Good morning. Welcome to the Viva Wine Group presentation of the Q1 result. As always, presenting is myself, Emil Sällnäs, the CEO, together with Linn Gäfvert, our CFO. You see the agenda on the left-hand side. You will get instructions for the Q&A on your screen and also in the end of the presentation. Starting with an introduction, quick introduction to the Viva Wine Group. We are a company which have our business in three different segments, Sweden and Nordics, which are both the monopoly markets in Sweden, Norway, and Finland. Then a strong e-com business based in Germany. We are the Nordic leaders in wine in a very stable monopoly market. We have a very strong mix of own brands and partner brands together.
Which together with a pioneering role as a sustainability leader in our business makes us a very strong group. Our operating companies are based in four different countries, Germany, Finland, Sweden, and Norway. In Germany, we have two companies and three platforms, Vicampo, Wine in Black, and Weinfürst. In Finland, we have Cisa, and in Norway, we have Norwegian Beverage Group. In Sweden, where everything started, we have six companies, which you see on the screen. Over to the quarterly numbers. The quarter has been very stable, despite the quite challenging start of the year. We have in the Sweden and the Nordic Segment, which record market shares, which means that we are growing stronger than the underlying market.
Also our net sales increased in total for the group with 1.3%, despite both the Nordic markets as a total, Sweden, Norway, and Finland, and the e-com market being down. On the Adjusted EBITDA, the news is mixed. We have very strong margins in the e-com, while we do see significant impact on the FX in Sweden and in the Nordics, and especially in Norway in that case. We do feel that we are in a very strong position for growth. We are starting from record high market shares, and we are increasing quarterly. We have a very strong and lean organization in the Nordics, which together with a very strong product line and the increased cooperation between the Nordic companies is driving our sales in the Nordics.
In the e-com, we have a very cost-efficient structure. We are on the way of finishing our own warehouse. We are already in one warehouse, but we will soon move into a new modern one. We have one team serving all the three platforms. Very efficient e-com cost-wise. In addition, we are every quarter basically increasing the expansion of the Weinfürst concept into new markets. We are every quarter or continuously getting into new markets with the Weinfürst concept, which to remind you is the entry-level concept, which is quite well suited for the current market conditions. Over to Linn and some financial overview.
Yes. Taking a look at the group numbers. At group level, we have a growth in net sales, as Emil mentioned. The growth is 1.3% in the quarter. We have some positive effects by the earlier Easter sales. Taking a look at our gross margins, we have pressures on the gross margins, mainly explained by the negative FX effects in Sweden and Norway. There is also some cost inflation mainly hitting freight and distribution. Our e-com business is delivering very strong gross margins. Due to our pressure on gross margin, that also affects our Adjusted EBITDA in the quarter negative.
Taking a look at the segments, we see here that the net sales contribution comes both from Sweden and the Nordics, and our Adjusted EBITDA margin, here we can clearly see that the pressure and the negative FX effect hits the total Adjusted EBITDA, and it comes from Sweden and Nordics mainly. e-com, however, in line with last quarter, previous year. Our net working capital is lower than last year at the same time, and we have a positive trend towards net sales. Our net debt situation is very strong, and gives us a lot of strength going forward. Looking at the cash flow, we have a strong cash flow from our operating activities. We have improved working capital during the quarter and is also in line with normal seasonal patterns. That gives us a very strong position in the quarter.
Going to segment Sweden. Here we have a net sales increase of 5.3%. That's well above our financial targets. We have had successful launches, price increases, and also some positive effects of the earlier Easter sales, very positive development on the net sales level. Our volumes developed stronger than the market, with +2% in the quarter. The market was down 1.6%. Our market share increased in the quarter, landing on total 26.7% at record high level. Very great news. Our Adjusted EBITDA margin, as mentioned, lower GM puts pressure on the EBITDA margin. We have significant negative FX effects, also some inflation, mainly in freight and distribution. That means that our Adjusted EBITDA margin is lower than last year.
As the tra dition has been, it's my pleasure to introduce you to some of the new products that we have launched in the quarter. We have launched so many products, they can't fit into one presentation, we are always doing a small selection. Starting off on the top left corner, you see two Piemonte wines, one from our partner brand, the G.D. Vajra, Langhe Rosso, sorry, from Piemonte. Then you have Vecchia Villa, which is an own brand, which has the special USP of being an older vintage, introduced in the 2012 vintage, and has had huge success. On the right-hand side, you see two products from the Mood brand, In the Mood brand, I should say.
You see the can, which is a very environmentally friendly product that we won through a tender listing, which is selling quite well in the start. On the right-hand side, you see In the Mood bag-in-box, the red one. We have previously shown you the white one, and now also the red wine is doing very well. This is positioned below SEK 200 in the bag-in-box segment, also meeting a little bit the trend where the consumers are going. In the middle, you see another tender win from a partner brand, Doppio Passo, which has started very well. It's a 2 L bag-in-box, so not all of the bag-in-boxes in the market are 3 L. On the left-hand corner, you see the Crazy Cat concept.
You have seen the red, you've seen the white, now comes the rosé, the logical step. This is the Kitten Rosé, which is with, so far, the cutest cat. The Crazy Cat that you have seen in previous presentation is a quite typical way of how we launch products. If we are successful with the red or the white, in most cases you start with the red or white, then we will be able to launch at least a red, white, and rosé in total. That's a little bit how we grow an existing brand that has been received very well. Over to the Nordics.
Yes. In our Nordic segment, we have Finland and Norway. We have a very strong net sales increase in the quarter with 10.1%, so that's also well above our financial targets. We have some positive effects of the Eastern, but very strong net sales increase. Both Finland and Norway outperformed the market. Finland increased the volume by 4.6%, while the market actually declined with 5.8%. And Norway increased by 7%, and the market was down 1.6%. That also gives us record high market shares in both Finland and Norway. In Finland, 18.8%, and in Norway, 5.9% in the quarter. Our Adjusted EBITDA margin is below previous year, landing at 8.6%. The main reason is the negative effects hit Norway hard.
We also have some cost inflation in this segment, related to freight and distribution mainly.
In the Nordics, we've launched a lot of products as well, and we've done a lot with our partner brands this quarter. Lisbonita, the white bottle on the top left-hand corner, is a tender win with a 1 L PET presentation. Again, a very environmentally friendly packaging and one of our sustainability goals to go to more and more eco-friendly packaging. In the middle, you see Gran Passo, which is a brand that we've been selling many years, and now there's a new wine from the Gran Passo series that has been very well received. On the right-hand side, you see two products from Boisset, one of our main partners in all three markets. You see Château de Pizay , which is a Beaujolais wine. Beautiful wine.
I've been there many times myself, so I'm very happy that we are now launching that also very successfully in Norway. On the right-hand corner, you see the Bouchard Pinot Noir, a bag-in-box Pinot Noir with a Burgundy style, which has been starting very well in Norway. In the middle, you have a Bulgarian wine, Plateau, which we have launched in Norway with a lot of success. That's together with Slaviyanci, also a producer that we work with in all three markets. On the left-hand side, bottom corner left, you see Aina Panda Riesling. That's actually the first, one of the first wines that we have developed in Finland as terms of a brand. Historically, we have launched a lot of brands that started in Sweden.
Aina Panda is specially made for the Finnish market and aiming at the Riesling trend, which is very strong in the Finnish market.
Yes. Over to the segment e-com. We have net sales decrease in the quarter with 11%. The market sentiment is still low. Our organic growth was negative. We have high comparison numbers still compared to 2022, where Q1 was affected positively by the pandemic. Our gross margins are strong and according to plan. Despite cost pressures, we have been able to, through smart pricing strategies and product mix, keep those at strong high levels. Our Adjusted EBITDA is actually at the same level as last year. That proves that we have a very cost efficient and stable situation in e-com, at the margins and EBITDA level.
We like to highlight that we have increased average order values, and continued strong margins, as Linn mentioned. We are expanding geographically, so we are now, since a little bit more than a month, live also in Hungary. As you might remember, we were quite successful in the Czech Republic, and we believe that Hungary is a market with quite similar characteristics, so we're hoping for that to work out well. The construction of the new warehouse and the distribution center is going totally according to plan, so everything is in line with our plans. The KPIs on the right-hand corner are in line with how the market looks. Of course, if sales are decreasing, the number of orders are also decreasing, as well as the active customers.
We are very happy that we're retaining a lot of sales from our repeat customers. That's maybe one of the secrets behind the fact that we are keeping our gross margins very well. Good. Over to sustainability. We have recently launched our annual report and sustainability report, I do encourage you to look at the sustainability part of that, which is amazing. We are audited according to GRI universal standards, which means that our auditor, EY, has assured that everything we report is in line and is correct. The highlights are that we have reduced our emissions in 2022 with 1.7%. We are now up to 75% with climate smart packaging. The packaging I mentioned, it could be cans, it could be PET bottles, bag-in-boxes, and also lightweight glass.
There are several others, obviously. Finally, we feel that we are well-positioned for the new regulations that are coming from the EU in terms of reporting. The Corporate Sustainability Reporting Directive, very long, very EU word. Thanks to the fact that we have worked with the GRI standards and with audits for several years now, we feel that we are well-positioned for that job ahead of us. My closing comments. We normally take a look at on the financial targets, and here it's of course a little bit of a mixed bag. In this growth on the Swedish and Nordic markets, we are beating our expectations very well, while in the e-com, we do feel that we are in line with the market. When we look at our...
The competitors that where the numbers are available, we see that the decline that we see is very much in line with the market, obviously not in line with our financial goals. That's not news to anyone of looking at our company from quarter to quarter. On the M&A, we see increased activity, that's somewhere where we, especially in the e-com segment, see a lot of things happening in the next period. Profitability, again, mixed bag. Profitability on the e-com going very well, while we do see the impact of the FX effects on the Nordic segment and the Swedish segment. The capital structure, we are at one, very well in line with that.
Yesterday at the annual general meeting, we decided on the dividend policy, which where we are having a dividend of SEK 14.55 , which is in line with the dividend policy as well. Of course, we're again, we're reiterating the message that we are trying to turn this headwind into a tailwind. We feel that we have a very good position in the, in the market for growth. We have a strong product pipeline which is well suited for current market situations. We have shown you a few of the products that we have launched that are working very well in the current market context, where you see a general downtrading. People are buying cheaper wines in the market. That's a very clear trend now. In previous calls, we have mentioned that, it looks like it.
It's a very clear trend that people are buying cheaper wines in all of the Nordic markets. Not so much in the German market, where order values are actually going up, as you saw. We are seeing a lot of positive effects from the increased coordination between the Nordic countries. I think that it is contributing to the growth that we see in the all Nordic countries. In the e-com, I mentioned the warehouse and expansion of Weinfürst. We are planning on introducing more markets in the coming year. We have a very good situation also there. Waiting a little bit, obviously, as mentioned before, for the headwind to turn into a little bit of a tailwind when it comes to e-com.
As I mentioned, M&A, we are looking a lot of cases and, hopefully we'll have some news during the year. Of course, always difficult to say when, but we feel that it is happening a lot in the market and we are very well positioned for the in the M&A segment. Over to Q&A.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Benjamin Wahlstedt from ABGSC. Please go ahead. Benjamin Wahlstedt, ABGSC , your line is now unmuted. Please go ahead.
Can you hear me? Perfect. Sorry about that. You talk in the report about identified positive signals in the e-commerce segment. Should we interpret this as positive momentum going out to the quarter break or some other way?
Sorry, could you repeat the beginning of the question? We had a slight issue on the sound here.
No worries. You talk about identified positive signals in the e-commerce segment, talking about stabilizing markets. Is this a comment on inter-quarter momentum or what positive signals have you identified, please?
I think that we have sort of reached a plateau where we expect to grow from.
It is of course, really difficult and as we've seen in previous calls, it's very difficult to call the market right now in terms of consumer confidence and so on. We do see some positive small signs in the market that the e-com will pick up a little bit in the coming months ahead. Again, the comparison numbers will be a little bit softer as well. I think we will see better numbers. Again, I had said that before, so I'm a little bit like, yes, we are seeing it, but I don't want to call it very strongly. We are seeing a little bit of positive signs in the e-com market, yes.
Yes, perfect. You also mentioned this briefly, that the increase in AOV in the e-commerce segment is partly due to price increases and partly due to an increased number of bottles per order. Is it possible to give any indication on the split between those two, please?
We don't have that number as of now. We're happy to provide you with that.
All right. Moving on to the Sweden segment. If possible, could you talk a bit more about the timeline to getting back to more normalized gross margins, perhaps 2021 levels, for example?
I think that's a timeline which is very much related to the euro. I mean, I think we are all facing every import company in Sweden, Norway is facing the same situation now, or should we expect this to be the new euro SEK or NOK, euro NOK level or not? I mean, we're working on it, but if you just look on the lag that we have, I mean, the exchange rate that when we set the prices for March, which was based on exchange rate in end December. Already there, you know, you see we are lagging because now we are at approximately SEK 30, SEK 40 ore more on the SEK exchange rate. So it is a bit tricky right now.
I think that you would have to go into 2024 to, even if you're just catching up with the, with the exchange rate, it will probably be into 2024 before we can see a change going back to higher numbers. Unless the exchange rate does something that we don't, which is positive for us. Again, very difficult to call. Also the very high exchange rate is tricky because the customers are obviously going in another direction. The customers want cheaper wines. We need to increase the price of some of the wines. I think that effect, we are counter-affecting that by increasing the number of cheap wines or entry-level wines that we're selling.
Obviously, there will be a choice to be made in the coming months in terms of how we treat that and how we look at exchange rates. We look a lot on exchange rate, and I know you guys do that as well. It's really difficult to say. I mean, I'm hoping that 2024 will look better, but not earlier than that. Again, even if we just playing catch up with exchange rate, we will increase prices in September and October, depending on which of the Nordic markets we're talking about, and that's at least only a third or a quarter of the year in order to catch up. I think that 2024 is the earliest possible, but it will have to.
The exchange rate shouldn't go in the other direction, let's put it that way then. We will again have to play catch up. Long answer to a short question. It's, it's a tricky subject.
Yes, of course. I perhaps should have specified the question. Was sort of assuming flat exchange rates. I think you answered that question.
Assuming flat, the flat exchange rate, I think by March 2024 we will be more in line, but not totally, because it's gonna be difficult to increase everything if the competitors are not increasing the prices.
Yes. Of course, of course. As well, this is a bit of a, an integrity question. Is it possible to quantify the Easter effect that you mentioned? Quantify the sort of excess sales for you during Easter?
We don't have the exact numbers, but we have some positive effects. Meaning that, more of the Easter sale was in March this year, where almost all Easter effect were in April last year. That gives us. There has also been a change with delivery date, so it's a bit tricky, but more in some positive effects where all was last year in Q2.
All right. Perfect. I think those were all of my questions for now. Thank you very much.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Well, actually, we do have some online questions as well. One question from Rauli Juva. You mentioned you expect pressure to margins for some time. What kind of timeframe are you talking about here? Your competitors seem more optimistic in offsetting the impact of weaker SEK NOK with price increases already during Q2. I think the SEK NOK is a little bit easier. We haven't been as aggressive as we have been with this. About SEK NOK. Okay. It's both together. Sorry, my bad. I think I answered that partly already. I do believe that it is tricky to increase prices just immediately. Again, by March 2024, all things equal, we should be back on track.
Yeah. Also the next price win isn't until September, October. Not during Q2. The price increase will have effect in Q4.
There's another question for you, Linn, from Andreas at[ MeddevInvest]. How much did the currency depreciation affect the gross margins in the Swedish and Nordic segments?
Here I can ask you to look at the note number four, where it's where we have the split between the segment on the gross margins, where we can see that the Nordic and the Swedish had 15.9% this year compared to 20.3% last year. The Nordics has 16% this year compared to 20.8% last year. The main effect is coming from the effects in both segments. Please look at that one, and if you have further questions, please send us an email.
Finally, so far, we have an anonymous question. Do we have a hedging policy? Yes, we do.
Yes, we have a hedging policy. Here we can also refer to our annual report that was recently released. We have note 22, where all our policy is described and how much we are affected by the currency is also explained in detail. We have had a policy of 75% to 100% hedging in the Nord, SEK and the NOK. However, we can do exemptions from that policy together with the board. As we have mentioned before, at these times, if we believe that it's not possible to increase prices to cover the currency effects, we have been on the lower side of the hedging.
I hope that answers your questions. I don't see any other questions, and I don't believe there are any on the phones either. No. I'd like to thank you all for joining and ask you to enjoy our new logo that we have slowly introduced to the market. We like it a lot, and we hope that you enjoy it as well. Thank you for today and see you next quarter.
Thank you.