Anora Group Oyj (ANORA) Earnings Call Transcript & Summary

Good morning, everybody. This is the presentation of Anora's Q4 and Full Year Results. Welcome all. My name is Milena Haeggstrom. I'm the Head of Investor Relations here at Anora. And our presenters today are our CEO, Jacek Pastuszka; and our CFO, Stein Eriksen. [Operator Instructions] And please also note that this call will be recorded and published later today on our website, anora.com. And now Jacek, please go ahead.

Thank you very much, Milena. Good morning to everybody on the call. I'm happy to report to you on our performance in Q4 and full year '24. We will go through the regular routine. So I will start with some general comments on our performance, reminding us about some of the priorities we set for ourselves for '24. Then Stein will take over to provide more detail, and then we'll be open for questions. So let me start. I believe that after an admittedly weak and disappointing Q3, we are back on track incredibly delivering on the commitments and the agenda that we have communicated at the end of '23. Just as a reminder, the 2 key elements of this agenda we have communicated at that time and which I believe is demonstrated by these results again in Q4 is, first, improving the marginality of our beverage business through a combination of pricing and mix management. And what I mean by mix management is just increasing the share of margin-accretive businesses, both own brands and partners. So this was the first theme. And the second one is improving the overall financial health of Anora as measured by debt leverage, trade working capital, balance sheet, so all the other non-P&L indicators of the health of our business. And I believe the results of Q4 demonstrate that we are back on track in delivering on both of them. There is the third theme in our agenda that has sort of emerged at the end of '23 and throughout '24, which is the need to tidy up or tighten up some of the loose elements operationally and financially after the merger and after the Danish acquisition and the integration of this business into the Anora business. And this is reflected both in the impairments that we have taken in December of last year and also some inventory write-downs and obsolete provisions that we have decided to take this year in 2 specific locations, one being the Globus Wine business in Denmark, where, as you remember, we have gone through the ERP system integration throughout this year, which created some disturbances in operations. And then the second location for this inventory write-downs is Laroche in Norway, where we are preparing for the ERP integration or SAP system implementation for this year. So this is the third big theme, this notion of tidying up or tightening up some of the loose ends coming from the previous changes in our operating model. And then the fourth element that you see emerging in our P&L and in our overall performance. This new element is the advertising investment that we started to increase starting from the Q3, and it extended into Q4. The logic and the context here is very simple. We have -- as you may recall, we have decided at the end of '23, beginning of '24 to take some aggressive pricing on our brands. It's usually the case, some of these brands we stood this pricing or have taken this pricing better than others. And we need to improve for next year or for this year, our net sales trajectory and the key way that we see for doing it is by increasing the support for our brands, mostly on the Spirits side, and this is the investment is mostly located in Q3 and Q4. And we are obviously eyeing some improvement in international business primarily because this is where much of this investment have a chance to have impact. And international business, especially the net revenue of international business was quite flat in '24 and our expectations for international as a growth engine for the future are definitely higher than that. All of this, these 4 themes that I have just mentioned, they are all being delivered against the very challenging market backdrop, as you well know, and a marketing sentiment that is rather unfavorable towards the premium brands or premiumization of the alcohol category. Now a little bit more about details. You see them in front of you. On the net sales front, Q4 was minus 3%. On a year-to-date basis, we are minus 5% versus last year. In Q4, this EUR 7 million difference versus last year is mostly half of this roughly is Spirits, partially because of the softness of the monopoly business, especially in our stronghold Finland, but also because of the termination of cognac -- one of the cognac contracts that we have had with a partner. For the full year, this 5% decrease or around EUR 35 million in decrease is coming from many sources. It's important for all of us to understand that around 2/3 of this decline is unrelated to the performance of our own beverage brands. So it's a combination of industrial, around 1/3 of this decline is coming from the industrial side product sales. I will get to it later. Another element is businesses we sold like Larsen or the businesses we intentionally discontinued like some of the wine filler, low-margin filler business in Denmark and also the gain-loss balance on the partnership business, which tended to be negative on the Spirits side in '24, but it is gradually moving towards positive in Wine as we enter '25, while it was very negative, as you will remember, for '23. So there's this continued movement in the partner business. We are very committed to the partner business, and we will continue prospecting to make sure that this net gain loss in partner business is positive, but it was negative in Spirits in '24. So restoring net revenue growth is obviously on the agenda. We have a selective list of places that we want to focus on to bring revenue growth back to the company. International and the investment behind international is something that I have already mentioned, but there are also a few other places where we will be looking for growth this year. On gross margin, back to the comment I made before, this was the key priority for us to make sure that the marginality of our beverage business is significantly up, and it is significantly up 250 basis points for the full year for Wine and 270 for Spirits. This is the level of improvement in marginality and gross margin that we are very satisfied with. And all segments improved their gross margin in Q4 and for the full year, including the industrial business that is not explicitly mentioned in this slide. Our control of OpEx spend was good enough and our operational expenses were flattish versus previous year, slightly declining actually, which translated into improvement in comparable EBITA margin as well. As you can see more than 100 basis points improvement for Q4 and 60 basis points improvement for full year. This reflects strong performance of the Wine segment. I will talk about it in a second a little bit more. And in Spirits, strong performance on the commercial side down to gross margin, gross profit level. However, we have these additional expenses on the marketing front to boost our net revenue performance or improve the current trends for this year. And then comparable EBITA, slight for the full year, slight 1% improvement versus '23 and Q4 was back to high single-digit improvement versus Q4 of last year. We will talk about guidance and dividend when we move to Stein's part. Let me now dig a little bit deeper into the segments. Starting with the Wine segment. Wine segment had a strong Q4, while net sales were mostly flat versus the previous period. The base business, our own brands and the partner business, the beverage business was in good shape. The slight decline came from the reduction in the filler business. Important to mention is the Finnish development. We keep talking about Finland, obviously, because we are undergoing a major transformation here between grocery and monopoly, which is affecting quite negatively our Spirits performance, and I will mention it again later. But on the Wine side, we have taken good advantage of these regulatory changes. We have established strong position early on in the grocery channel. This grocery part of the Wine business has become sizable enough to influence our overall share performance for the market. And I think Anora has demonstrated an appropriate level of commercial agility in taking advantage of this opportunity. While it's slightly more difficult to demonstrate it in the monopoly business because of the way that the monopoly works. But clearly, on the grocery opportunity, we took advantage of it very well. Gross margin, gross profit, comparable EBITDA, all of them improved quite significantly. So to summarize maybe the Wine situation, what were the key drivers for the Wine performance improvement in '24 other than the fact, obviously, that the '23 base, as you will remember, was significantly depressed because it was not a good year for Wine in '23. The 4 or 5 elements I would mention that supported our Wine performance is first, obviously, this focus on marginality, pricing we have taken mostly on our own brands. And good discussions we have had with our Wine partners to drive pricing in the market and also look at the terms of conditions of our relationships. Also positive net gain/loss balance on partner business. We had quite a few large partner losses that influenced '23 and also partially the first quarter of '24. But from that moment, we gradually started improving this net gain/loss balance for the partner business, and I trust that it will continue in '25. Then hedging and stable COGS. We don't talk about COGS too much in these calls. And that's good, I think, because through the implementation of Center of Excellence program, and also because of the more stable raw material prices and the hedging that we have implemented, the COGS picture that we are working against is much more favorable. And then both OpEx and marketing spend were under control and down versus the previous year, which also supported the Wine business. And then on top of all of this, glögg performance, Blossa and Blomberg now in Denmark performed well enough, it wasn't a perfect winter, especially in Sweden, we didn't have enough snow to create this good Christmas atmosphere, which is needed for glögg sales, and it's visible in Systembolaget sales of glögg. However, we have significantly by around 200 basis points, improved our share position, already very strong share position with Blossa in the glögg segment in Systembolaget. And we have also expanded the footprint of Blossa to other markets, especially Denmark on the back of Blomberg acquisition and also Norway. It's important to talk about Blossa because it is half in terms of its impact on our business is half of Koskenkorva's importance. Let's move to Spirits. Yes, a more challenging quarter for Spirits as we already talked. Net sales minus 5%, which is a combination of the termination of the cognac contract that I mentioned before. But also -- and here, we need to talk about Finland again. Finland is obviously our largest market in terms of net sales and profits. So the fact that the monopoly sales are visibly impacted by the regulatory changes and show around 10% decrease in net sales or drive us to around 10%, 11% decrease in net sales, it has impact on our overall performance. The gross margin is in good territory. Also gross profit was relatively stable actually for the full year, growing plus 2%, but it's very visible that in the second half of the year, the momentum of the Spirits business has deteriorated. In order to offset this, we are doubling down on our largest asset, which is Koskenkorva, obviously. We have a new campaign in place. We are spending behind this campaign, and we expect to see it at least already in the beginning of the year an improved performance of our international business and Koskenkorva sales in international markets. Let's move to Industrial. We talked a lot about industrial in the first 2 quarters of the year because this was mostly a drag on our overall performance. We were indicating at that time that we expect some stability, especially improved stability on the contract manufacturing side in the second half of the year. It has materialized, while the side product sales, both their pricing and volumes and net revenue and profits, all of the key indicators have continued to be soft side. And also our own production volumes were not particularly strong for the reasons I have discussed a moment ago. Contract manufacturing has improved, especially in Finland, Vodka volumes improved in the second half of the year, which has a sizable impact on our industrial performance for the fourth quarter and also for the full year. It was also underscored by the ongoing efficiency improvements. As I also mentioned before, the Center of Excellence execution has provided some stability in our COGS. And then we have an ongoing program to improve efficiency on the industrial or supply chain part of our business, which is delivering improvements on the key indicators. I think that's enough for now in terms of introduction. I will be happy to answer your questions. But with this, I would like to hand it over to Stein for more details. Thank you.

Yes, hello, everybody, and good morning. Let's then move over to the financial review of Anora for the fourth quarter and also I will have some slides on 2024. If we move to the next slide, starting with this slide that I think shows the quarterly net sales for 2023 and 2024. And I think it illustrates in a good way the very high importance of obtaining a good fourth quarter as it's being a strong contributor to the overall yearly sales as well as the results. Just to remind you that almost half of our full year profit is made during Q4. So of course, a very important quarter for Anora, both from a revenue point, but from a net revenue point and also from a cash perspective. So then moving over to the numbers, as Jacek mentioned, Anora sales in the fourth quarter declined by 2.8% to EUR 205 million, primarily due to lower volumes in the Spirits segment. For the full year, we ended at EUR 692 million, a decline of 4.7% versus last year's EUR 727 million. And if we move on, then we can have a closer look at the composition of the 2024 revenues. As I mentioned, a 4.7% decrease in 2024 due to lower volumes in Wine and Spirits as well as lower sales prices in the Industrial segment. And then Jacek already mentioned it, but I want to highlight some recent single events explaining parts of the decline. We lost 2 partners that had an impact on net sales in total compared to previous years. One was in the Wine segment where we lost a contract. Also, as Jacek mentioned, we transferred the distribution of Brosta connect produced by [indiscernible] fund to a third party during 2024, also affecting the sales volume in the fourth quarter. Then we have the Larsen divestment that also impacted the international sales of Larsen. I also want to just highlight that we still have the distribution in the Nordics. And then as we have mentioned before, we also discontinued some low-margin third-party filling contracts in Denmark. As already mentioned, lower sales in the industry were all related to lower sales of side products. That's mainly ethanol, feed, and starch, explaining then EUR 12 million of the EUR 13 million decrease in Industrial. Moving over to the net sales development in the quarter. That was down by 2.8%, starting with Wine. As you can see, almost flat compared to last year and the sales amounted to EUR 100 million. And despite the overall market decline, the Wine business managed to retain volumes, while the decline in the segment was driven by the third-party filling business, and also worth mentioning in Q4, the Wine segment regained its overall market leadership in Finland, including grocery due to a successful introduction of up to 8% ABV wines, where we have taken a leading position in the Finnish grocery channel. In Spirits, total net sales declined by 4.9% and Sweden delivered net sales growth, while net sales declined in all of the other Nordic countries. And in Industrial, the decrease was very much explained by lower sales of side products that is also the fact for the full year. However, we are very happy to see that the contract manufacturing volume improved in the fourth quarter. Then moving over to the comparable EBITDA development for the full year. As you can see, the group's comparable EBITDA was up with 1% from the previous year and its EBITDA margin ended at 10% of net sales in 2024. Very pleased with the overall performance on gross margin, driven by mainly good revenue management as well as stabilization in input costs. The Wine segment, as you can see from the slide, delivered notable EBITDA growth, almost EUR 10 million, while the 2 other segments, Spirits and Industrial had a decline from the previous year. Most of the EBITDA improvement in Wine was explained by stronger gross margin as well as good OpEx control and OpEx savings. The Spirits segment ended below last year, mainly explained by lower sales volumes as well as some higher OpEx, mostly then related to higher A&P investments. And lastly, Industrial segment performance was negatively impacted by ethanol and side product erosion due to declined grain prices. However, I would also like to state that good OpEx control in the Industrial segment. Also, please note that last year's figures were affected by a one-off capital gain of EUR 11.6 million from the divestment of Larsen in Q3 2023, and it's classified under other operating income, and that was not allocated to any segment, but of course, then impact the group gross profit for 2023. Then moving over to the EBITDA development in the quarter. The comparable EBITDA, as you can see on the left-hand side, was up by 6.7% from last year, very much again driven by the stronger performance in the Wine segment, increasing to EUR 28.9 million or 14.1% of net sales. Once again, Wine improvement was very much related to high gross profit and lower OpEx, while Spirits had a comparable EBITDA decline, mainly then related to lower net sales and somewhat higher operational expenses. In the Industrial, the efficiency improvement programs, together with improved gross margin did increase profitability. Yes. And then please also note that additional inventory impairments of EUR 3.8 million were made in the Wine and Industrial segment and were reported as items affecting comparability. Yes, let's just look at very briefly the EBITDA margin, then rose up to 14.1% of net sales and showed an improvement from the previous quarters. And also, as you can see, an improvement versus last year. So moving over to the famous barley prices that during the last couple of years truly have affected Anora's results until it was compensated, I would say, with more active revenue management. The barley prices in December was 15% below the previous year's level, and we do expect that it will stay stable also going forward. But as you know and are aware of, the market price of barley can significantly then fluctuate year-by-year. And of course, it's considered a major risk, as no hedging is used, but very happy to see that the barley prices have stabilized. Then moving over to cash flow. And I have to say I was very pleased when I got the first indications of the cash flow and the balance sheet numbers for December because it implied a good cash flow in the quarter. As you can see, the net cash flow from operations for the full year-ended at EUR 33 million. And yes, it was a weakening compared to last year, but also then remember that last year, we increased our sales of receivable program. But please take note of the sales of receivable program amounted to EUR 164 million compared to EUR 174 million last year. Our CapEx was also fairly in line with our own expectations and also with last year, mainly related to replacement investments. But as I said, very happy to see a strong cash flow in Q4. Moving over to development in net working capital that amounted to minus EUR 73 million, more or less on the same level as last year and minus 11% of net sales at the end of December. As you can see, we have significantly reduced our net working capital during the last quarters and years, both in absolute numbers and in percent of sales. Part of it is related to the increased share of the sales of the receivable program, but I would also like to highlight that we also see an underlying improvement, mainly driven by reduced inventory levels. And talking about inventory, it decreased to EUR 139 million compared to EUR 144 million last year. Then looking at the leverage at the end of the quarter, our net interest-bearing debt ended at EUR 122 million compared to EUR 138 million last year, and our leverage decreased from 2x last year down to 1.8 this year. As you can see, Anora's liquidity position is strong, and our cash and cash equivalents amounted to EUR 182 million at the end of the quarter. And then if you look at the lower part of the slide, you see that we still have EUR 150 million in unused facilities going forward. And please bear in mind that we paid down EUR 50 million in our term loan at the end of September. Yes. And moving over to the last slide before giving the floor back to Jacek. Here are our financial targets until 2030. And compared to our recent performance over the past 3 years on the right-hand side and I think it's fair to say that we will continue our focused efforts to get back on track to deliver on these long-term targets. That being said, we are happy to see that the net debt and the balance sheet is improving. Yes, part of it is related to increased sales of receivable. But as I also said, we do see underlying improvement in working capital. Also, the dividend proposal for 2024 is EUR 0.22 per share, which is the same level as last year. And this equals a payout ratio of 141% of the earnings per share but as you know, the proposal is subject for approval at the AGM, the 15th of April 2025. So that ends my session, leaving the floor back to you, Jacek, for some summary and outlook.

Thank you very much. Now in terms of summary, I would repeat what I said at the very beginning. I believe Q4 demonstrated that we are back on track in delivering on this mid-term agenda that we have established at the end of '23. It has 2 large elements. First is marginality improvement on our base beverage business in order to offset the challenges on the top line side. And the second element was improving our overall financial health and Stein talked about it at length. I think we are ready now for questions.

Yes. Thank you, Jacek. And let's open up for questions. We already have some questions in the chat. [Operator Instructions]. We do have some live questions already. So the first question comes from Maria Wikstrom at SEB.

I actually would have 4 questions, if I may. So I'd like to start on the guidance for 2025 and get a bit more color on the assumptions behind the guidance. So talking about what kind of sales trend, gross margin as well as fixed cost, I mean, you have built in your current guidance for '25.

Stein, can you take this one?

Maria, I don't know if I want to go too much into details regarding all the assumptions regarding the guiding. But that being said, I mean, looking at the guiding for between 70% and 75%, I feel pretty confident that we will be in that range in 2025.

And may I just dig a little bit more into detail in this one. And just thinking that what will happen, does your guidance hold even if the market will be down in '25 as well? So have you built in, I mean, some fixed cost cuts, I mean, which would take you to growing profits even if the underlying market would be down and your sales, I mean, along with the market development?

Yes. The simple answer to this question, Maria, is yes. We have obviously looked, we have obviously taken some assumptions for the market development. We need to be both sober about it but also recognize that, first, it's very uncertain how the market will develop. And secondly, that our efforts on the commercial front and some of these investments that we are making in our brands that they should help us offset some of this. And then obviously, just as this year, we will be watching very closely our OpEx performance and all the cost items to make sure that we have enough flexibility and contingencies to make sure that we react if something happens. So the answer is yes, without going into detail on the assumptions we have taken. But yes, we have the contingency and plans in place in order to deliver on this guidance. Otherwise, we would not be communicating it.

Okay. Perfect. And then on the gross margin improvement in the Wine segment, I mean, we talked about it on the presentation, but a little bit more about -- is there a gross margin impact on the channel shifts that we are currently seeing that more wines are consumed from the grocery store versus the monopoly channel. So the gross margin improvement, is there an element of a channel shift that is supporting it?

Obviously, there is, but it's not large enough to distort it. The marginality -- if this is what you are referring to, the marginality of the business that we gained on the grocery side in Finland, the gross margins that we are able to generate there are lower admittedly than the margins that we are generating in monopolies, for example. However, we have entered this opportunity, we have approached this opportunity with a certain set of expectations on the margins that we want to accomplish in order not to distort the overall picture, and we are delivering on these margins. So we are interested in continuing to develop the grocery Wine business in Finland because it is not diluting our marginality of the Wine segment to the extent where it would become a threat or a problem or a complication. We appreciate the fact that the top line in this channel is coming at the marginality that is acceptable for us.

Then I had a question on the inventory write-down. And given that, I mean, you are part of the retail business, I would think, I mean, of course, sometimes you misread the market. And I mean you have these inventories, you are not able to sell on prices that you initially thought. So is this really an extraordinary item? Or should it be considered as an ongoing business?

You are absolutely right. We have cases like the ones that you have described that we are reading the demand poorly or making some other mistakes and then we end up with excessive inventory. And this would not be the items that we would propose as items affecting comparability. These are really 2 special cases. And just to give you a little bit of color on this inventory write-downs on Wine and Spirits, they come from 2 sources, as I said before, only. One is Globus Wine and another one is Laroche. As I indicated in our Q3 call, we have been through the ERP integration project in former Globus Wine business in Denmark, which in itself created some challenges on the operational side, but it also improved our visibility and transparency of the inventory situation. And these are extraordinary write-downs simply because they refer to inventories that were accumulated over quite a few years, including a period before the merger or before the acquisition. And now as we move with the ERP implementation in Arcus, we would like to take some preemptive measures to make sure that we have a clean slate. So in our books, there are both normal ordinary inventory adjustments for the reasons that you have mentioned but this to the total amount of around EUR 3.8 million or EUR 4 million, both obsolete provisions and inventory write-downs, they are extraordinary in nature.

That is clear. And then finally, I mean, just on a housekeeping question that have you restated some of the figures in the Spirits segment? Because if I compare the current comparison figures actually for both group EBIT as well as the numbers for the Spirits segment, they differ from the report that was published within the Q4 2023.

Stein?

That I have to check up, Maria.

Maybe I can answer that. So when we published the annual report last year, we did do some minor changes to those figures. So they are mentioned in that release in the end of March.

This was a spirit adjustment of one point something...

Yes. Okay. It hadn't ended up in my model. So therefore, I'm asking because I have different figures, but yes.

And then we have the next question coming from Sanna Perala.

I have a couple of questions. First, I would like to hear more or for you to elaborate more on the situation with Globus Wine regarding the Q3 EBITDA miss or poor performance there. So what is the situation with the integration and perhaps the Danish market in general? And is there anything specific that we should take into account when we're looking at 2025?

Yes, there are basically 2 stories here. One is the story of commercial success in the Danish market. The market has been affected as all other markets by depressed consumption. However, our share position has not only been strong, but it has also considerably improved over the year 2024. We have added more than 200 basis points on the share front at acceptable marginality. So from this point of view, we are satisfied with our performance in Denmark and the Globus team has done an excellent job in winning market share and satisfying our customers and consumers. The second part of the story is the ERP implementation in the middle of the year or in the beginning of the year, which didn't go without issues, extra cost and some disturbances, some turbulence and also some improved transparency on the financial side of the business that we had to reflect both in Q4, Q3, if you remember. And then in Q4, it affected our inventory write-downs that we have just discussed. So these are the 2 basic stories. We obviously expect that the former, which is the commercial success will continue and the latter, which is the operational disturbances will be corrected.

Perfect. That was very clear. Well, then moving on to Wine and Spirits segments. In Industrial, you've managed to cut OpEx very, very much during 2024. Could you apply these learnings in Wine and Spirits as well?

Yes, we can and we cannot. Obviously, it's a good inspiration, and we continue looking at this. You just need to remember that the nature of our beverage business is such that it is more complicated because we have this commercial element to it. We have partners, we have customers, and there is a certain machine, a certain organization that is needed to cover for these needs. Things are a bit simpler, more straightforward, and there is a much higher element of blue collar on the industrial side. So yes, the answer to your question is it's a good inspiration. It's a good learning. It's not fully applicable.

Right. Well, then touching on Maria's question on your guidance. How do you see growth in 2025, perhaps in terms of market and then reflecting your performance to that? Do you believe the market will decline in 2025? Or should we start to see some growth already?

No, I really don't want to speculate on the market development. We have taken some assumptions for our budget planning. As I said before, we are trying to be sober and don't expect too much. On the other hand, we need to keep a bit of positive outlook, both on the fact that the market needs to stabilize and also on our ability to beat the market trends and grow shares in the places where they have not been strong enough for our liking. So without going into specific assumptions that we have taken for creating our budget, I want to say that we expect to beat the market in order to improve our top line performance.

Right. Then a bit of a more technical question, perhaps just to clarify the inventory impairments, were they made on materials and services line or in fixed costs? What I mean is, did they impact the gross margin as well or only EBITDA?

Yes. So I can answer that one. It's on the gross margin. It's impact on gross margin,

So adjusted gross margin was even better than.

Exactly.

Yes, exactly. That's the point, especially for Wine because Spirits part was taken on the industrial side. But for Wine, you see this 100 basis points improvement in Q4 versus Q4 last year, which in itself is a good number, I believe, but we have accustomed to all of you, I think, to much better growth. And for a full year, this growth is much better, 250 or 260 basis points. So if you adjust for it, Q4 was as good as we expected it to be.

[Operator Instructions] And we also have many chat questions. So I will go through those next. So first one is coming from Mika Hakkinen. What were the main reasons for partner losses in Wine, price, quality, performance, et cetera? How have you mitigated those reasons not to lose more partners and to win new ones?

It's obviously a broad subject. Let me start by saying that we are committed to the partner business. We are in the business of gaining partners and developing their sales and profits, not in the business of losing partners. So it's not reflecting any strategic intent to reduce the share of partners in our business. So that's probably the first statement I need to make. The second one is that I personally believe, and it's proven by the performance and relationships we have with the partners who are with us is that we have a lot to offer, starting from the on-trade coverage. We are very committed to on-trade business, which is not the case for any other distributors. And ending with near market filling or packaging capabilities, not to even mention our sustainability credentials or pan-Nordic platform, commercial platform that we are offering and which recently was extended also to Baltics and covered all of Baltics by opening of the of the Lithuania branch. So we are not only committed to the partner business, but we're also investing behind this business, and we want to develop it. There is a natural fluctuation in partner base, obviously driven by the negotiations and renegotiations and pitching and tendering and prospecting of agency for new agency contracts. So when we do not find satisfactory terms on either side, either if our partner does not believe that we can drive their business or we are dissatisfied with the terms and conditions, there is also always a chance for one side to walk away even if this relationship lasted for 10 or 15 or 20 years. What we are tracking very thoroughly is the net gain loss balance on our partner business. As I mentioned before, it was very negative for Wine in '23. It was not a good year for Wine in terms of partner acquisition and prospecting. We are moving now gradually into positive territory in the second half of '24, and this should also carry over into '25. Spirits had a very good number of years on this front, delivering good value and sales and profits to our partners. '24 is a little bit more difficult and this gain/loss balance has become negative in '24 for Spirits. So there is a bit of no cyclical movement on this one, a bit of fluctuation in partner base resulting from the renegotiation of the agency contracts. But as I said before, we are fully committed to the partner business.

Thank you, Jacek. And the next one is maybe for Stein about the net financials. So they were EUR 5 million in Q4, largely similar to previous quarters despite lower debt. Is the EUR 5 million per quarter a good assumption? Or would the run rate for '25? Or should we expect lower financials?

Yes. Good question, Rauli. Yes, we paid down EUR 50 million of the term loan. That should, on a yearly basis, give around EUR 1 million in lower financial costs. So -- but you will see the full effect in Q1 and going forward. So a little bit lower going forward. But I think Q4 is a fairly reasonable level of what you can expect also going forward, but a little bit lower.

Thank you. And next question is coming from Juva [ Rauli, Inderes ]. Could you please talk a bit about what internal measures you are taking in order to increase profitability, be it streamlining your product portfolio, cost cuts, extracting synergies, selling of brands, other efficiency measures and so forth? And what is the status in terms of the insurance claim related to Globus acquisition? So let's start with the profitability measures first.

Yes, let's start with that. I think it's a good question because it allows me to summarize some of the topics I have talked about already. So obviously, it all starts with net revenue to deliver an improvement in profitability. You need to start with healthy top-line growth and revenue growth. This is what did not provide the stable enough base for us in '24. So as I said before, the first thing that we are doing is to invest behind it, especially on the Spirits side. So that's the first one. The second one is more of a continuation. If you take it down to the gross margin or gross profit level, then we'll continue working on pricing and mix management to improve the share of margin-accretive businesses and more profitable businesses in our overall mix, whether it's owned brands or partners. The next thing is that we are experiencing now a bit of highly appreciated stability on the COGS side, but it's a combination of the hedging that we started doing more actively last year and also of the Center of Excellence execution that we wrapped up also in last year. So this is another measure that we are taking in order to improve the profitability. Now then going down between gross profit and EBITDA. The OpEx lines, although we are not planning any aggressive cuts or restructuring at this stage, at least, it may come obviously later. But at this stage, we have no plans in place. We are watching very closely the OpEx development. Our OpEx in a highly inflationary environment was flat or even slightly negative in '24. Also, our head count was slightly negative, definitely not up in '24. So we are managing this very cautiously, but also we are managing in a way not to undermine the commercial machine that we have in place to serve both our brands and partners. So that's the combination of measures that we are taking. Of all of these dimensions, which are more or less covering the totality of the P&L, obviously, the one on which we struggled the most clearly in '24, and that's why the questions about what we expect for '25 are so relevant. So the one that we struggled the most was obviously top-line development, volume, net revenue, partially driven by markets, but also partially driven by the impact of pricing on our share performance.

And sorry, Jacek, if I also can briefly comment on the working capital part. We are also, I mean, still seeing potential to continue to reduce inventory, like I already stated, especially related to the number of SKUs. And also, we see a potential to improve the number of payable days towards our suppliers. So that's also something we will have focus on in 2025, continue to reduce what we call C SKUs, our tail, and then also increase the days of payables.

Thank you. And then there was this follow-on question on this Globus acquisition-related insurance claim.

Stein?

Yes. So no news on the insurance claim. We are still in dialogue with our insurer in the U.K.

Thank you. Are there any more live questions in the audience? Don't seem to have any. We have one comment or a question from Maria for Jacek, with today's share price move, would you still consider staying on board?

I appreciate the question. I take it lightly. Obviously, I have taken my decision, so there will be no changes here. The Board is working on nominating my replacement. But in the meantime, for the time that I'm here, we are working as usual. We are preparing our plans for executing already the plans we have prepared for '25. So I'm not moving anywhere at this stage, and the team and myself continue to work to improve Anora's business. But thank you for your interest, Maria.

Thank you. We don't seem to have any more questions in the chat either. So thank you for the speakers and everyone online for joining us today. And please be reminded of our upcoming investor events. So we have the Annual General Meeting on the 15th of April and then the Q1 report on the 7th of May. So hope to see you then. And the annual report will be published on week 12 in March. Thank you for participation today.

Thank you very much.