Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viva Wine Group AB (OSTO:VIVA, Financial) achieved record high market shares in all Nordic markets, reinforcing its position as the market leader in wine.
- The company reported a solid organic growth of 5.8% for the group, driven primarily by the Nordics segment.
- EBITA margin improved significantly to 9.9%, up from 8.1%, indicating a strong increase in profitability.
- The Nordics segment experienced a net sales increase of 7.8% in the quarter, with Sweden being a major contributor to both sales and gross margin growth.
- Viva Wine Group AB (OSTO:VIVA) maintained strong gross margins in the ECOM segment despite a challenging market environment.
Negative Points
- The ECOM segment experienced a decline with an organic growth of negative 6% due to weaker consumer sentiment, particularly in Germany.
- Networking capital increased compared to last year, attributed to timing effects rather than operational changes.
- Despite strong performance in the Nordics, the ECOM segment has not yet reached its growth targets.
- The company faces challenges in the ECOM market, with no clear strategy yet to significantly improve growth.
- Market dynamics in the Nordics are expected to remain similar in Q4, with no significant changes anticipated.
Q & A Highlights
Q: How long can Viva Wine Group continue to gain market share in mature markets like Sweden before reaching an upper threshold?
A: It is difficult to predict a threshold for market share growth. We have consistently gained market share and do not foresee a limit in the near or mid-term future. However, larger acquisitions in Sweden may not be feasible due to our current market position.
Q: Are there any regulatory thresholds on monopolies that dictate how much of the total wine volume can be supplied by one company?
A: We have not been informed of any such thresholds by government agencies or monopolies. Our business is spread across several companies in each market, which likely mitigates concerns about market share concentration.
Q: Can you elaborate on the organic sales growth in the Nordics, specifically the distribution between volume and price?
A: Both volume and price have contributed to the growth. We increased our volume by approximately 3.5%, with the remaining growth supported by price increases. There is always a product mix, but the primary drivers are volume and price.
Q: Regarding the e-commerce segment, what strategies are being implemented to drive growth given the challenging market conditions?
A: We aim to perform similarly to our success in the Nordics by exploring various strategies to increase market share. While we currently perform similarly to comparable companies, we are developing a new growth strategy and will update once we have a clear plan.
Q: Is the improvement in the EBITA margin in Sweden primarily due to gross margin effects, or were operating expenses also lower?
A: The main driver of the EBITA margin improvement is the gross margin increase, both in Sweden and the Nordics. Operating expenses have remained stable.
Q: What is the outlook for the e-commerce segment, and does the trend show a brighter picture for the future?
A: While Q4 remains uncertain due to factors like Black Friday timing, we expect a more positive trend in consumer sentiment and market conditions in Q1 and Q2 of next year.
Q: Do you expect operating expenses (OPEX) to remain flat year-on-year in Q4, and what is the outlook for OPEX growth in 2025?
A: We expect OPEX to remain at similar levels year-on-year in Q4 and to grow with the business in 2025.
Q: How do you see market dynamics in the Nordics in Q4, considering the current market conditions and price adjustments?
A: We anticipate that market dynamics in Q4 will be similar to Q3, with potential increases in wine purchases due to holiday-related demand. However, no significant changes in market dynamics are expected from one quarter to the next.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
