Milena Hæggström: Good morning, everyone. It is 11:00AM here in Finland, so let us get started. Warm welcome to this presentation of Anora's Q3 results. My name is Milena Hæggström. I am the Head of IR here at Anora. Our presenters today are our CEO, Kirsi Puntila, and our CFO, Stein Eriksen. After their presentations, we will start the Q&A session. Please also be reminded that you can post your questions to the chat throughout the call. Please note that the presentation will be recorded and published later today on our website, anora.com. Now, please go ahead, Kirsi.
Kirsi Puntila: Yes. Thank you, Milena. I will just see that I am on the same slide. Thank you, Milena. Hope all good with you online. I hope you have escaped the worst flu and other autumn bugs until now. It is pretty much a year ago when we at the Anora management team introduced our turnaround plan for the company on the Capital Markets Day on 5 November. From what I gathered, the market took the FFF strategy very positively, but of course, you have been eagerly waiting for the execution of that strategy, hence the results. It does require patience and determination to turn around something that has been on a downward spiral for years. Things do not happen overnight, and our ambition is to secure sustainable structural improvements for profitability. Our ambition does not stop there.
Kirsi Puntila: All along, we have also wanted to show not only external markets, but also for our own people that there is growth to be taken. Yes, we do believe that growth in the beverage business is possible when you make smart decisions. It is with a fair amount of confidence that I can say that we are doing just that. FFF is working, and I am happy to announce the Q3 results. As a reminder, here is the flight path that we have shown you before. This is the flight path to the 2028 target EBITDA, which we have communicated to be EUR 85 to 90 million. In simple terms, by reaching that level of comparable EBITDA, we can consider Project FFF successful. The market development is still negative, especially in the monopoly channels, and that is why we want to have a buffer not to disappoint our stakeholders.
Kirsi Puntila: Next, I will then give you some more details as to how Q3 contributed to those targets. This is a strategy wheel that you hopefully have seen before, and here the first F means Fit. Here we have simplified our operating model, and we have been looking at different cost harmonizations. We promised EUR 20 million EBITDA impact, and this we have largely secured. The second F means Fix, and here our work continues. It is about revenue management, inventory reduction, and supply chain, all continue to bring further margin and cash improvements this year, but also next year and moving on. So, eventually resulting in EUR 20 million. Then the third F, that means Focus, something that starts to give us results and growth from now until the end of the strategy period in the end of 2028.
Kirsi Puntila: Here, our target is to get further EUR 10 million worth growth initiatives. Allow me then to elaborate some of the FFF execution elements a little bit further. How well have we executed the cost part? We combined the wine and spirits go-to-market organizations earlier in the year, and we have simplified some other functions, resulting in one stronger commercial engine. We have also gained significant savings, for example, from harmonizing packaging, supplier tenders, and also introducing tools to help our teams improve their procurement practices. This means that by the end of Q3, around 80% of the run rate for the 2028 Capital Markets Day plan have been secured. Moving on then to the Fix execution.
Kirsi Puntila: Here, the key work streams have included, as I mentioned, different revenue management actions and commercial efforts, improved discipline in inventory reduction, and making our balance sheet leaner and stronger. With the help of all that, our gross margin percent is up by 2.9 percentage points year-to-date. Margins are record high in all of our segments, Wine, Spirits, and Industrial. Our inventories are down by EUR 48 million since 2023, and our balance sheet is also very, very healthy. Net debt is down. Leverage is already now after the first year with FFF at the targeted level below 2.5, and we also did some refinancing, which results in costs going down by around EUR 1 million on a yearly basis. We have done pretty much the fitting and fixing, and the results are showing.
Kirsi Puntila: When it comes to the most difficult part, and that is the Focus, and that means growth, this is something we are starting to see some early positive signals. Sure, the fact of the matter is that all Western markets continue to be the challenge in our industry, and the time will tell when they start bouncing back. Still, we have been able to strengthen our sales and marketing teams and ways of working so that we now start to win some great partner deals, both in wines and spirits. This page shows the areas where we promise to get the growth from. First of all, we still believe that our core is where we can grow, in our core wine and spirits portfolio. We have evidence that we can win and add great international brands into that portfolio as well.
Kirsi Puntila: Bacardi, of course, needs no further explanation, but also wines, Moselland, Cantine Settesoli, and now latest, Gato Negro in Sweden, to give you some of the latest wins in our wine segment. Overall, we continue to beat our competition in wine in Sweden, and our glögg portfolio, of course, is incomparable. Secondly, we are forcefully getting into the grocery channel, and not only in our open markets, Denmark and the Baltics, but also in the rest of the Nordics. Our exciting and topical ever-increasing liqueur portfolio is outperforming the market, and we are super proud to present one of our partners, Sazerac's hit product, that ready-to-drink cocktail brand, BuzzBallz. That is an amazing brand. We are extending also our own brands portfolio to the new packaging formats. Thirdly, we also grow outside of our home region.
Kirsi Puntila: Koskenkorva continues to gain momentum, and we are focusing more and more driving cross-country sales of our own brands in all of our markets. How do we secure Q4 then. Our key priority now in Q4 is to continue with the market share recovery and then secure a very good glögg season. As simple as that. Now finally to the beef of the presentation, which is our Q3 numbers. Yes, the third quarter, it was good. We have two key messages for you. One, Fit, Fix, Focus is a profitability strategy. Since the start of the turnaround journey, we have now improved our EBITDA double digit in every quarter. In Q3, the comparable EBITDA was up by 12.5%. Secondly, we are particularly excited to report that for the first time since Q2 in 2022, we saw growth in net sales.
Kirsi Puntila: Okay, not a whole lot just yet, but 0.5% anyway. On top of that, we continue to have record-breaking gross margins. This time, improvement across all the segments, Wine, Spirits, and Industrial. Net sales, EUR 157.5 million, driven mostly by increased contract manufacturing. Gross margin, 47.7% of net sales, all segments improving their sales mix and pricing. EBITDA, EUR 20.2 million, up from EUR 18 million last year. Net debt down to EUR 188 million, and the leverage being below 2.5 at 2.46. Okay. I will then highlight a few commercial developments during Q3, which were supporting our growth ambitions. The glögg season. Glögg season has started strongly with Blossa Annual 2026 featuring Mexico, a brand called Mexico, and it has a margarita theme. Of course, we have some other novelties strengthening our seasonal glögg and also aquavit offering.
Kirsi Puntila: I already mentioned the two significant new distribution agreements, Bacardi in Sweden and Norway, and then VSPT Wine Group in Sweden. These partnerships, they strengthen our market position and support profitable growth through increased scale. We also expanded our liqueur portfolio with a few new launches, again, supporting our focus on innovation and growth in attractive categories that are growing by themselves. One example is Koskenkorva Pumpkin Spice, now very topical for the upcoming Halloween weekend, and then aquavit such as Løiten Krem, Opland Malteser, and a few others. Okay. As usual, I will then use some time on individual segments performance, and let us start with Wines. Total net sales declined to EUR 66.6 million, and that means that it was down by 5.8%. The two key reasons for that was lower sales in Norway and Denmark, and also filler services in Denmark.
Kirsi Puntila: Finnish wine business was down in volume. If you look at the positives, comparable EBITDA increased to EUR 3.8 million from last year's EUR 3.5 million, and there was an increase in gross margin, which was 31.8% of net sales. Of course, we still continue with a good path with wines in Sweden, and our market position is still number 2 in Sweden. If you look at the total market leadership, we still are market leaders in Norway, Denmark, and Finland, if we take the retail business into consideration. If we then move on to the Spirits segment, net sales declined a little, 1.5%, resulting at EUR 50.1 million. This decline is largely explained by the earlier partner portfolio changes in 2025, and we are going to see less of that effect moving on from now on.
Kirsi Puntila: If you look at the comparison numbers, there was an inventory buildup by retailers in Denmark a year ago when they were anticipating a Danish environmental tax. Again, looking below the surface, on the positives, we see gross margin improvement to 48.5%, and gross profit amounted to EUR 24.3 million. Mix and pricing, they are clearly bringing results. Also, Baltics and expansion markets, they were growing. The total Spirits comparable EBITDA increasing by 1.5% to EUR 9.5 million, and comparable EBITDA margin increased to 18.9%. Then the third star of the pact at the moment in Q3, Industrial. Industrial delivered a very strong third quarter. External net sales increased by 15.6% to EUR 41.1 million, while the total net sales amounted to EUR 64.4 million. There, the growth was driven by contract manufacturing, starch and ethanol, but also the logistic services in Norway.
Kirsi Puntila: EBITDA improved to EUR 7.2 million, and GM to 51.5% of net sales. Overall, Industrial continues to be a very stable part of the business, and in fact, Industrial is very much part of this FFF program as well, so we warmly welcome any improvements there as well. Okay, these are the key figures, and now we will hand over to Stein to go a little bit deeper into the numbers as well.
Stein Eriksen: Thank you very much, Kirsi, and good morning, everyone. Kirsi showed how Fit, Fix, and Focus is being executed, and I will now put the numbers behind it for the third quarter and the first 9 months of 2026. The main message is that Q3 extended the earnings improvement. Comparable EBITDA grew by 12.5%, with improvement in all three segments, and gross margin reached 47.7%. Adjusted for acquisitions, the reported net sales grew for the first time since the second quarter of 2022. In my section, I will cover net sales, comparable EBITDA, gross margin, cash flow, and net debt, our financial position, and finally, working capital. If we then start with net sales, Q3 external net sales increased by 0.5% to EUR 157.5 million, up from EUR 156.7 million last year. Currency contributed positively by 1.6%, so organic growth was -1.1%.
Stein Eriksen: Kirsi already went through the segments, so I will just go through the main points. Wine was down with 5.8% in the Nordic wine market. That was down with 3.4%. Mainly Norway, also Denmark, including the filler volumes, and Finland was down. Spirits was down with 1.5%, reflecting the earlier partner changes, as we have communicated in previous quarters. And Industrial external net sales grew by 15.6% on contract manufacturing, starch and ethanol, as well as logistic services in Norway. Two things that matters for the coming quarters, the impact from the earlier portfolio changes, the lower margin filler volumes, and certain partner brands decreased in Q3, and we don't expect any major impact from them during the rest of the year. Bacardi starts during Q4 with up to EUR 5 million in net sales in the quarter. Just bear that in mind.
Stein Eriksen: Let's move over to comparable EBITDA. Before talking about comparable EBITDA, a few words on items affecting comparability. Reported EBITDA was EUR 20.1 million compared to EUR 18 million last year. Items affecting comparability were only EUR 0.1 million net in the quarter. We had some one-off project costs related to Fit, Fix, and Focus, but this was largely offset by a gain on contingent consideration from an earlier disposal and a small positive restructuring item. For the first nine months, items affecting comparability were EUR -6 million, mainly transformation project costs. Then, turning to comparable EBITDA, it increased to 12.5% to EUR 20.2 million, and the margin improved from 11.5% up to 12.8%. As I already mentioned, all segments posted positive improvement compared to previous year. Gross margin, that remains the most important financial proof point of our strategy. Kirsi showed the tools behind it.
Stein Eriksen: It's one pricing tool, it's a common pricing architecture, and stronger governance. This is where you see them in the numbers. In Q3, underlying gross margin, if you adjust for IACs, increased to 47.1%, up from 43.9% last year. That's up by 3 percentage points and the highest third-quarter level in several years. For the first nine months, underlying gross margin was 46.7%, up from 43.7% last year. As you can see from this graph, over the last three years, that is an improvement of around 7 percentage points, both for the quarter and year to date. Margins improved in all segments. Year-to-date, the drivers are the same as we described at the H1. First, revenue management, pricing mix, and governance across the monopoly markets. Second, the positive mix from exiting some lower margin filler and partner volumes.
Stein Eriksen: Thirdly, better operational performance, particularly in Industrial. So, this margin uplift is a key reason why comparable EBITDA improved despite the lower net sales. Let us then move to cash flow and balance sheets. Turning to net debts. As usual, as you all know, the first nine months are a cash outflow period for Anora, while Q4 is by far our strongest cash generative quarter. Net cash flow from operating activities was EUR -45.4 million, an improvement of EUR 8.7 million from last year. The improvement mainly reflects the timing of certain trade and other payables and lower net financial expenses. Also, the bridge shows the movement from EUR 101 million at year-end, and then you see that the EBITDA, the reported EBITDA, contributed with EUR 39 million.
Stein Eriksen: We have a seasonal working capital buildup of EUR 69 million, net financial payments of EUR 11 million, taxes of EUR 4 million, CapEx of EUR 14 million, which includes the new biomass boiler at Koskenkorva. Lastly, a dividend of EUR 16 million. That means that we ended Q3 with a net debt of EUR 188 million, down from EUR 203.3 million a year ago. Let us look at the financial position of Anora at the end of September 2026. Leverage, net debt to comparable EBITDA was 2.5x compared to 3x a year ago. I just want to mention this before rounding it up to 2.5x, it is actually 2.46x, so we are within our target at below 2.5x. Remember that in Q4, it is our strongest cash quarter, and at the end of last year, we ended at 1.4x.
Stein Eriksen: Hence, we do expect leverage to stay below 2.5x throughout 2026, which means that we reach our leverage target communicated in our CMD last year already in the first year of the strategy period. Of course, extremely happy with that. Liquidity reserves were EUR 232 million. The difference from EUR 262 million last year reflects the smaller revolving facility after the June refinancing of EUR 120 million compared to EUR 150 million a year ago. Not weaker liquidity. Cash was unchanged at EUR 92.3 million, and the revolving credit facility was undrawn. Net financial expenses were EUR 3.1 million in Q3, down from EUR 3.5 million last year. Year-to-date, it has ended at EUR 10.2 million, yet down from EUR 11.2 million last year. The financial position of the group is clearly stronger than a year ago. Lower net debt, lower leverage, and solid liquidity.
Stein Eriksen: I will round off by talking a little bit about the working capital, because I think this is also quite a strong story. Net working capital, as you can see, was -EUR 12 million, compared to EUR 3.1 million positive last year. So, we ended up around -2% of 12 months rolling net sales. Extremely happy to see that the inventory continued to come down to EUR 137 million from EUR 151 million a year ago, a reduction of more than EUR 14 million, and as Kirsi showed, EUR 48 million lower than in 2023. The year-on-year improvement in working capital is driven by inventory, which is exactly where the fixed agenda is focused. With that, Kirsi, back to you for some outlook.
Kirsi Puntila: Thank you, Stein. A lot of details, and I think we might sound like a broken record, but we want to make sure that you are fully aware of all the details. Here is our reminder of the financial targets, and the good news is that we are well on track delivering the promised results during the midterm strategy period. So, we are targeting to achieve 6% to 7% annual comparable EBITDA growth, and so far, we are well above that target. We are targeting organic growth being above the market, and market growth is measured from Nordic market sales volumes change. Here you can see that the organic growth for Anora in the first nine months was -3.7%, whereas the market was down -3.1%. Please note that the organic growth for Anora in Q3 was -1.1%, whereas the market was down 3.2%.
Kirsi Puntila: So, in Q3, Anora's organic net sales did not decline anymore as much as the market overall, but we are fully aware of the fact that this is definitely an area we need to continue our hard work. Leverage target is to be below 2.5, and I think Stein is very, very happy that now it is 2.46, so we are below 2.5 even in Q3, and the dividend payout target is 50% to 70%. So, wrapping up Q3 with the key message being net sales increased to EUR 157.5 million, which means that we are finally up at least a little, 0.5%. Then continued FFF actions were driving Q3 comparable EBITDA growth up by 12.5%. So, the comparable EBITDA was up to EUR 20.2 million. Gross margin, as said, rose to 47.7% of net sales.
Kirsi Puntila: Net cash flow was -EUR 45.4 million in this first 9 months, an improvement of EUR 8.7 million compared to the previous year. We have talked of the leverage, but I want to leave you today with the following takeaway. We are improving profitability and financial position despite a very weak market, and that is exactly what we set out to do last year. We are now seeing the first signs of our net sales also turning to growth. Finally, looking ahead, we still expect for Q4 that there is a continued structural pressure on alcohol consumption, especially in the monopoly channels. We see volume pressure across all our markets, and then, of course, the increased energy and transportation costs that we need to take into consideration. So, there are no changes there.
Kirsi Puntila: But we intend to continue our turnaround journey on the elements that are in our control, and that is to execute all the Fit, Fix, and Focus initiatives as planned. Finally, our guidance, it does remain unchanged, where we believe that we will reach our comparable EBITDA somewhere between the range of EUR 74 to 79 million, as we have explained before. Yes, I guess that was a long talk. So, with that, I guess I hand over back to Milena, and any possible questions for us.
Milena Hæggström: Thank you, Kirsi and Stein. Please remember that you can post your questions through the chat, and we already have a couple of questions here waiting. So, if you want to ask a question, just raise your hand to mark that. But first question comes from Maria Wikström at SEB. Please go ahead.
Maria Wikström: Yes, perfect. Thank you. Congratulations, Kirsi and Stein, from a very well executed strategy so far. I have few questions. Firstly, I would like to start with the guidance. After the first month, you are EUR 5 million ahead on the EBITDA level. Just having a flat EBITDA for Q4 would take you to the mid-range of the guidance. Why would you be so bearish for the final quarter?
Kirsi Puntila: Yeah. Thank you, Maria, for a good question. I suspect everybody else is thinking the same thing. Remember, guys, that Q4 is 44% to 45% of the whole year. We are quite dependent on a few things. One of the key things obviously being how well we perform with Blossa and glögg. Looking at the weather right now, at least here in Helsinki, it is quite many plus degrees. Of course, that has an immediate impact for the glögg sales. We want to be rather conservative than promising too much, because the glögg sales is a big contributor to that 44% of the yearly net sales. That is one thing. We do see now increases in costs, whether it is energy or the transportation costs. We need to take that into consideration.
Kirsi Puntila: The third one is that the total markets are still in decline, especially in the monopoly channels in Finland and Norway. Denmark is still struggling. I think there is no reason that we would give you any more exact guidance than what we have said until now.
Maria Wikström: Thank you. Then I wanted to get a bit of the grip on the sustainability of the sales as well as EBITDA trend in the Industrial segment. Sorry if I described it earlier to being a low-quality piece coming from the Industrial segment, but that is purely by the fact that, for myself, it has been the most difficult segment to forecast. Maybe you give a little bit of a tools that, how volatile the sector actually is in terms of the profitability and sales growth.
Kirsi Puntila: I will let Stein to say, but remember that, as I said in my presentation, industrial is as important as wines and spirits to us, and industrial is part of the FFF program. We take every victory that we get, and industrial has, as you've seen, demonstrated a very strong growth trajectory the full year. I do not know, Stein, if you want to add anything to that.
Stein Eriksen: Yeah, I can add. Remember, Maria, that industrial consists of some of our factories, especially Koskenkorva factory is running at full speed, which is really good. That lubricates the whole industrial area. That is point number 1. Point number 2 is also our logistics service in Norway, Vectura, is also continuing to perform very well. I would say it is a strong performance by industrial, and it is an underlying improvement. Like Kirsi said, related to the Fit, Fix, Focus program. So we believe that it is sustainable. Yes.
Maria Wikström: Thank you. My final question would be on your new partner, just to get a little bit a sense of the magnitude of the VSPT partnership. I mean, you mentioned the Bacardi. Of course, that is also for both Norway and Sweden, representing, I mean, EUR 25 to 30 million in sales. I mean, if you could give a little bit of sense that, I mean, how big is VSPT, please?
Kirsi Puntila: Well, first starting with the Bacardi, we have said that, I mean, we are now ramping up, obviously, the operations where we are taking over the business in a couple of weeks' time now. I think we are ready to rock with Bacardi portfolio in Sweden and Norway, apart from the RTDs. Then we have communicated the VSPT, which is Gato Negro, Santa Helena, and some of the sort of others. We will and it is a significant wine partner for Sweden.
Maria Wikström: Okay. Thank you.
Milena Hæggström: Thank you, Maria. Next question is coming from Sanna Perälä at Nordea. Please go ahead.
Sanna Perälä: Yes, thank you. I actually made the same observation as Maria regarding Industrial, but you did mention that it is as important as the other segments. So you are happy with the current mix, how it is developing, and have all the segments met your expectations so far?
Kirsi Puntila: Yeah, it's a good question. Have all segments met the expectations from the gross profit point of view? Definitely. Now we're continuously working on improving that even further, so absolutely. But I would be lying if I said that we haven't had a years-long challenge with wines, and we continue to work on that. So, no, we're not obviously happy with minus figures for wine in particular. With spirits, of course, that's very much related to the previously lost partners, the impact of which is now basically over. As of Q4, we don't see that comparison negativity anymore. But for wines, we have still work to be done.
Kirsi Puntila: But I have to say that, I mean, obviously, Anna Möller, who started only a few months ago with the Wine segment, she is doing an amazing job now getting all the ducks in order and the plans, especially, I mean, we see very promising plans now for Finland. But there is still work to be done, definitely, especially with wine.
Sanna Perälä: Got it. Thank you. So, as Stein mentioned, this is a sustainable kind of level in Industrial. So do you believe that even though the other two segments would continue declining, Industrial would kind of be able to support growth going forward as well? So it is not super volatile, as Maria also pointed out.
Kirsi Puntila: Well, part of the FFF strategy we have communicated, the focus part, which consists of three elements, as I mentioned. It is the core brands that we are consistently innovating around, and then it is going to the grocery channels with more lower alcoholic beverages and other RTDs, and also 8% wines in Finland, and then it is International. And then, I mean, there is nothing else to say at this stage. We, of course, believe that the plans are very strong, but then how far they will take us, the future will tell. But, of course, we put equally much pressure for the Beverage segments that we do for Industrial. And the sustainable growth is, of course, the ambition of this whole strategy.
Sanna Perälä: All right, thank you. Then a couple of questions regarding the other two segments. In Wine, you now declined more than the market. How much of this gap, if we could get some color, is explained by these kind of portfolio optimization and lost volumes rather than organic market share losses? And how much did you underperform organically versus the market, or if any?
Stein Eriksen: Yeah, Sanna, unfortunately, not so much was explained by the lost filler business in Q3. Most of it is organic market share loss.
Sanna Perälä: Yes, thank you. Then in spirits, I am thinking about the gross margin versus EBITDA growth. If I am looking at this correctly, the gross margin improvement did not completely drop through to EBITDA. Is there something we should be aware of?
Stein Eriksen: No, I think for the group as a whole, you can see that OPEX is up. That is explained mainly by three components. First of all, we have some higher bonus accruals compared to last year. But then also, like Kirsi mentioned, we do see higher transportation or logistics costs and also higher energy costs. So those three elements are impacting our OPEX negatively. Also what we see, and Kirsi also mentioned it, related to the guiding for Q4, we see that it is escalating in Q3 compared to the two first quarters.
Sanna Perälä: All right, that is clear. That is all from me now.
Kirsi Puntila: Thank you, Sanna.
Milena Hæggström: Thank you. Then we have questions from Matti Kaurola at OP. Please go ahead.
Matti Kaurola: Thank you, and congrats on the great result. First, I will still cover the industrial growth. Could you a little bit open up where the underlying demand growth for ethanol and starch is coming? I think in the past, there has been some sort of structural decline.
Kirsi Puntila: Yeah, of course, we have contract manufacturing, and when we produce more ethanol, that then also cascades down to the need for the starch and others. So, it is very much about the growing need for ethanol in general for industry.
Matti Kaurola: Could you open up which industries are buying the ethanol, or what is the driving ethanol demand growth?
Stein Eriksen: Well, first of all, we have one big customer buying our ethanol, as you know, Coca-Cola Hellenic or the Finlandia brands. Of course, when we are selling more Finlandia, then also we are selling more side products like starch and feed. When we are producing more ethanol, we also produce more side products, and it is more demand. We could actually produce even more of the side products, but it is limited by how much ethanol we are producing.
Matti Kaurola: Okay, thank you. Then regarding the inventory reduction, I think you said a year ago the number of SKUs was quite high. You described in the EUR terms the decline, but could you open up how much the SKU number has come down, roughly?
Stein Eriksen: It is a good question. I do not have that number here.
Kirsi Puntila: No, I was thinking the same thing. Of course, we did when we started with the analytics and focus project, we have categorized our SKUs, and there has been a significant reduction in the SKU, but also harmonization of some of the bottles and all that. I do not know exactly how many SKUs that will be since what we have said, but that work continues. Obviously, that work continues, but not only that. I think I have mentioned it somewhere that this is a massive cultural change within Anora, that I think we have now tools, helped by AI as well, where we can actually control the inventories much better than we were able to do before. All the teams and our people, they know, they can attack the challenge already earlier. That is a fantastic thing, how the tools are helping us.
Kirsi Puntila: But then one has to remember that, of course, when we get fantastic deals such as Bacardi, then that occasionally, of course, also increases the inventories because, of course, we need to have those products in our warehouse before we start selling them. That, of course, then affects inventories to a certain extent moving forward. But overall, we are still continuing on the reduction of the inventories.
Stein Eriksen: Maybe to comment on Kalle's comment, just like we do expect some not as big as reduction in Q4 due to the Bacardi deal and potentially around EUR 5 million in a negative working capital effect in Q4, just so you are aware.
Matti Kaurola: Okay, thank you. Then one final question regarding this raising cost pressure. How do you see possibilities to then escalate those to the pricing side, or is there going to be some sort of, I would not say hiccup, but I still say hiccup in the margins before you can transfer the increased cost to the prices?
Stein Eriksen: I think it is fair to say that, as you know, in Finland and Sweden, we only have two pricing windows, and in Norway, we have three. So, we will not be able to pass on the increased input cost right away. So, you will see some delays going forward. Yeah.
Matti Kaurola: All right, thank you. That is all from my side.
Milena Hæggström: Thank you, Matti. Then we have a follow-up question from Maria Wikström, SEB. Please go ahead.
Maria Wikström: Yes, I wanted to have one follow-up on the Finnish wine business specifically. I think you mentioned that you are a market leader in Finland if you account for the retail channel.
Maria Wikström: So, wanted to see that if I mean, what is your status if we just talk about the monopoly channel? Then relating to that, I wanted to see that what type of growth you are currently seeing in the retail channel, that if it has stabilized, or is it still growing, or has it started declining?
Kirsi Puntila: You mean the overall grocery sales?
Maria Wikström: Yes. Wine sales in grocery.
Kirsi Puntila: Yeah, it depends really. We, of course, have both 8% wines, and then we have also RTDs, which RTDs are still growing overall in the groceries. I do not know. I am not going to Obviously, I do not see everything what is happening with the K and S Group and Lidl and what is there, and how are they forecasting their growth. But I guess the first year was very, very strong for us, but then I think it has stabilized a little bit. Then as the Finns in this call know, we have some huge structural changes in the alcohol beverage market in Finland due to the political decisions that were made a couple of years ago. So, that, of course, overall is changing the whole channel structure in Finland, but we are in that game ourselves, and that changes our future as well.
Kirsi Puntila: But the wines, when you look at our wine plans in the monopoly, for example, they are very strong, and I think we are starting to gain share there. That's we're very comfortable with. The retail we need to further work on. We need to have the best possible portfolios for the groceries, whether it is wines or any RTD. That is definitely work in progress, and it's a new channel for us that we're learning ourselves at the moment. Is it growing or declining? I think it's rather stabilized. Of course, you should ask that from the grocery channels, how much are they investing in that growth there for future.
Milena Hæggström: I will. I can report back when I have done it.
Stein Eriksen: Could just say it's a mixed bag, like Kirsi says. So, actually, the Finnish team has done a really good job in the monopoly channel in Finland. So, we have gained market share now for three consecutive quarters in Finland. But then it's like Kirsi said, we still have some challenges, especially towards the retail channel.
Milena Hæggström: Okay. I think we are done with this question.
Kirsi Puntila: There is Rauli. I think there is one up. There is the hand up. There is the one hand up.
Milena Hæggström: Okay. I thought actually. Yes, sorry. We have one more question from Rauli Juva at Inderes. Please go ahead.
Rauli Juva: Yes. Thank you, and hello. Just one question from me. You gave some color on the savings related to the FFF program, but can you share the number of, if we think of the total EUR 40 million savings you are looking at the Fit and Fixed phases, how much of that will actually be seen in the 2026 P&L?
Stein Eriksen: I think, when it comes to the OPEX reductions, and you see it in our P&L already, because we downsized with almost 70 man-years.
Stein Eriksen: in the beginning of this year.
Stein Eriksen: But like I said, it's partly eaten up by some higher bonus accruals
Stein Eriksen: and, of course, normal salary inflation. When it comes to procurement synergies or savings, then you will see most effects in 2027.
Stein Eriksen: We have taken up savings, but of course, the savings needs to go through the inventory.
Rauli Juva: Yeah
Stein Eriksen: P&L effects you will first see in 2027. But as I said also, Rauli, I am a little bit worried for the higher input costs
Rauli Juva: Sure.
Stein Eriksen: and the impact from that.
Rauli Juva: Sure. Okay. Thank you.
Kirsi Puntila: Sorry, I just saw that you missed Rauli. That is why I said that I did not see Rauli's hand.
Milena Hæggström: No, I was referring to the previous question.
Kirsi Puntila: Yeah. Sorry about that. We do not want to miss Rauli.
Milena Hæggström: I guess Rauli is done now.
Rauli Juva: Yes. Thank you.
Milena Hæggström: Thank you. If anyone else has any more questions, you can post them through the chat or raise your hand to mark this. Let's wait a while. It looks like we don't have any more questions, so thank you to the speakers and to everyone online for joining us today, and all these good questions. Please remember that our next event is the full year financial statement release, which will be published on 16 February. Looking forward to see you then. Thank you for joining today.
Kirsi Puntila: Thank you.
Stein Eriksen: Thank you.
