Anora Group Oyj (ANORA) Earnings Call Transcript & Summary

Good morning, everyone and a warm welcome to Anora's 2021 Results Presentation. I am Tua Stenius-Ornhjelm from Anora's Investor Relations. Our speakers today are CEO, Pekka Tennila; and CFO, Sigmund Toth. It has been horrible to follow all the news from the war in Ukraine. And before we go into the results, Pekka will shortly discuss the impacts and uncertainties relating on that for Anora and then Sigmund will talk you through Arcus standalone results and continue with the financials. For the Q&A, we invite your questions through the Teams chat, and actually, you can all already send your questions to us during the presentation. And it's also possible for you to use the raise your hand function if you want to ask the questions personally. Before handing over to Pekka, I would like to remind you that, just like in the Q3 report, Arcus is reported as the fourth segment of Anora and as of Q1, we will be reporting with the new segments, which will be Wine, Spirits and Industrial. And finally, please note that we are recording this presentation and the on-demand version will be available later on our website. With this, we are ready to start. Pekka, please go ahead.

Thank you, and welcome on my behalf as well. First of all, as Tua said, it has been shocking to see the development in Ukraine, and we are deeply concerned about the war and want to offer our support to Ukrainian people. A week ago, Monday, we sent out the press release saying that we will suspend all sales to Russia, and a donation of EUR 50,000 was made to Red Cross to support the Ukrainian people. From the business point of view, both Russia and Ukraine are important exports markets to us. We have one distributor in each market. It's mainly exports of Koskenkorva Vodka, but from the Group perspective, it is not a major -- it doesn't have a major significance. We haven't had any business in Belarus since 2020. The non-direct effects of the war is expected to be significant, including global supply chain, possible disruptions, expected further price increase of grain, and obviously, further price increases across many input costs. Going back to Anora, today, we are the leading wine and spirits brands house in the Nordics. We are very proud of our sustainability work and we believe that we are one of the forerunners in our industry globally in sustainability. We have the number one market positions both in wine and spirits, and last year, our pro forma net sales amounted to EUR 665 million and comparable EBITDA was at EUR 101 million. We employ about 1,100 people across Northern Europe. Our distilleries are allocated in Finland, Norway, and Sweden. The main production facilities are in Norway and Finland, a small one in Estonia and a Cognac house in France. After the merger, we built a strong local sales force in our home markets to be able to serve our partners and customers, customers even better. So we feel we have a very strong platform to build upon. With the merger, we are stronger, and as said, we have a better platform to grow. We have a market-leading portfolio with own and partner brands, covering all categories and price segments. To our partners, we provide insight on Nordic consumer. We can offer the superior route-to-market and sales force locally present in all customer segments. Sustainability is at the core in everything we do. For us, it means, for instance, developing sustainable packaging for wines and spirits as a considerable part of the carbon footprint of beverage product is related to packaging. With the merger, we have taken a step-change in scale, which allows us to drive productivity further. Last, but definitely not the least, we have a strong growth ambition. Our strong financials puts us in a good position to pursue growth opportunities and we see that the M&A will play an important role in the future. We are working on Anora's growth strategy, and we'll come back to that after the summer in our Capital Markets Day. Now let's move on to talk about the 2021 results with the key highlights. Last year, COVID restrictions in on-trade and traveling continued to impact our market environment in a significant way. The market volumes in the monopolies were extraordinarily high and supported by these, we are reporting very strong results for 2021. On a pro forma basis, net sales grew by 6% to EUR 665 million and comparable EBITDA grew by 3% to EUR 101 million. And I want to take this opportunity to thank all Anora employees for their excellent work to get to these results. In the last quarter, we started to see the markets going back to normal, which was also reflected us lower monopoly volumes versus Q4 last year. On the cost side, we were faced with a historically sharp increase in input costs, and specifically, the cost of barley reached a record high level. On a pro forma basis, net sales grew to EUR 206 million and comparable EBITDA reached EUR 31 million. I will go through the Q4 results in more detail later on. During the last quarter, we worked hard on the merger integration and for instance, focused very much on the people processes as we were restructuring our organization according to the new operating model. Overall, I'm pleased to say that the integration has progressed according to plan and is on schedule. The Board has made its proposal to the AGM to pay EUR 0.45 per share as dividend, and before we dive into the segments more in detail, let's discuss the market development. When we talk about the Nordic market, this essentially means the state monopolies in Sweden, Finland, and Norway. In these monopoly markets, normally, some 90% of the overall market volumes go through the monopolies and the remaining 10% is split on on-trade and to a smaller extent on grocery trade when it comes to wine and spirits. During the pandemic, we have experienced historically high monopoly volumes because of restrictions in restaurants and traveling shifted demand to those stores. If we look at the development during the past 2 years, we can see that in 2020, the increase in volumes was extremely high with an overall growth of 17%. Last year, in 2021, we could already see some movements towards more normal levels as restrictions were from time to time lifted, and so the overall volumes were flat compared to 2020. However, as can be seen from the chart to the right, the volumes in 2021 were still well above the 2019 levels, specifically in Norway with 44% above normal level. Now, as the societies have more or less removed all restrictions, we can expect the monopoly volumes during 2022 to return to pre-pandemic or 2019 levels. Let's move on to look at the former Altia in Q4. Here we report the Finland & Exports, Scandinavia and Altia Industrial segments. We see a good topline development with net sales growth of 8% to EUR 115 million in Q4 and 6% growth to EUR 362 million for full year. All segments contributed to growth and I'll discuss the segments in more detail shortly. Comparable EBITDA for former Altia stood at EUR 16.3 million in Q4, which corresponds to a margin of 14.2%, behind previous year mainly due to high barley costs and somewhat bigger investments into marketing of our brands. For the full year, EBITDA amounted to EUR 51.8 million with a slight decline from previous year and corresponding to a margin of 14.3%. Next, we look at Finland & Exports segment. Finland & Exports is reporting strong results for Q4 and here we see the positive impact of the markets returning to normal after COVID as former Altia exports and travel retail are reported in this segment. The solid net sales growth of 10% was driven by good recovery of travel retail exports on-trade and the Baltic sales to the monopoly declined mainly due to the overall lower market volumes and the weaker development of own wine brands, while total wine sales grew, driven by the recovery of travel retail. In the Finnish grocery trade, we saw the solid development continuing. Comparable EBITDA grew from EUR 6 million from last year to EUR 7 million, corresponding to a margin of 18.6%. This improvement was driven by higher volumes in travel retail exports, which offset the impact of lower monopoly sales and the increased marketing spend due to a higher activity level compared to last year. On the right, you can see some of the Q4 launches, in line with our ambition to bring our brands to new markets. We have brought Larsen Aqua Ignis to US and to German markets. This is the first Cognac in the world aged in steam toasted barrels and reflects the brand's ambition to be the most innovative brand globally. We also introduced Valhalla and Koskenkorva Vodka in Switzerland. Well, all Fins will be familiar with the next brand, Jaloviina, which this year celebrates its 90th anniversary. And for that occasion, we have launched a limited edition. From the wine side, we launched a new prosecco and won a new listing for Los Intocables red wine bag-in-box. Now moving on to Scandinavia segment. In Scandinavia, net sales grew by 2% to EUR 47 million. In constant currencies, net sales declined by 0.8%. Here it is important to remember that the brands that were divested due to the merger were reported in former Altia in Scandinavia segment. The divestments was closed in Q4 and it explains the decline in the segment spirits sales from previous year. In Sweden, net sales of both spirits and wine grew. We had a very strong Blossa season, both in monopoly and grocery trade. In addition, new partners and novelties and on-trade recovery contributed to growth. In Norway, net sales grew driven by on-trade and higher spirits sales. In Denmark, net sales declined due to brand divestment. Comparable EBITDA was below last year at EUR 7.7 million, which gives a margin of 16.2%. The decline is driven by the brand divestments and also the increased marketing spend due to high activity level versus last year COVID year. Product mix, strong Blossa season and revenue management contributed positively on EBITDA. Then a few highlights from recent launches in Scandinavia. The non-alcoholic and low-alcoholic category or no-low is still a small category, but they're growing one, driven both by consumer demand and new innovations. We are taking an active role in transforming this category and in Q4, the O.P. Anderson Distillery's alcohol-free snaps was launched in Sweden. The novelty includes 3 different flavors and was immediately awarded at the Spirits Business Low and No Masters. In Norway, we have strengthened our partner portfolio with De Kuyper Royal Distiller's world-leading brands in different categories such as Peachtree and De Kuyper's liqueurs. To conclude my first part, let's look at Altia Industrial. There we see strong topline development with net sales growing by 16% to EUR 30 million. This is mainly due to higher contract manufacturing volumes than in previous year and pricing due to increased cost of barley. In starch and feed, net sales development was positive, supported by pricing, while volumes were below last year's level. And technical ethanol, net sales were stable despite slightly lower volumes. Comparable EBITDA declined to EUR 2.5 million, which gives a margin of 8.3%. The decline was due to higher cost of barley and imported ethanol as well as higher OpEx in logistics. Sigmund will discuss barley more but just to mention that barley consumption in 2021 was slightly lower than in 2020. This concludes the review of former Altia segments. All-in-all, very strong topline development whereas profitability was impacted by barley and higher marketing investments. Now, I will hand over to Sigmund.

Thank you, Pekka, and a warm welcome to everyone from me as well. So what I'll be going through now is the former Arcus and I would like to then remind everyone that these figures, which we are showing here, they are prepared on an illustrative basis to help you understand the real underlying evolution of the business and of course, they differ from the reported figures in where it's the time of the merger, which is the basis September 1, but here we are showing apple-to-apple figures for the former Arcus business. And the Arcus figures for Q4, they are heavily impacted by the fact that Norway is such a big part of the numbers and as Pekka mentioned, while for a whole, volumes in the monopolies for 2021 were still at a very, very much higher level than 2019, the last, let's say, normal year, in Q4, at least the first half of the quarter in 2021 was more of a, let's call it a normal year. And what that means is that we were facing very, very tough comparables. And as a result, in Q4, the reported net sales, they declined by 3% to EUR 91 million and in constant currencies, they actually declined by 6%. For the year as a whole though, the performance was very strong. I would say reported net sales grew by 5% almost and in constant currency 0.6% and comparable EBITDA for the year as a whole was also up both in absolute terms and actually, the margin was up as well, whereas, and we'll go through this in more detail in the former Arcus segments by segments Q4 results, they were impacted by this decrease in sales and also other factors that we will go through. So that, while still a strong result, the comparable EBITDA was lower at EUR 15 million and with lower margin than the very, very strong and exceptionally high figure of last year. So with that, we take a closer look at wine. And here in wine, we really see -- this is the former Arcus segment, which was the most impacted by what I mentioned the normalization of volumes in the monopolies and particularly, in Norway. So reported net sales declined by 6% and in constant currencies by 8.5%. And 2 effects we see here, there were lower market volumes in all the 3 monopolies with COVID-19 normalization, but there were also a second effect that we saw last year on additional boost even beyond the COVID volumes in our portfolio with a lot of bag-in-boxes was exceptionally well-positioned for that sort of demand in the early COVID times and now we see a tendency more towards bottles and higher-priced wines and here, our portfolio is, relatively speaking, less well-positioned. So there is also, let's call it a second normalization effect. If you look country-by-country, still good performance in Norway of our own brands and Sweden was at last year's level. And then in Finland, we were a bit down due to some loss of some partners. And now when we look at the profitability, it's still at a very, very high level with the 17% margin for Q4. I think that we are happy with that result, but compared to last year's exceptionally high level of 19%, it's down. I mean due to the lower sales volume, we do have fixed costs and with the lower sales volume and lower sales, that has an impact on the margin. Product mix with a lower bag-in-boxes and then we were able to and I think that's a good thing to spend more on marketing than in the last year, where that was not really possible, and that is also having an impact on profitability, but it is an investment into the future. And when speaking of the future, we can mention you see the products on the right there. There is Wongraven Barolo. It's an own brand with an exceptional track record over these last years and the Barolo is the latest addition to the family. And then on the partner side, we have won 2 wine tenders at the Vinmonopolet for Maison Champy, which is part of Advini Group and we are excited about those 2 and we are also excited about the 2 rightmost products you see are in cans. So this is from our partner Pedregosa, I think both Altia and Arcus, they have been at the forefront of innovations in packaging, be it bag-in-box or other formats, and I think cans are a very nice addition to that, that we will continue with us as Anora, including as you can see from our partners. So now we move to the former Arcus Spirits. And here, we see that the reported net sales again versus the very, very strong base, the base declined by 3% and in constant currencies by a bit more than or around 6%. So, here, again, we should note that the comparison to Q4 is particularly tough, and also we are seeing shifts of volume back and we are also, as with the Altia's Scandinavia segment, we are seeing the impact of the divestments of the brand. So it all came here on the spirits side like on the Altia side, it mostly came in the Scandinavia segment. That said, so, in Sweden and Finland, we also saw some impact of partner portfolio changes decreasing sales but on the positive side, in Denmark, the development was very solid. There was a more normal year and with more COVID consumption than we saw last year and the recovery of travel retail, it also continued. And then when you look at the comparable EBITDA, it decreased a bit due to a lower sales volume and then driven by the market development also then the partner portfolio losses and last but not least, the brand divestment. So -- and I said that also here that we also like on wine invested in marketing, when we again have the possibility. Now, for Spirits, there are 2 unique launches that we want to highlight here and one is an addition under the Norwegian whiskey brand, Gjoleid. So this is something we've been working on since 2010 and this one, Mesterens Utvalgte, it's showcasing the important processes that are essential to creating a savory whiskey flavor. So this innovation, it includes experimentation with the temperature, various types of barrels and it provides whiskey with a unique flavor without the decades of maturation that would otherwise be needed. And the other example here is on the Braastad Cognac brand, Braastad Skiflygeren, it's only 2022 numbered bottles that are available to celebrate the Ski Flying World Championships and the average age of the content is 65 years. So this one is near and dear to my heart as a former ski jumper myself. Although, my jumps were a bit shorter than the ones we'll see this weekend. So then to end the Business Review part, we'll have a look at the Logistics segment. In Logistics segment, the distributed volume was down but the reported net sales in euros was up, but in constant currency is only slightly up at 2% with price adjustments and channel mix contributing and offsetting the volume decline and then the comparable EBITDA was negative like it was last year, but slightly less negative. I mean we have talked about Corona impacts and how, for us, especially in Norway, they have had typically a positive impact due to the higher volume on the logistics side in our Vectura business, the very high volume way above the build capacity of the logistics facility has meant that there has been a need for high level of additional cost to weekend work, night work to get the volume delivered as best as possible during this very, very high season period of Q4. So with that, we move on to the financials. And in this section, I'll give an update on the barley situation and also the key figures, and I'll discuss the dividend and the guidance. And we end with that 3. Yes. So with the barley, many of you know, it's a key raw material we use it to produce, obviously, ethanol for our beverages and also technical purposes. And we also sell it, it's a business for us where we sell the side streams and is a form of starch and raw feed material. And you can see from the chart that the cost of barley has reached historically high-level, many reasons for that. I mean the main reason, obviously, is the harvest in Finland and also future expectations and since year-end -- so yes, the average price in 2021 on average was 35 -- 34%, sorry, higher than in 2020. And in Q4, the increase was 74% and since year-end, unfortunately, these prices continue to increase with the latest quarter as you can see on the chart at EUR 316 per ton. Now, I mean we do have some tools to mitigate this cost-push and can pass on the cost increases in the form of price increases, but not fully, and there is mitigating action, we've lowered the running speed at the distillery. And so as a result, as Pekka mentioned, the consumption of grain was below last year's level and totaled 209 million kilos. And I should mention here as well that the pricing cycle of grain is normally then is dependent on the volume quality of the new crops. So I mean a bit early to tell about that because it happens in August, September. And then on top of that, there are additional uncertainties related to the war in Ukraine and those are related to the global grain market, as you know, Ukraine is a large producer and exporter of barley and both Russia and Ukraine, obviously, are the sort of the biggest or amongst the biggest wheat producers and exporters in the world. So we are seeing as a result of that strong pressure on prices, and right now, we can't make long-term forecasts, but we are monitoring the situation closely. So with that, we move to the actual key figures, and here I won't spend too much time on this chart because again it's a very difficult comparison due to the fact that we have consolidating our former Arcus as of September 1 and then the full-year figures, they only include 4 months. So I think that we move to the next slide. And with the balance sheet key figures, again, here, difficult to compare. I think one key measure is the reported net debt over comparable EBITDA and here, again, it's important to emphasize one that the big change that is due to the Arcus consolidation and second that in some sense that 1.8 times figure is a bit misleading when you include the full 12 months of comparable EBITDA, also for the former Arcus part, you are at 1.2 times for 2021. So still on a low level, although not as low as the exceptionally low level for Altia at the end of last year. And with that, we move to the next slide, which has the pro forma key figures. And here, I think we've talked through most of this. I think what is particularly interesting to look at here is, here we have now 2019, 2020, 2021 figures for net sales and for comparable EBITDA and here, they are comparable so we can see the trend and I think that what's important to see and it goes to what Pekka talked about, about the market volumes in both 2020 and still in 2021 being at exceptionally high levels due to COVID and we see that is reflected also in our figures. So in our net sales, EUR 629 million and then versus EUR 665 million in 2021, but in particular, right, with the channel mix being favorable to us in terms of the profitability levels, you see EUR 80.7 million in 2019, and that is what we consider to be the base or normal level versus the EUR 98.3 million in 2020 and the EUR 101 million, as we talked about for 2021. So I think that this, of course, a lot of hard work has gone into achieving those results, especially our employees working in production and logistics to simply deliver those very, very high demanded volumes, has been fantastic effort during COVID times but I think we also need to admit that, that has influenced our results positively and as the markets normalize, demand normalizes. We need to realize that the big -- and we'll come to the guidance, but a big part of the explanation for that is that we are returning to a normal also in our comparable EBITDA, which as you can see was around a bit north of EUR 80 million in 2019. Very good. Moving on then to the dividend. And here, as Pekka mentioned, the Board is suggesting a dividend of EUR 0.45 per share. This is in line with the former Altia's dividend policy to pay 60% or more of the result for the period. Payout ratio of 68% is even a bit more if you look at the pro forma figures, I think 71% and an effective dividend yield, that's at 4.1%. So quite favorable levels. We should mention here obviously Anora's financial targets, including dividend policy. They will be updated once we finish our strategy process which is only just started but will be done before the summer and then communicated after the summer, but for now, I think we are paying a dividend that is quite good, but obviously, that's the decision of the Annual General Meeting on May 11. Yes. Moving on to the next slide around the outlook. And here as you can see, we've guided now on the level of EUR 75 million to EUR 85 million and to a large extent, you could say that this corresponds to volumes demand at the pre-pandemic level, right. I mentioned that we were a bit higher than we were at EUR 80.7 million in 2019 and it also takes into account that we have an annual impact of EUR 4.6 million of those divested brands. The full impact of which, obviously, we'll see in 2022 and obviously, we are realizing synergies, thanks to the merger, but the synergies, they come in gradually versus the divestment impact which was immediate. And then on top of that, you have old input costs, right, which are expected to be at a very high level and we mentioned that we mentioned the barley, we mentioned other raw and packing materials and there although, all of this is very uncertain at the moment but the situation in Ukraine is also reinforcing that plus adding volatility to foreign exchange. So with all of that, that is the reason that we are guiding in this range, but again I think that not only comparing to the result of the current year but also the baseline of 2019, which is a more normal year pre-COVID. So I guess with that, I am handing back to Pekka.

Thank you, Sigmund. I will have my closing remarks on integration and sustainability, and then we go to Q&A. So let's start with an update on integration and synergies. In Q4, we successfully completed the restructuring of our organization and we're now operating according to our new operating model. Integration work has continued, as I said earlier, according to plan and we have several ongoing initiatives. In wines, we build and expand on the entrepreneurial model that has worked very well for former Arcus and provides the best possible service and maximize these business opportunities for our partners in the monopoly markets. In spirits, we have established strong innovation, product development, marketing, and sales organizations, which support the growth of our brands in the 3 independent commercial units in the monopoly markets. Our international partner spirits is in place as well with the aim of creating sales growth in Denmark, Baltics duty-free and exports markets. In Industrial, we're running projects to insource third-party logistics operations in Norway, Finland, and Sweden and expect to close in phases during 2022. To date, run rate of realized cost synergies was at EUR 5.1 million. Then a few words on sustainability. We will publish our sustainability report as part of the Annual Report right after Easter. So here are just a few highlights. We reached a nearly 100% recycling and recovery in the Koskenkorva, Rajamaki and Gjellerasen plant, great achievement and proof of our circular economy thinking. I mentioned earlier that we want to take an active role in no-low category. And here's a good KPI, 16% of former Altia's product portfolio was no-low alcoholic drinks. At Rajamaki, we have made changes in recipes, by which we were able to reduce the amount of sugar by 5%. We're leading the way in developing sustainable and recyclable packaging. Today, 30% of entire Anora's beverage packaging was made from PET plastic. Gjellerasen achieved an important milestone as the final approval for PET bottle formats was received and are ready for the Nordic-wide recycling deposit system. Work safety is something that we take extremely seriously and have high on our agenda. We work continuously to improve our processes and routines and actively through, for example, communications promote a safety culture at our plants. This work is giving results with the number of accidents decreasing both at former Altia and Arcus, and at the Gjellerasen plant, there were no injuries reported last year. This concludes our presentation and we are ready for your questions.

All right. Thank you, Pekka and Sigmund. We have received already good questions on the chat. Please keep on sending those and we will take them then later on, but let's start with the first one from Mikael Heikkinen. So there are 2 questions there. How do you see the raw material prices develop during the year? And how do you assess possible supply chain hiccups affect your business?

Yes. I can take that may be on the raw material prices. Well, I mean, I think it's difficult to assess now -- we have already as we outlined, we have seen and expect to see pretty high increases in raw materials and we've taken that into account in our guidance, but I think as everyone can see with the current situation in Ukraine, a lot of dependencies that I think were not visible, I think, to people even operating in the business emerge and that can drive further increases. So I would say that the inflationary pressures, which were there, we expect them to continue, but it's something that we are monitoring really sort of day by day and that goes for the possible supply chain hiccups as well. I mean I think that it's difficult to say that this is a good thing, but I think I would like to extend a huge thanks to our people who are working in supply chain in procurement and also to the suppliers that they are working with because we've been through I think quite tough times on the COVID handling, the huge increases in volume and the supply chain problems that they have already been there and I think that they will continue to be there. I think that this is not a guarantee, but what we can say is that I think those things have been handled very successfully during COVID and I think that we will try to reapply the same methodology of collaborating very closely with our suppliers to try to mitigate any impacts, which are recurring and using any creativity that we have to find good solutions to problems that I'm sure will arise. So far, I mean during COVID, I think that on the whole, we can say that for the most part, we did manage to not have the big underlying problems impact our business in a significant way and I hope that we can manage that also in the current situation.

All right. Let's continue on the price increases. We have a question from Maria Vikstrom about that and first of all, commenting that input costs are on the rise and impacting your profits, your guide for full year 2022 adjusted EBITDA down 20% year-on-year pro forma, how have you taken price increases into account? And when do you expect to be able to raise prices next time? And a follow-up on this one is why there is not a bigger impact of price increases on profits?

So let me start with the price increases first. So in monopolies, you have basically 2 opportunities to increase prices. One in springtime, and then one in the fall time and then also one in between in Norway. We just taken the price increases during Q1 and Finland will happen in the beginning of April. Those price increases were done, as usual, looking at the opportunities, but obviously also based on the cost increases that we saw during the fall of last year and we know that the prices have increased across all input costs since then in a significant way. So that's for beverages monopolies with travel retail, basically, one opportunity a year, which we have already taken. In Industrial side and I think there's a question later on that. So on the Industrial side, there is a large part of the price changes go through automatically but for starch and for technical ethanol and ethanol products, it's more negotiation-based once or twice a year. Now one thing that I would like to mention here when we compare and talk about 20% pro forma changes, all along from the beginning of when we launched our merger plans, we've said that the COVID times, these are unusual times for us. The monopoly volumes were extraordinarily high like we saw earlier, the Norwegian monopoly volumes grew by almost 50% and we've all along said that the right comparison for Anora this year is 2019. And that's more a normal situation with a normal channel mix. Obviously, the input cost increases are something which is totally unusual, but I think the right basis to compare our performance is more 2019 than 2021 or 2020.

All right. Thank you. Let's take here Maria's second question. I guess you answered her third question, but the second question is about the demand. So how do you expect the demand developing for you if we hit the economic downturn? Is there difference for liquor, spirits or wine volumes?

Well, I think alcoholic beverages and us are considered as quite resilient industry overall. In economical downturn, you normally see a bit less sales of premium products, Champagne I think is a good example. You know, for our part, I think we are quite well positioned. We have a very strong portfolio of brands across all price segments both in wine and in spirits. But to your question, Maria, I would say probably, more trending towards lower price segments from the super-premium categories.

All right. Then we have a few questions from Mika Raitanen. So let's take the first one. Do you think your overall profitability level is satisfactory relative to your market position, which is pretty dominant in many segments?

Well, I think I partly answered that question. I think what was the right comparison out rather compare us now to another normal year, which is 2019. What comes to our financial ambitions will come back to those with our strategy work, which we will present after this summer in our Capital Markets Day.

All right. Following on that, why do you think some of your direct and un-direct competitors can absorb better-rising costs than Anora in Nordic alcohol markets and report better overall operating margins, reference companies are mentioned Royal Unibrew, Olavi, Viva Wine Group?

Well, maybe I don't want to comment on any specific companies. I would say our ability to absorb cost increases is very good in beverages with monopolies on-trade, travel retail and exports as well. So I would say we are quite in a normal position with that. I think maybe one specific for us is the Industrial segment, which I think there we have a bit more exposure towards raw material price increases as we're selling more of commodity-type products. So that could be one difference. But in terms of beverages businesses, we have strong brands, strong position in our operating markets and a good opportunity to push the price increases through to our prices.

All right. And then we have a question to Sigmund from Mika Raitanen. Also, do you think that Anora's free cash flow in long term is higher than net profit due to higher depreciation versus normal CapEx, which have been the case past? Is that reflected to new dividend policy?

Well, let me start by saying that we don't have yet a new dividend policy, right. We are paying this dividend which is in line with the former Altia's dividend policy and we will come back with a new dividend policy as part of the financial targets that we will set once we've finished the strategy process that we have just in the beginning of. I think at that point, we'll also come back to this point, I think this has definitely been the case in the past. I think that typically, there is a limit to all those things we wanted to invest in our business and it's normal that we renewed equipment. It has been the case. Definitely, it was the case in the ex-Arcus side that there was quite new equipment for a while as that equipment ages and there is changes in consumer demands new forms of packaging, for example, that you have to invest, too. I think that at some point, it's expected that depreciation or investments, I should say, go back to a level that's similar to depreciation. I don't think that that's for the immediate future, but I think we'll have to come back to what time perspective we are looking at when we come with our new financial targets.

Thank you. And then there is a question from Joni Sandvall about monopoly volumes. So, if monopoly sales volumes are expected to return to 2019 levels, how is your view on-trade travel retail and exports volumes in comparison to 2019 levels?

On-trade, I would expect bouncing back close to normal levels to 2019. On travel retail, I would expect a slightly kind of gradual recovery, but still definitely growth versus last year. Exports, so the Russia, Ukraine, they were the 2 of the fastest-growing markets that we had in our exports. So we obviously need to rethink on exports side. So that will be slightly different than we anticipated in the beginning of the year.

Thank you. Then we have a question from Michael Veesim about integration costs, and I will give this to Sigmund. So you mentioned post-closing, integration costs of EUR 7 million to EUR 9 million for '21-'22, how much of that is forecast for '22? And are these costs included in the '22 EBITDA guidance?

I think first point here is that the EBITDA guidance is about comparable EBITDA, right. So there we are excluding the integration costs. So you can see them on items affecting comparability. Quite clearly, we are not going to integrate on a continuing basis. So we think that for the financial performance to be legible and comparable from year to year, we are not including those integration costs. So that's something that you would add if you're doing your cash flow forecast, you would have to add those costs, and I would say that maybe definitely, more than half of those integration costs would come-in in 2022, as we are doing very big projects as Pekka mentioned on logistics in this year.

Yes. Thank you. And then following, the last question from Joni Sandvall to Sigmund as well. So how much receivables do you have in Russia and Ukraine or have the sales made with pre-payments?

Well, I would say that there are -- the amounts are non-material at the Group level. So obviously, this is something that we are monitoring very, very closely with the respective distributors and the amounts in question are not really material ones at the Group level.

Okay. Thank you. So now we have gone through all the questions that we have received in chat, and looking at time, I think I will hand over to -- sorry, I missed the euro amount of integration costs, EUR 7 million to EUR 9 million for 2021-2022. So I will hand over now to Pekka for the closing.

Thank you, and thank you for all the great questions. Recap of last year. We had a very strong full year results. Q1, that was already impacted by lower monopoly sales and volumes and heavily increasing input costs. Board proposes a dividend of EUR 0.45 per share. AGM will be held on 11th of May. In '22, we expect EBITDA to be in the range of EUR 75 million to EUR 85 million with 3 clear impacts, market volumes going back to normal, significant uncertainties in the operating environment and increasing input costs. And now back to Tua for final remarks.

Okay. So thanks, Pekka and Sigmund for your presentation, and thank you to you all for very good questions and active participation. And this will now conclude our presentation, and the next thing you can be looking for is to read our Annual Report, which we are going to publish during Week 16, that's right after Easter. With this, we are ready and I wish you all a very good rest of the day. Bye.