Equity research Viva Wine Group, Q1 2024: Profitability above our expectations despite soft top-line

Today, Viva Wine Group published its interim report for Q1, 2024. Below is a compilation of our first impressions of the outcome, including deviations from our estimates. The company will host a webcast with a telephone conference today at 11:00 a.m.

The Nordic segment continues to impress by growing market shares year-on-year and sequentially. Nevertheless, the e-commerce business under the Viva eCom segment continues to struggle, holding back the group’s ability to grow its top line. However, as stated in the report, the trend over the most recent period looks somewhat brighter, raising hopes for improved figures going forward.

Despite continued pressure from foreign exchange on gross margin, profitability in terms of adjusted EBITA was strong (relative to our expectations), indicating solid cost control.

• In Q1 2024, Viva Wine Group reported net sales of SEK 904m, corresponding to a 2.4% growth. Organic growth was 2.8.%. Our forecast for the quarter was SEK 936m. As of Feb. 2024, acquired Target Wines AS is included in the Nordic business segment. The Nordic segment increased net sales organically by an impressive 6.1% on an underlying market with small volume growth figures. Thus, The Nordic segment continues to increase its market share. Organic growth for the Viva eCom segment was minus 9.0%.
• Gross profit calculated on net sales decreased by 9.0% in Q1 2024, year-over-year, to SEK 172m. Our forecast was SEK 180m. The gross margin fell by 2.3 percentage points to 19.1%. Our forecast was 19.3%.
• Year-over-year, adjusted EBITA decreased by 16.2% to SEK 57m, corresponding to a margin of 6.3%. Our forecast was SEK 52m, equivalent to a margin of 5.6%.
• Earnings per share amounted to SEK 0.44, corresponding to a negative growth of minus 45%. We forecasted earnings per share of SEK 0.15.

We intend to provide an updated analysis of Viva Wine Group shortly. Read the last research update report here.

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