Hi, and welcome to our Q3 interim report. It is a pleasure to have you here, and thank you to those joining us in the room. Before we get to the content, I want to remind you of the disclaimers. Of course, whilst we are looking predominantly at the Q3 results, we will also make references to our expectations going forward, and that always entails a certain degree of uncertainty. Before we get to the actual content, I am pleased to introduce you to Juha Kauppinen, who is our new CFO and taken over from Tiina Liukkonen since a few weeks back, effectively from the beginning of October.
Thanks.
Welcome, Juha.
Thank you. Well, happy to be here.
Great to have you. Let us get to it. As you know, last week we had to issue a negative profit warning, and I am glad that we can be here today to share a bit more context with you as to why this is our expectation for the year. I want to start by emphasizing that the volumes are growing, net sales are growing, and this is to a great extent attributed by our acquisitions. Our profits are also doing well, but they are lagging behind, so catching up to our top-line performance. A few highlights. I want to start by pausing on our portfolio, our core business, which is doing really well. Our brands are strong, our market shares are strong. We have introduced some new products in a number of markets. These launches have been successful.
I believe we mentioned in one of our previous quarterly reviews the soft drinks launch in Finland, for instance. We have been able to take share here. Things are going well. This is also reflected in our margins. Our portfolio play when it comes to mix management has worked as planned, and that has helped us cover some of the costs that are impacting our business. Pausing on the acquisitions for a while. Four acquisitions are all complete. They are now included in our numbers from the third quarter. Integration work is of course ongoing. But already in this first year, they are contributing positively, not only top-line, but also on a profit level, albeit marginally. We will conclude these integrations by the end of the year and look for profits to start materializing through synergies from next year onwards, starting with 2027.
Rest of Europe, this is the new segment that we call it. In this quarter's report, we have also wanted to help the market and the analysts by separating out organic and inorganic growth. But when we zoom in on Rest of Europe we want to highlight a few things. First, the Baltics. In the Baltics, performance is solid. We are growing both net sales and EBIT. The same impact and softness of market that we have experienced in Finland, we also see to an extent in the Baltics, but we are performing in a competitive market. The negativity in the figures as it pertains to the segment of Rest of Europe are unfortunately still driven by Denmark. All our efforts to turn the market around have not yet carried the dividends that we are expecting. We hope and expect that to change in the foreseeable future.
Briefly on cost pressure. Cost pressure is of course driven by the geopolitical situation. We have spoken about that already for a number of years it feels like. This year it has been accelerated, particularly around transport costs driven by the oil price, which then spills over also on PET packaging material and aluminum and effectively a broad spectrum of our raw materials. In essence, a key reason for the adjustment and the negative profit warning was a slower than expected recovery of the market. There has been some positive signals for some months already in the economies across our operating markets, but unfortunately that has not translated yet to increase in consumer spending. Also we did not get a boost from weather this third quarter. Quite the opposite, as we will see when I get to Finland, we had the opposite effect.
A few more words on the third quarter. The Verska integration, the final one to be completed. It was completed and the numbers were included from July onwards, as we have shared. The full effect of that integration is materializing now as we have taken over distribution locally as well. Of course, there is work on finalizing the integration and to get to those synergies which I mentioned will happen next year. The gross margin part. I think this really speaks to the relevance and the effect of our strategy more broadly. As you know, we have invested in analytics. We have improved our efficiencies across our factories. We have optimized our portfolio, and we strengthened our brand. This clearly is resonating not only in terms of protecting gross margins, but also our share on shelf.
Consumers are more and more choosing our products at the moment of truth there in stores and restaurants across our operating markets. We believe that this places us really well for the future, enables us and allows us to continue driving sustainable growth also in the future. Now then briefly on the segments and the third quarter performance across the segments. I already made a reference to Finland. The numbers in isolation are quite negative. That is clear. But what I want to build as context is as well, if you refer to the Finnish Brewers Association's numbers, you will see that in the third quarter, the whole market came down with 7%. We are performing better than the market but in a challenging market. In Finland, again specifically, we had a strong summer last year, which we are now overlapping.
We had three weeks of really perfect weather across the country. This year, we have had the equivalent number of warm days, but they have been spread out into smaller pockets of the country. That is clearly seen in consumption, which is mainly driven down through water and beer. The story is quite clear there. The model is not broken, consumption has not escaped. It is a weather effect. On the rest of Europe, already mentioned, acquisitions are driving performance, and you see the positive number development. Importantly, the Baltics are growing also organically. Denmark continues to be an area of focus for us. Belarus, on the other hand, had pretty much a flat quarter when it comes to volume development. That is on Q3. Now, Juha, I will give you the chance to talk us through the full year or year-to-date results, please.
Thank you, Patrik. Indeed, if we look at the year-to-date performance, January, September, we are showing a strong growth supported by the acquisitions. Volumes have grown by 4.4%. However, organically, they declined behind our expectations due to the reasons Patrik already elaborated on, particularly in the third quarter. The market was soft. Net sales has grown 13%, and that growth comes both from acquisitions and also organic growth. That is supported by our strong product portfolio, our own product launches, and the positive development of the average selling price. Year to date, we have delivered EUR 70 million of EBIT. That represents growth of 6.5%, despite the headwinds we are seeing in inflation and despite the challenges we have in Denmark.
If we then break down that year-to-date performance to the segments, in Finland, as Patrik elaborated, we had a softer third quarter and following a strong first half, the soft third quarter demand brings down the growth numbers in Finland. For the rest of Europe segment, there are basically three things happening. All in all, it is a positive development, but we see three different developments. First of all, solid performance and organic growth in the Baltic countries, albeit at a lower pace than we had earlier expected. Secondly, in Denmark, our efforts to turn around the business have not yet delivered. The profitability is still developing in the wrong direction. Thirdly, we have the acquisitions which are driving volume. They are driving net sales growth and also having a positive EBIT contribution, which we then expect to grow in the following years as the synergies start to materialize.
In Belarus, we've grown by 4% in volumes, and with the help of our strong local demand and our net revenue management actions, both the net sales and EBIT are growing by approximately 20%. Turning on to look at some of the key performance indicators for the year to date. The equity ratio is still very strong at 52.9%. It is somewhat lower than last year due to the investments we've been doing, not only the acquisitions, but also the operational investments. The operational investments are roughly at last year's level, and we've continued to strengthen our operational capabilities. The largest investments in this period go to Iisalmi and Lithuania, where the high bay warehouse is being built. Earnings per share is up to EUR 2.33. Headcount is growing due to the acquisitions. Operating cash flow remains strong.
I should note that on operating cash flow, we've now made an update to our estimate as to how much dividends we can pay from Belarus to the group. As you know, there are limitations as to the dividend payments from Belarus. This year, we were only able to pay dividends locally in Belarus, and we will not be able to repatriate them to Finland under the current restrictions. Management still expects that this will not have an impact on Olvi's ability to pay dividends. Lastly, our work on sustainability has earned us multiple awards, nominations, and mentions, including very good results from Walk the Talk survey in Finland, which shows that our sustainability actions very much correspond to what we've said and targeted— set ourselves as targets. We've had success in Bosnia and Herzegovina, both in the Young Energy Europe competition and the SDG Business Pioneers Awards.
Last but not least, our A. Le Coq factory in Estonia was awarded the Estonia's Most Responsible Factory of the Year 2026. Now handing over back to Patrik to talk-
Excellent
about the outlook.
Great. So indeed, near-term outlook, we referenced the change that we communicated last week and the negative profit warning that we had to issue. We hope you have captured the key items that led us to do this. I will just paraphrase them one more time. We are growing organically but at a slower pace than previously anticipated. Unfortunately, we do not expect the market to do a massive positive turnaround by the end of the year. So this brings our full year expectations down. But in that market, we are performing well and holding strong. Then the second point is Denmark. Our efforts are continuing. We have done a lot in terms of improving our operations, our quality, making sure we look after the brands that we have and driving growth in those.
We are now ready to take on board further volume, either supporting our own markets in Sweden and Norway, the new markets, we have their production for these markets, or then even broader in Europe. So we are really looking to unlock the opportunities of Denmark as we had originally planned. Then the cost pressure. The cost pressure is significant on our business and on our industries overall. So we are happy that we have taken the right initiatives to protect our gross margins, but the results are clearly impacted by that. Now then, concluding by referring again to our choices. I think the brand performance, the gross margin in itself speaks a clear language. We have been able to retain our shares, even grown our shares in several categories. We are delivering. Some of you may recall this slide. At the bottom there, you have three categories.
This is what we intended to focus on this year. So driving growth, and especially non-alco. We are doing that. Our non-alco growth has accelerated. We have expanded our reach. So with these new acquisitions, we have entered four new countries. We are now servicing locally twice as many local consumers as we did at the end of 2025. Then on the development side, we are continuing our efforts in net revenue management and data utilization.
We are seeing results in Belarus already. We are working on the integrations. We want to grow as people. We want to make sure we invest in education internally as well to retain and develop the talent we have. On the efficiency side, I cannot under-emphasize the importance of efficiencies in the way in which we use our assets, the way in which we improve our operations, and how we make sure that we have solid cost control.
With that in mind, for the next few months of this year, we intend to close the integration work, complete that, so that next year we can be in full swing. We seek further synergies and efficiencies via even closer collaboration across the group and our markets. We remain confident in the viability of our proposition and our ability to deliver solid, profitable growth also in the long term. Thank you. Now we move over to the questions part. Please, in the room.
Yes. Thank you. This is Maria Wikström from SEB. Just needed to come back to the new outlook. Given that after the first nine months, your EBIT is EUR 70 million, and that compares to last year of EUR 65.7 million. So roughly you are EUR 4 million ahead of last year after the first nine months. Now you are guiding an adjusted EBIT between EUR 80 million- EUR 84 million compared to roughly about EUR 82 million that you made last year.
Yep.
In my books, this implies that you see weakening trends for Q4. Can you elaborate? Why is that?
Yeah. Thank you for the question, and I am glad you asked because I want to correct the impression. We are not suggesting weakening trends. What we have seen already materialize in Q3, which is lesser demand, we expect to carry on through the balance of the year. We are not suggesting that it is getting worse. We are just saying we are not expecting a massive improvement. That really brings down our full year expectations. We see a softer market. Really, when you are talking and referring to EBIT, I think even more so we need to bear in mind the cost impact of the geopolitical uncertainty continuing and even potentially escalating. Then the Denmark situation. Unfortunately, the progress has not been in the positive direction. These are the three changes versus our last guidance that makes us more cautious as to our expectations for the full year.
And-
Anything I should add to that, Juha?
No, I think that is complete.
Good. Thanks.
Yeah. I think my follow-up questions is exactly on the topics that you already touched, but more specifically, now when we talk about the cost inflation, can we talk about it more specifically? So what are you seeing when it comes to the grain prices, what comes to the price of aluminum?
Yeah.
Are there other cost items that we should take into account that you currently see?
Yeah
coming up?
I think it's a great question and one that we've been discussing as well to what extent we can provide without being in a territory of anti-competitiveness, to what extent we can provide further clarity on that, because clearly that's a key driver. I can say that the impact is in the millions. Where is it coming from? It's predominantly logistics driven by the oil price because we're transporting our products over distances. So that's a big driver. The oil price also impacts PET plastic. So that's where we see raw material or packaging material implications. The Hormuz situation, the Iran war, is actually blocking parts of global aluminum production and can production. So there will be a spillover on cans as well from that. Those are maybe the three biggest moving items.
Broadly, if you think about just the oil price in itself, you need machinery to get also the grains out of the ground. So it has a broad impact beyond these three. These are the three major ones that we see being directly impacted by the geopolitical situation.
I had a question on the Danish business. I think you said in the report that you are also looking for structural options to improve the profitability of the business. Can you give a bit of color that what do you refer with these structural options?
Thank you. Another great question. Indeed in Denmark, if we zoom in on the third quarter only, we are having a volume impact still from the private label business that we do not have today. Today we are running a pure branded business with our own brands. Performance in Denmark is also promotionally driven. It is a tough market and we have formidable competitors that are not trying to help us. We are running a factory that is half empty. We have subscale volumes for the scale of our factory. We have put our own operations in shape so that we can take on board further volume, be it then to support within our group production. That is also a reference here on the slide when it comes to asset utilization.
How much we look at leveraging our assets beyond their domestic borders to support the Swedish business, the Norwegian business, or then, as I mentioned, acting as a co-manufacturer for a third-party operator, just simply using our asset to produce volume. Those are some of the structural things that we are thinking about in our playbook of options.
Then I would like to ask about how your novelties have continued to perform over the quarter. I think you were quite happy about the recent launches during the Q2.
I see that you are still smiling but can you give a bit of color that if those launches have proven to be successful in the further time ahead as well, or how should we think about it?
Yes, I am smiling, so you must read into that. You are probably referring to our new soft drink in Finland. I am happy to say that we continue to take share in the soft drinks category, which is a highly competitive one. We have, of course, entered with great flavors that have been well-received by consumers in the market and the brand resonates. We are very pleased with the launch indeed. Of course, there are new things to come. I very much look forward to our full year report and sharing some news about what kind of products we have brought to market, not only in Finland but across the group. This is really an enabler for us also in the future to deliver value growth for our shareholders and ultimately for the consumers. That is why we are here.
Finally, I think it is probably me and my colleagues who are wanting to get a bit more color that should the cash that is currently sitting in the Belarusian accounts, should we take it into account in all of these net debt calculations or not? My question is that, is there any possibility for you to actually lobby or somehow try to push for the Belarusian politicians to take an action where you could actually repatriate this money? Or is it pretty much you are just holding back and waiting for the news to come whenever they come?
As a culture, we are struggling to just sit on our hands and wait. We are very active engaging and running our business best we can in a very complex situation. I cannot possibly give confidence on the future in terms of what decisions might be taken by the legislators there. What I can say is that we have full confidence in our own leadership team. As you know, our CEO there is Lithuanian, has been with the group already for a long time running the business according to our values and delivering good growth. Our cash is trapped for the moment. As you know, the limitations that are in place were introduced for 2024 and 2025 and then extended to 2026. We do not see it as a permanent thing, but I do not want to give a guess on when things will change.
I heard someone say that every day we are closer to a resolution, but I do not know how far away we are.
Thank you. I had no further questions.
Thank you.
Okay. Then we could take some questions that we have gotten online and let us start. There are quite a few questions about Denmark.
Okay.
First, there is that could you give us a rough indication of the current magnitude of the losses and also the negative impact on the organic growth during Q3 and how much they have increased year-on-year?
Maybe I'll start.
and then we see if Juha Kauppinen has further details to complement. Can you repeat again the buckets of volume and
Yeah, and the losses, like the rough indication about it per month.
Good. Clear. Thank you. What is publicly available is the information on how we performed in the calendar year of 2025. I invite you to go and find that data. Unfortunately, I can't confirm an improvement on that, rather the opposite. That's what I can say about the economic performance in the market. It is really structural in terms of volume. This is a volumes business, and it's expensive to run factories at subscale in terms of the volume. We have effectivized our operation so that we're ready to take on board more volume and sell it and deliver it across the region really, not only looking at Denmark. Was there a part of the question I feel like I'm forgetting?
No, it was mainly about
Okay
Denmark magnitude and
Okay
Then maybe continuing with the same theme about Denmark. In the comparisons in terms of the operational and capacity challenges, is there some easement coming, going forward, or will the earnings continue to decline year- on- year?
Yeah. As I said, we have a long list of initiatives in place, and unfortunately, they haven't yet materialized into improving profits. We're looking for volume for our domestic markets, so producing in Denmark for our own intragroup markets and also seeking locally and in the Scandinavian territories across Sweden and Norway, new business. Then the third aspect is co-manufacturing for third-party interests. Is there something you'd like to add to that, or was it maybe
No, I don't think we can go into the details of the absolute numbers in Denmark. Suffice it to say that it is a significant impact on the organic
Yeah
figures. As we're pointing out, it is a challenge yet to be resolved.
Yeah. Thanks, Juha.
Thank you. One more about Denmark. When do you expect it to turn around? Also, are you currently losing shelf space with Olvi Cola?
Olvi Cola specifically. We have, of course, Olvi as our local soft drinks brand there. The market is very promotionally driven, so I wouldn't have the exact data for last week or the last month even as to how much our promo pressure has been there and thereby our presence in store. Reading on the numbers, I think we're going a bit lighter on the promo pressure than we did last year.
Okay. Then about the cost pressure and prices. How do you see your ability to transfer higher energy costs into your prices?
This is the challenge in a competitive market when you have big operators who are keen to also fill their factories. I'd rather refer to the performance that we have demonstrated. We've been able to protect our gross margins, which is a signal of our ability to, on one hand, take pricing, on the other hand, manage our pack-price architecture, which is critical. And the third part, which really has been a tremendous generator of improvement, is the efficiency part in terms of how we run our factories. There's a lot of stuff we can do internally as well as with our portfolio, and then leveraging the pricing part as well in terms of price increases.
And maybe just-
Yeah
Adding to that, I think the best reference point is to look at our gross margins, which on a percentage level are relatively stable and same level as last year, which is an indication of how much of the direct cost pressure we have been able to mitigate, not only with the actions you mentioned, but also then, of course, the product development, our own brands and so on.
Yep. Good addition. Thanks, Juha Kauppinen.
Yes. A little bit continuing on the theme, so what kind of price increases are you planning to take place from beginning of 2027? Can they compensate for the cost inflation seen currently?
That is something I will not disclose for competitive reasons.
Thank you. Then there's still about the even though that was discussed in the presentation, but the profit warning. You opened the reasons behind it, but where was the deviation to your pre-previous expectations the most meaningful? Was it mainly driven by Denmark, weak demand in Finland, or the geopolitical cost pressures?
Well, if you want to rank them, I think the market softness is one-
Yep
one critical part, as we've mentioned. Indeed, the market wasn't supported by weather. We had an average summer at best. That's one that didn't come in to support growth, and we don't see that trend in terms of increased consumer spending kicking in quite yet. That impacted our kind of balance of year estimates. Then, yes, costs are there and indeed Denmark is going in the wrong direction still, but we intend to rectify that.
Thank you. Then there's a question about the dividend restrictions in Belarus. Are they also valid in Bosnia and Herzegovina, and could you finance the business by the cash flow coming from Belarus?
Maybe Juha Kauppinen wants to elaborate, but indeed, we shouldn't mix these two things. Yes, the dividends are restricted in Belarus, and at the same time, I guess the question relates to the fact that Lida is a minority stakeholder in Bosnia. That's not a channel for dividends necessarily. It's more of an ownership and financing perspective.
Yep. Just to be clear, there are no restrictions directly impacting Serbia or Bosnia and Herzegovina. Yeah. One more detail that I think we need to be clear on is that the current restrictions in the distribution of dividends from Belarus, they are in effect until the end of this year. That is what we know. For next year, we don't know.
Thank you. Then the last theme of questions is the new company acquisitions. How are the integrations going? Do you see a risk of becoming subscale in some of these areas as well?
Subscale in which areas?
In these areas, I think geographically.
You're referring.
Yeah
To volume challenge. The integrations are progressing according to plan, so the technical integration has gone really well, in some cases even faster than expected. As you may recall, the Verska integration in itself for the acquisition was delayed, so it only closed in end of June, allowing us to then integrate it or include the numbers from July onwards. That's working well, and we're confident that we can conclude all the integrations by the end of the year because some of them have already been concluded, which allows us then to focus on growth in the markets. We should also think about the nature of the business we acquired. So in Verska, we bought a healthy beverage water company. In Sweden and Norway, it's a distribution business, so existing business that we acquired. There's no factories there.
In Bosnia, it's a factory that we've already started complementing with our own products. So we have local production of energy drinks and some of our beers, and we're going to use that as a production hub, not only for the Bosnian and Serbian markets, but more broadly for the Balkans and across the Mediterranean.
Thank you.
Maybe just to rephrase a bit what you said. What I hear from the question is that there is a concern that we have been subscale in Denmark, which has been a challenge. In Denmark, the challenge specifically comes from the production of other subcontracting to other players in the market. Whereas the acquired entities we have acquired this year, they have strong brands, and they are focused on a different business model. Therefore, they are in our own hands, so to say. We have strong brands like Verska that we have now acquired.
Good build. Thank you.
Thank you. The last question, so how much EBIT do you expect from the M&As for the full year?
We are not disclosing that number.
No. We have reported the actual EBIT contribution. We will continue to do that for the full year. So we will show that number after the year-end.
Thank you. That is all questions.
Thank you very much. Thanks for joining us. Look forward to seeing you when we conclude the year. Bye.