the disrupted delivery patterns due to harbor strike in Finland. As far as brands are concerned, Koskenkorva remains strong, high share in our overall business, and good underlying momentum. However, I would also like to highlight that in this environment in which the consumer is downtrading, our mid-priced or mainstream spirits brands across the Nordic markets are doing very, very well. Brands like Leijona, Jaloviina, Explorer, Vanlig.
The brands we are usually not discussing at length in these calls, they are performing well, and they are the core of our business. It's important that the core is healthy. I mentioned international being under pressure. I want to highlight travel retail. It is under pressure from the top-line perspective for the reasons we all know pretty well. This channel was hit hard during COVID, and it never really fully recovered since then. But our revenue management and cost control in this area of the business is producing satisfactory financial performance. To all of these partners for whom travel retail is important, we still have a chance to deliver a distribution vehicle there. That much on spirits. The last part. Yes, in industrial, we talked about the numbers already. Significant decrease in net revenue, -12%. Then big drop, 70% in EBITDA.
In simple terms, we had less product, less side product to sell, and lower pricing on them. Largely a flip side of the lower barley pricing. Contract manufacturing is more or less stable, although we are optimizing it like the actions we have taken in Denmark to reduce the filler business. Logistics is obviously the function of volume and demand in the market. But generally, the key impact on industrial is from lower general activity, lower volumes, and then lower availability of side products. So lower sales of side products at more depressed pricing because of the pricing formulas that I use there, which are based on barley prices. I think in this context, it's important to mention that the primary purpose of the industrial sector of our business is to make our overall beverage business, wine and spirits business operations, more efficient and more cost-effective.
So it is not a business in which we would be actively driving net revenue, especially given the fact that the profitability profile or the margin profile of this business has a dilutive effect on our overall performance. This obviously refers mostly to side products from ethanol production in Koskenkorva, so ethanol, animal feed, and starch. It's also important to mention that our industrial side product sales play an important role in our sustainability agenda simply because we want to reduce waste to absolute minimum by disposing in a commercially relevant way of some of the side products of our ethanol production. That much from myself. Now over to Sigmund for more detailed financial perspective, including cash and balance sheet.
Thank you, Jacek. If we then have a look at the first financial slide, it's giving an overview of the net sales development by quarter. We will go into the details of each of the segments on the next slide. Again, here, the core observation to make, as Jacek already alluded to, is that Q1 is by far the smallest quarter of all the quarters in the year. As you can see, especially the contrast is quite stark when you look at the bar right next to Q4, which is the biggest quarter of the year. If we move on to the next slide, you can see here that the decrease in net sales overall was driven mainly by a decrease in the wine segment. As Jacek mentioned, there was still then some effect in the base of the loss of the big partner, François Lurton, in Sweden.
And then there was then also the discontinuation of low-margin third-party filling contracts in Denmark. In the spirits segment, the four Nordic markets delivered sales growth in Q1, but the performance of international sales was weaker. And this was partly then due to the harbor strikes in Finland that disrupted export deliveries, although the gross profit impact of that was quite limited. And then, as Jacek just mentioned, there was also the industrial segment with a decline due to lower sales prices and also reduced production volumes. Divestment of Larsen, which was completed in the—it was the end of last year—also had an impact in that there were some volumes or sales lost related to that divestment, although obviously, Anora remains the distributor of the Larsen products for the Nordic markets. If we then move on to the next slide, please.
On the other hand, the group Comparable EBITDA was up last year. Here, there were contributions from both wine and spirits, then partly offset by the lower performance in industrial. Basically, the reason that the EBITDA increased is essentially that even though we had a sales decline, the gross margin across the segments improved strongly, pretty much offsetting that net sales decline. Then there was a decrease in OpEx that led to the improvement in Comparable EBITDA. Again, here on this slide, I think it's important to mention that this is the smallest quarter. It's the smallest quarter in net sales, but it's even more so the smallest quarter in terms of EBITDA in the year. If we then move on to the next slide, a few words about the barley sourcing.
This has been a bit of a roller coaster ride, but over the last few years. And it's interesting when you look at the long period here, there have been similarly such variations with increases and decreases in the barley price over the last couple of decades. But as you can see from the graph, the suddenness of the increase of a couple of years ago and the levels which the price attained were unprecedented over this time period. And then, fortunately, now barley price has gone down quite significantly and seems to have settled at some sort of plateau that is pretty much in line with the peaks of previous periods.
But obviously, in terms of its impact on Anora's profitability, it's now less in the sense that we have been able to mitigate the impacts both on the beverage side through price increases and then through good management on the industrial side. As always, this is something which is evolving. There will be a new harvest in August, September that may impact the barley price either to the positive or the negative side. If we then move on to other elements in terms of the cash flow development, so cash flow from operations was negative, almost EUR 45 million in the quarter. This is explained pretty much exactly by the seasonal increase in working capital. So this is something which happens pretty much every year.
Last year, as you can see, and I think we have more on that on the next slide, there was, for once, in the first quarter, positive net cash flow from operations, but that was due to the very strong expansion of the sales of receivables. CapEx largely in line with last year's levels and mainly allocated to replacement investments and to improve work safety and energy efficiency. Moving then on to the next slide. Yes, net working capital. You can see that we are now, although the net working capital is at a higher level than at the end of Q4, this is simply part of the normal seasonal pattern in terms of working capital. In terms of absolute levels, we are significantly below where we were at the end of the same quarter last year.
We are also significantly below where we were at the end of the same quarter in 2022. The reasons for this is one-time impact of the Larsen divestiture, very significant impact that is permanent due to the sale of Larsen. Then there has been also further progress in reducing inventories. Now, it also has to be said that there are probably some cutoff effects in terms of trade and other receivables that give a slightly more favorable impact in terms of working capital than what you could structurally expect. But in terms of the big levers that we have been able to action, the divestiture of Larsen, the strong work on reducing inventories, again, after an increase in 2022, is progressing with good results, leaving us at negative working capital of -4% at the end of March.
If we then move on to the next slide, this has an impact also in terms of the leverage. Leverage is higher at 2.6 than at the end of Q4. This is due to this increase in working capital, again, which is a normal and seasonal effect. Then there is a strong decline compared to the same period year over year. We started with a stronger liquidity position at the end of Q4 2023 versus end of Q4 2022. Then we have carried that impact with us till the end of Q1 2024 with a very, very strong liquidity position and additional facilities to draw on if need be.
Then if we move to the next slide, and this, I think, is the last slide I have before passing the word back to Jacek, this is a comparison and reminder versus our long-term financial targets for 2030. Again, some of these don't necessarily make a whole lot of sense for an individual small quarter. I can say that in terms of the net sales growth, that is clearly one of our challenges, is to find engines of profitable growth. This is lower than both the actual for 2023 and 2022 and lower than this 3%-5% that we are aiming for. Then in terms of the comparable EBITDA margin, of course, it is quite a bit lower. Again, this is the smallest and lowest profitability quarter in the year.
And then in terms of more favorable metrics, the net debt over Comparable EBITDA, as we saw, was at 2.6, which is almost at the target level of being below 2.5. So with that, that concludes my portion, and I hand the word back to Jacek.
Yes, thank you very much, Sigmund. So to summarize very quickly, Comparable EBITDA improving Q1, mostly due to the margin enhancement and also cost reduction. The increase was 12.1% versus Q1 of 2023. The decline in net sales was 7.9%, mostly wine and industrial. And I provided more details and more granularity on this one. And also, as Sigmund presented, our efforts to reduce our leverage, they progress well. So in summary, given the fact that our job number one, which we have communicated already a few times, is to improve the financial fundamentals of the company, we are reasonably satisfied with the Q1 performance. Yes, as I said before, I recognize that the turnaround in our financials may be slower than some of the market representatives expect. But I truly believe that it comes in the right places.
The right place is the margin expansion in the beverage business, wine and spirits business, in the core Nordic markets delivered through an active mix and revenue management. With stronger financials, I trust that the company will have more options in looking for or supporting profitable revenue growth in the future. So this closes our remarks. I think we are open for questions now. Milena, back to you.
Thank you, Jacek and Sigmund. We already have some questions in the chat, but please continue to send them through to us. We can start with the live questions. Please raise your hand, use the raise your hand function to mark your interest to ask a question. We have already some questions. Maria Wikström, please go ahead.
Yes, thank you. I do have a few questions, so I'll take them one by one. So I'd like to start on the gross-margin development and more specifically on wine and spirits as both of them grew the gross margin year-over-year. And I suspect that a lot of this is coming from price increases. So do you see this continuing in the coming quarters as well, which build your confidence towards the full-year guidance?
I can take that. Well, I mean, I think this sort of expansion, I don't think that you could project towards the full year on a year-over-year basis. I mean, the biggest price increases that we took were in September and October of last year. So there will be another quarter, let's say, and to some extent, Q3, where you have these sort of baseline impacts. And then, of course, we have the option also of adjusting our prices in the current year. But there is both, I would say, less room for that and less need for that. So to your question, yes, you can say that the year-over-year performance, it should carry into Q2 and then partly Q3. But then towards the end of the year, in terms of pure gross margin, we will be hitting tougher comparables.
Thanks. Then I wanted to touch, which I think is the most difficult to forecast for an analyst, is the profitability in the industrial segment. And I guess, I mean, it was a disappointment for you as well. So what there is for you to do in order to improve the profitability, and is there any possibilities you could kind of change the pricing methods of the side streams in order to be not that much dependent just on the purely barley price?
Yeah, I mean, I can maybe take that. And then, Jacek, you can add if you. I think that we are largely price takers in this market. I mean, these are, to a large extent, non-differentiated industrial products, where you face quite tough competition. I would say that obviously, there are ways of managing the profitability of this segment. But those measures have, to a large extent, been taken over the last couple of years with the very, very strong increase in the barley price. We did, for example, we were firmer in terms of the profitability we expected on various accounts, on ethanol, so reducing in some cases the throughput at Koskenkorva in order to only produce volume, which was profitable at the margin. So I would say that to a large extent, things have been optimized as they can.
Our room to add value to the products, to have some sort of brand pricing power, is quite limited. The pricing formulas which are there, they serve us well. And in some cases, it's a pure sort of pass-through of the pricing. So the impact on the bottom line is lower than it is on the net sales. But then, as we both explained, there are also some elements which are then hitting the bottom line more. And these are, to a large extent, I think, outside our control, given the fact that we have already optimized, I would say, the business to a large extent. But it's an ongoing process. We always sort of look at what's the marginal revenue versus the marginal cost.
One variable that we can action is that there is some leeway, right, to how much you produce at Koskenkorva, which you can increase that or you can decrease that.
Yes, there isn't much to add to this one. I would summarize by saying that we will be working to optimize the costs to reduce the negative impact from potential decrease in profitability from this segment. We need to keep in mind that pricing power comes with branding. And unbranded products, which is the nature of the side products from ethanol production in Koskenkorva, do not have much pricing power. And then we are very dependent on pricing formulas on which we have contractual pricing formulas on which we have very little impact. So all in all, our ability to actively manage the revenue from this and profit from this segment, other than managing the costs down, is simply limited. And if we have a gap, like clearly we had in Q1, then it needs to be offset by the stronger beverage business. There is no other way.
Thank you. And then finally, if you could give more color, I think you wrote in the report that you are looking to enhance or invest in the commercial ability of the wines and spirits business in order to increase the net sales in both of the segments. So if you could go a bit more detail in the efforts that you are doing during this year in order to hike the sales? Thank you.
Yes, there are two things that I would mention in more general terms. Obviously, we are continuing to solicit partners because we are in the partner business, and we are committed to developing this part of the business. We will continue supporting the brands. But the two things specifically I would mention is first that we are doing our utmost to protect our marketing budgets or advertising budgets for the full year. This strong focus on profitability and on gross margin is designed exactly for that because we had a few years under our belt. We're relatively early in the year. We had to start cutting our marketing budgets simply to deliver the bottom line performance for the full year or maintain the guidance. So it's simply unsustainable. Yes, if we are to build the commercial part of the business, we need to secure funds to invest.
That's the first action. The second one is focusing on the largest brands and partnerships. I think we have mentioned it in the report as well. We are intensifying our efforts to strengthen, support, sustain, grow the largest chunks of our business. I'm talking here both about brands and the large partnerships. So, focus, the most basic things probably in business. We have a long tail of smaller brands and smaller partnerships. There will be a gradual activity of reducing it. But it's not really the nature. You do not grow the business by cutting the tail. You grow the business by focusing on the biggest chunks of the business. That's exactly what we are doing right now.
Thank you very much.
Thank you. We have a next question coming from Joni Sandvall. Please go ahead.
Yeah, thanks. Maybe a follow-up on the industrial side. Still, given the low side product prices, how should we now expect the volume trend or your usage of barley to develop this year? It's a good question. I would say largely in line with what you saw in Q1. But again, I mean, this is something which the team is looking at optimizing continuously. So if the side product prices go up, we have the capability on relatively short notice to take our production up as well. So a bit difficult to forecast now, but I would say probably something in line with Q1.
Okay, okay. And then we have seen the barley prices coming down. And given your contracts, what is some months of you have prices in. So when should we see the lower barley prices hitting the P&L?
Well, I mean, I think that it's coming in continuously. And as the slide showed, I mean, I don't know if there is now a very, very big decrease that has come of late, right? It has come down from the peak levels, and then it's been roughly stable at this plateau. But it's gradually coming in, right? There is roughly one month's worth of inventory and a bit longer in terms of the commitments that we make, right? So maybe it takes two to three months to cycle through.
Okay, okay. And then a question on the hedging. Can you give any color on how long hedges you have currently and when should we see? There have been quite big movements now in SEK NOK, so when these are coming visible?
The principle of our hedging is that we try to hedge now most of our exposure, right? Very, very high levels of exposure, 80%-90% of the NOK and SEK exposure, or to be more accurate, the euro exposure in NOK and SEK markets. And the length of these hedges is the philosophy is to try to match them to the pricing periods at the Monopoly, right? So in Sweden, you can change your prices on March 1st and September 1st, and you have to give the Monopoly your prices a month and a half, two months before that. So it's at that point that we try to lock in an FX rate that will cover us for the entirety of that period where we don't have the possibility to change our prices.
So it's the same thinking in Norway, except there are three price periods. You'd change the prices: January 1st, May 1st, and September 1st. So the thinking is that the length of the hedges are either well, I mean, if you add in the pricing period, right, before, it's either then eight months in Sweden or six months in Norway. And then you kind of lock in the exposure at that point in time, and you do your pricing accordingly, right? So you sort of try to lock in the gross margin. And then you have much more stability around that gross margin a bit regardless of what the actual FX rate is, but only for the length of the period. So when you enter a new pricing period, then of course, you are no longer covered by your hedges.
When you calculate your prices for the upcoming pricing period, redo your assessment of how much price adjustment is needed depending on what the spot rate then has become. And let's call it the new hedging rate that you are able to achieve at the moment when you are setting your prices. So I hope that was clarifying.
Yeah, yeah, very much so. Then one question about the net working capital or inventories. You have been quite vocal that you have been able to, on like-for-like basis, to decrease the inventory level. So how much we have still room to go lower on inventories or net working capital?
Yeah, I think that it's a work in progress to figure out how much we are able to take it further down. We have ambitious plans to continue with this, although this is a bit like fitness, right? Is that you have to keep exercising every day, right, if you want to keep the weight off. Otherwise, it has a nasty tendency to sort of come back and to give one indication. For example, these issues that we had with the harbors in Finland with problems getting products out or problems getting products in raw materials, both of those things can actually lead to temporary increases in inventory. So things sort of happen. But we think that there is still further potential. I mean, I think it's probably not enormous. Maybe it's another EUR 10 million-EUR 15 million.
But it requires kind of hard work, including what Jacek alluded to in terms of cutting the tail. Obviously, if you have fewer products to worry about, rotations on remaining products become higher, and it becomes easier to keep a certain level of inventory for a given size of business with fewer SKUs.
Yeah. Last question from my side, the cash position. So it's quite high. So how large cash buffer is needed to keep CFOs satisfied with?
Lower than the. I'm always satisfied, or at least I try to be. But it's a lower one than what we have currently, probably. So we are looking into ways about reducing that cash buffer, which we have, which is probably a bit too large. That being said, again, we do have quite big, let's call it, cutoff or seasonality impacts, even within different dates or how the various sort of holiday dates or like Easter, how they fall. So as I said at the end of Q1, our cash position was probably a bit higher than its real fundamental position simply because of some cutoffs with money which had come in, but some payables in terms of taxes, for example, which had not yet gone out. So that's important to mention.
But yes, cash position is good and higher than what is needed for me to sleep well at night. So we will take action on that.
Yeah, thanks. That's all from me.
Thank you. Let's continue with the chat questions. So the first one is coming from Mika Häkkinen. What is the total impact of the long strikes in Finland on revenue and profit?
I would say for now, quite limited, right? I mean, as Jacek explained, it can have then an impact on ability to export at a given moment in time. Or as I said, it can have an impact on temporary increase in inventory, things like that. But for now, thanks to the solid management efforts of our supply chain team in close collaboration with the commercial, I would say that the expected impact of that is really quite limited. Yeah, I don't know, Jacek, if you want to add any color to that, but that's the message for now.
Yes, agree fully, especially for the outbound or external exports fails. Of concern, and we need to add this comment as well, is the impact that came from the wine out of stocks in Finland, especially in preparation for the May 1st celebrations. I think we lost some sales, depending on, obviously, who you talk to. But the general expectation is that we lost maybe around EUR 500,000 in net revenue because of the out of stocks prior to Vappu in Finland, in net revenue. And then the impact is a bit higher, yes, because the profitability of the export business is lower than our own brands.
Okay, thank you. And continuing with a question from Mika Häkkinen. In your recent CMD, you raised international to be an important growth area. In the light of the recent development in that area, are you reconsidering that, or what is your view on international going forward?
Oh, if I may take this question, the one quarter does not change anything, especially quarter with extraordinary one-off events, as we have mentioned before. The capital market, the commitment that we have made to extend our reach beyond the Nordics, to the adjacent geographies, and beyond that, through a combination of organic growth and M&A, still stands. So we'll continue developing the international business. There are some markets that we are focusing more than on others. Also, the fact that our financial fundamentals are gradually improving gives us also more flexibility in choosing the way in which we will extend our international business. But as an intent, it still holds.
Thank you. A follow-on question. Are you hedging the barley prices?
No, we are not. Unfortunately, there is no good available financial hedge or other hedge for that matter for Finnish barley. So as much as we would, we probably would hedge it if we could, but it's not available. So no.
Yeah, thank you. Then a question from Rauli Juva at Inderes. When was the filling agreements in Denmark terminated? And can you share the total quarterly or annual impact to sales from these?
I don't recall exactly when they were terminated, but I guess there are several contracts here, and they were terminated at different points in time during the first quarter. I also don't think that this is sort of the detail that we would be sharing. Although in terms of the revenue impact, I believe that Jacek mentioned, right, the approximate order of magnitude of that, right? It was something like 30% out of the 50% sales cap coming from the wine segment was made up of the lower margin volume from Køge. But again, impact on the bottom line is much less significant than the revenue impact.
And then we are working hard, or rather our Danish-owned brands team is working very hard also to fill the factory not only with transferred volumes from other parts of Anora, but also gaining market share in the Danish market with our own brands, right, that give higher profitability than the volume which was being replaced here.
Thank you. A question from Jori Lijäs. Many good explanations for reduced sales in Q1. However, in order to restore some confidence in your full-year guidance, could you please touch upon the current trading margin trends as well as volume development?
Well, I think that the question is a fair one. I think that we're not going to open up more than we normally do on the exact volume and margin trends. I mean, we are, after all, only on May 7th, right? So not very, very long after the end of the quarter. I think that it is fair to say, right? And we said that as well, that on the one side, I guess our biggest worry is the softness of volumes and maybe the lack of a clear sort of growth driver. And we are working very hard on that. Some of the softness in Q1 was probably due to things like Easter effect or these export issues. And we hope to see some positive, let's call it, transfer effects into the next quarter. But I think that it's fair to say.
I don't know, Jacek, if you want to add color to that, but that is something that we are looking at and is a relevant concern. And then on the other side, one of the key elements that we are using, have used, and we expect to see positive impacts from is then the gross margin management, which has continued and I think will continue simply because of the year-over-year effects for quite a while to improve. And it's a balancing also of these impacts. Obviously, if you take gross margins too high or prices too high, it may have a negative impact on your volume or market share. So it's a constant balancing act on a brand-by-brand, SKU-by-SKU basis. I don't know, Jacek, if you want to add something to that.
Yeah, I agree with everything you said. I would generally say that we would not be restating the guidance for the full year if we were not convinced that Q1 was the right step in this direction. And then I would prefer not to comment on April or first week of May development.
Thank you. Then we have a question from Pål Handeland. Within your industrial segment, the annual EBITDA has been around EUR 17 million-EUR 18 million the last three years. Is that reasonable to expect this year as well, despite the weaker Q1?
Well, I think that it would be very close to giving a profit forecast, right, on a segment level, right? And so I don't think that I will do that, although I commend you for trying. I mean, I think we try to balance the various sort of segments from each other to achieve the total profitability. I mean, I think that it's quite clear from the Q1 and from the remarks that we made that maybe achieving the 17-18, which industrial segment sort of has achieved coming in all kinds of storms of the last few years, that requires a sort of a lot of work. But that's as much as I can say, that we balance the various segments with each other. And if we have a shortfall, industrial, we try to recover that on the various segments.
I would prefer not to say more on exactly sort of what is our expectation for profitability for industrial segment in isolation.
Yeah, if there is one thing I would add, and I already commented on the purpose that industrial plays in our overall business. Now, in the end, we are talking about supply chain for the beverage business here, yes? And the primary purpose behind the supply chain operations is to reduce the COGS as percentage of net revenue for the total business. And then specifically in our situation, we have the side products, contract filling, and logistics services that complicate the picture a little bit. But if I were to judge the first indicator that I would look at internally, at least, is COGS as percentage of net revenue, because this is the clear indication of whether we are managing our supply side in a cost-efficient and effective way at the same time. This indicator is satisfactory at the current stage.
Thank you. We also have a follow-on question from Maria Wikström. Any update on the insurance claim related to Globus Wine?
Not one that we can share externally. I mean, what I can say is that we are, of course, working very, very diligently on that claim. As we have reported previously, we have made the claim officially with the insurer. I would say that what we can disclose is that we are in a constructive dialogue with the insurer, but don't have anything further to share in terms of likelihood of achieving the successful outcome or when such a positive or negative outcome would when the conclusion to this whole matter would be reached. The only thing that we can say is that we are working very diligently to move the matter forward.
Thank you. This completed the questions in the chat. Do we still have more questions live here in the meeting? If so, please raise your hand to mark that. It seems not. So thank you to the speakers and to everyone online for joining us today and for all these good questions. The next scheduled event will be our half-year report on the 20th of August. Hope to see you all then. Thank you.
Thank you very much.
Thank you, bye.