Equity reseach Viva Wine Group, Q4 2023: Strong growth, but profitability on the soft side

Today, Viva Wine Group published its interim report for Q4, 2023. Below is a compilation of our first impressions of the outcome, including deviations from our estimates.

• In Q4 2023, Viva Wine Group reported net sales of SEK 1,098m, corresponding to a solid 4.4% organic growth despite continued challenging market conditions. Our forecast for the quarter was SEK 1,075m. The Nordic business segment increased net sales organically by an impressive 6.6% and grew its market share in all three markets: Sweden, Finland, and Norway. Organic growth for the Viva eCom segment was as expected negative, minus 3.3%.
• Gross profit calculated on net sales decreased in Q4 2023 annually by 10% to SEK 211m. Our forecast was SEK 210m. The gross margin fell by 3.1 percentage points to 19.2%. Our forecast was 19.5%.
• Year-over-year, adjusted EBITA decreased by 29% to SEK 70m in Q4 2023, corresponding to a margin of 6.3%. Our forecast was SEK 88m, corresponding to a margin of 8.2%. Currency and non-recurring costs related to the acquisition agenda and efficiency improvements negatively affected profitability.
• Earnings per share in Q4 2023 came in at SEK 0.00 per share. For the full year, earnings per share were reported at SEK 1.19, corresponding to a negative growth of minus 58%. We forecasted earnings per share of SEK 0.40 in Q4 and SEK 1.60 for the full year 2023.
• The Board of Directors propose an unchanged dividend per share of SEK 1.55, implying financial strength and confidence in the strategy for growth at improved profitability.

Strong growth, above expectations, in the Nordics, as well as less negative growth for Viva eCom, should be highlighted as clearly positive. On the other hand, costs were higher overall than expected, making profitability fall short of our expectations. However, profitability was, to some extent, negatively affected by non-recurring costs. We are encouraged by better-than-expected sales but expect a muted initial share reaction due to the somewhat soft profitability.

We intend to provide an updated analysis of Viva Wine Group shortly. Read the initial coverage report here.

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