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Viva Wine Group AB’s Q2 2025 earnings call revealed a significant 20.2% increase in net sales, primarily driven by the acquisition of Delta Wines. Despite this growth, the company’s adjusted EBITDA decreased, and its stock price fell by 1.79% in pre-market trading to $4.02. According to InvestingPro analysis, the stock is currently trading near its 52-week low of $3.79, though Fair Value calculations suggest the stock may be undervalued.
Key Takeaways
- Net sales surged by 20.2%, boosted by Delta Wines acquisition.
- Adjusted EBITDA dropped from 9.6% to 7.5%.
- The stock price decreased by 1.79% in pre-market trading.
- Gross margin percentage declined due to acquisition costs.
- The company maintains a strong market share of 22.6% in the Nordic region.
Company Performance
Viva Wine Group demonstrated robust sales growth in Q2 2025, largely due to the strategic acquisition of Delta Wines. This acquisition has expanded their presence into European markets, now operating in 11 markets across three e-commerce platforms. However, the integration of Delta Wines has also led to a reduction in the company’s gross margin percentage and a dip in adjusted EBITDA from 9.6% to 7.5%.
Financial Highlights
- Revenue: Increased by 20.2% year-over-year.
- Adjusted EBITDA: Decreased to 7.5% from 9.6%.
- Net debt to EBITDA ratio: 4.1, with a target of reducing to 3.0.
Market Reaction
The stock price of Viva Wine Group AB fell by 1.79% in pre-market trading, reflecting investor concerns over the decline in adjusted EBITDA and gross margins. The stock is trading closer to its 52-week low of 36.1, indicating cautious market sentiment.
Outlook & Guidance
Looking ahead, Viva Wine Group plans to focus on deleveraging and aims to reduce its net debt to EBITDA ratio to 2.5 within approximately one year. The company targets mid-single-digit organic growth and expects operating expenses to return to 2023 levels. It also continues to emphasize sustainability, with 73% of its sales in low climate impact packaging.
Executive Commentary
CEO Emil Salnes stated, "We have now laid the foundation for continued growth," highlighting the company’s strategic expansion and sustainability efforts. CFO Lynn Gauver added, "We expect to deleverage and reach our financial targets of 2.5 within approximately one year," underscoring the company’s commitment to financial stability.
Risks and Challenges
- Declining gross margins due to acquisition costs.
- Decreased sales volume in the Nordic monopoly market.
- Low consumer sentiment in key markets like Germany.
- Market estimated to be down 5-10% in Q2.
- High net debt to EBITDA ratio of 4.1.
Q&A
During the earnings call, analysts inquired about the company’s strategies for improving gross margins and the anticipated timeline for reducing the net debt to EBITDA ratio. Executives also addressed questions regarding market outlook and seasonal variations, providing insights into potential stabilization in the coming quarters.
Full transcript - Viva Wine Group AB (VIVA) Q2 2025:
Conference Operator: Welcome to Vivo Wine Group Presentation for Q2 twenty twenty five. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO, Emil Salnes and CFO, Lynn Gauver. Please go ahead.
Emil Salnes, CEO, Vivo Wine Group: Good morning, everyone, and welcome to our Q2 twenty twenty five presentation. My name is Emil Salnes, I will, together with our CFO, Lynn Gawehr, present today. This is the agenda for today. And before we go into the quarterly update and financials, I want to start by giving you a short introduction to WIWAINE Group. We, now after the acquisition of Delta Wines, have two main segments in the group: business to business, B2B and business to consumer, B2C.
Business to business consists of the Nordic countries as well as Netherlands, Poland, Belgium and The Czech Republic, all markets where we do not sell directly to consumers. B2C consists of our e com business based in Germany, but with consumers spread over a number of countries in Europe. In our B2B segment, we operate in the Nordic monopoly market. We are the clear market leader in wine, where we are the clear market leader in wine. Our operating companies are active in Sweden, Finland and Norway.
And now with Delta Wines, we have expanded our B2B presence into Europe. Delta Wines have a strong presence in all distribution channels from retail, sales to ecom platform, food services, wine shops and exports. In our B2C segment, we operate three ecom platforms, Decampo, Wein Furst and Wine in Black, covering in total 11 different markets. So now let’s move on to the Q2 update and our performance summary. Net sales increased significantly due to the acquisition of Delta Wise and increased by over 20%.
Organic growth was positive at 1%. A positive effect from Easter was partly offset by a slower development following cold weather in May. Furthermore, we have a comparison effect versus last year when some of our colleagues had severe logistical problems, which boosted our sales in Q2 twenty twenty four. We increased our gross profit while our gross margin percentage declines as a result of the acquisition of Delta Wines, a business with lower gross margins than our historic business. Our remaining business, excluding Delta Wines, increases in gross margin.
Adjusted EBITDA for the quarter decreased to 7.5% compared with 9.6% last year as a result of the lower gross margin percentage, onetime expenses for the acquisition and additionally from the previously communicated step up in OpEx. Now let’s look in more detail at the financial performance, and I will hand over the word to Lynn.
Lynn Gauver, CFO, Vivo Wine Group: Thank you, Emil. We have a positive net sales growth of 20.2% for the group, as Emil mentioned, a result of the acquisition of Delta Wines. WIVA Wine Group excluding Delta Wines was affected positive by Eastern, but as I mentioned due to very cold weather and also high comparable figures in Sweden Q2 twenty twenty four. Still the group managed to grow organically by 1%. In our B2B segment, Delta Wine is the growth driver in Q2.
Without Delta Wines, the sales was flat versus last year with a small negative currency effect. B2C declined slightly in the quarter, which is entirely in effect from a negative exchange rate. Our B2B business showed a small growth in local currency. We have a decrease in our adjusted EBITDA versus last year. The main reasons are our strategic OpEx step up to be able to support our growing Nordic business, marketing investments in our B2C segment and professionalization of the organization.
The lower adjusted EBITDA margin is a result of the lower gross margin percentage in the acquired business and our investments in OpEx. The gross margin percentage excluding the acquired business continued to strengthen. Looking at our net working capital, it has increased as a result of the acquisition and higher inventory. Net working capital to net sales is higher due to that only one month of net sales is included. A high level simulation including net sales for twelve months shows that the ratio is in line with numbers pre acquisition.
We have the same development in net debt where we have full effect from our new loan, but only one month result. We expect to deleverage ongoing as the EBITDA is consolidated month per month. A high level simulation of adding twelve months of EBITDA reduced the number from 4.1 to approximately three. We expect to deleverage and reach our financial targets of 2.5 within approximately one year. To go to our cash flow, we have a stable operative cash flow in the quarter.
Cash flow from investing activities include acquisition of Delta Wines with a cash flow effect of SEK $566,000,000. Cash flow from our financing activities is according to plan where dividends was paid during the quarter, planned acquisition of shares in subsidiary was paid out and further change in liabilities to credit institutions where we include a new loan of SEK $633,000,000.
Emil Salnes, CEO, Vivo Wine Group: Thank you, Lynn. So now over to the performance by segment. In the 2025, we took a decisive step in our growth strategy with acquisition of Delta Wines, a big step towards our strategic goal of becoming a leading European wine group. We are happy to share that the integration of Delta Wines is proceeding according to plan, in many ways facilitated by the fact that the corporate cultures and business models are very similar. Delta Wines was consolidated into our accounts with effect from May 23, which means that only a little over a month of Delta’s operations are included in our reporting of this quarter.
Financial numbers for that period are in line with our expectations. Over to the monopoly markets. In total, monopoly sales in the Nordic region decreased in volume compared with the corresponding quarter in 2024. There was a positive effect for the market because of the timing of Eastern versus previous year, but this was not enough to compensate for the cold weather and lower consumer sentiment. In Finland, also the sales of 8% wines in supermarkets continued to take shares of the monopoly sales.
For the Nordic markets combined, WIWAINE Group reported a market share of 22.6% for Q2, which is slight decrease from last year, but again worth mentioning that our market share last year was boosted by logistical problems in the Swedish market. Even so, WIOA wine group remains the clear market leader in The Nordics and both Norway and Finland performed better than their respective markets and increased their market shares in the quarter.
Lynn Gauver, CFO, Vivo Wine Group: Looking at our segment B2B. The net sales in segment B2B increased significantly by 24.8% in the quarter with an organic growth of 1.1%. The increase versus last year is driven by the acquisition. B2B excluding Delta is unchanged. Although Easter fell in the second quarter, sales for the Wine Group in the Nordic markets has been affected as mentioned by the cold weather and strong comparative figures in Sweden.
Adjusted EBITDA is in line with last year, while the adjusted EBITDA margin in the quarter decreased and ended at 7.8%. Main reason for the lower adjusted EBITDA margin percentage are explained by the lower gross margin percentage in Delta Wines and OpEx step up from investments in marketing and professionalization. The gross margin percentage in the ongoing business increased in the quarter.
Emil Salnes, CEO, Vivo Wine Group: The market in our B2C segment continues to be soft, although we are seeing positive signs of stabilization of our customer base. In the quarter, we had 12% more first time customers than in 2024. The sales in B2C had a positive organic growth of 0.6%, which is now the second quarter in a row with some organic growth. To put this into some perspective, we estimate based on available market data that the market was down 5% to 10% in Q2. We continue to work hard on growth, and we have successfully tested and invested in new channels and approaches for acquiring new customers.
And as you have seen, this has shown clear results.
Lynn Gauver, CFO, Vivo Wine Group: In the B2C segment, we have a continued positive organic growth. While net sales was below previous year due to negative FX effects. Consumer sentiment as Eemel mentioned continues to show low figures especially in Germany. In Q2 however, we saw small signs of recovery and we have continuous positive organic growth which strengthen our belief of further stabilization in the market. We have a weaker gross margin mainly due to the product mix in the quarter.
We continue to pursue our strategy of balancing sales and profitability while investing in marketing. As we now see some stabilization in our customer base, we are investing to drive future growth. We maintain a strong and consistent cost control within our efficient cost base. Adjusted EBITDA margin in Q2 was lower than prior year, driven by lower GM percentage and investments in marketing.
Emil Salnes, CEO, Vivo Wine Group: Now a few words on our sustainability work. Our annual sustainability report for 2024 was published during the spring. This was the first report in which Viva Wine Group consolidated sustainability data for the whole group beyond Sweden to include the international operations. We are as many companies working on aligning our reporting with the CSRD and ESRS frameworks. A highlight in the report and something we are proud of is that in collaboration with suppliers and the Nordic monopolies, 73% of the group’s total volumes in 2024 were sold in low climate impact packaging, including bagging boxes, tetra, pouch, lightweight glass and PET.
In our in Q2, our latest acquisition, Delta Wine was included to the Wine Wine Group. By onboarding Delta Wines, we are expanding and strengthening the sustainability organization. And to summarize, overall, the second quarter was dominated by our strategic acquisition of Delta Wines, which significantly increases our footprint outside of The Nordics. The integration has been successful both organizationally and operationally. Regarding M and A, we now, of course, have a focus on our recent acquisition, but we remain active in M and A and see an increased deal flow in both our segments.
Finally, we have now led the foundation for continued growth. We have a stronger, more diversified business and are well prepared and a well prepared organization. So we are confident and look forward to the end of the year and the year ahead. And with that, it’s now time for the Q and A session.
Conference Operator: The next question comes from Johan Fred from SEB. Please go ahead.
Johan Fred, Analyst, SEB: Yes, good morning guys. Thank you for taking my question. A first one, if I may, on your gross margin. You stated that the gross margin expanded year on year, excluding the Delta Wine acquisition. Could you potentially give us that gross margin figure, I.
E, what would have the gross margin been excluding Delta Wines in Q2?
Lynn Gauver, CFO, Vivo Wine Group: We don’t present that number, but it is an increase of approximately 0.5%.
Johan Fred, Analyst, SEB: Okay, got it. Very clear. Thank you. And the second question, if I may, on the increase in OpEx. Could you just elaborate on which cost categories are temporary in the OpEx increase, I.
E, sort of integration and one off relating one offs relating to the acquisition versus how much of the OpEx increase is more structural investments? And the follow-up on that question is how we should think about the cost base into 2026, please?
Lynn Gauver, CFO, Vivo Wine Group: Yes. Well, we have onetime costs related to acquisition of approximately SEK9 million. And looking at the OpEx added by Delta Wines in this quarter is approximately million. So I would say 61% is related to the acquisition of the total OpEx. And looking at our OpEx estimates as we have communicated earlier, we expect the OpEx levels towards net sales to be in line with 2023 percentage and that is our guidance that we still keep.
And this year is an OpEx step up. However, we have no planned increase in OpEx step up next year. So that number should be slightly decreased next year.
Johan Fred, Analyst, SEB: Got it. Very clear. Thank you. And the final one, I may, on your gearing. So net debt to EBITDA rose to 4.1, if I’m not corrected.
However, the pro form a number, as you stated in the presentation, is roughly around three. But what are your sort of concrete deleveraging priorities going forward? Are you seeing any synergies between in working capital? Or sort of what’s strategy going forward essentially?
Lynn Gauver, CFO, Vivo Wine Group: LARS Well, we are expecting to deleverage with the positive addition of EBITDA going forward. However, worth mentioning that Delta Wines has a good working capital and will contribute going forward to this number. But mostly it is a fact that we are prioritizing to consolidate EBITDA and that will give the effect of deleveraging.
Johan Fred, Analyst, SEB: Okay. But so you expect a net debt to EBITDA with the consolidation to still be around 3x
Lynn Gauver, CFO, Vivo Wine Group: We only have one month of EBITDA in our numbers now. However, we have the full loan. But when we consolidate the result going forward, we will reduce the ratio.
Johan Fred, Analyst, SEB: Okay. So if you were to consolidate last twelve months EBITDA from Delta Wines, what would the net debt to EBITDA pro form a ratio be?
Lynn Gauver, CFO, Vivo Wine Group: Yes. We have no exact pro form a. So it’s approximately three point zero as we have stated in the PowerPoint presentation.
Emil Salnes, CEO, Vivo Wine Group: But on top of what Lynn mentioned, there is also the amortization that will during the coming year will come into effect.
Lynn Gauver, CFO, Vivo Wine Group: Yes. So we will amortize our loan according to plan and then we will add our result.
Johan Fred, Analyst, SEB: Got it. Very clear. Those were all my questions for now. Thank you for taking the time.
Unidentified Speaker: Thank you.
Conference Operator: The next question comes from Fredrik Iverson from ABG. Please go ahead.
Fredrik Iverson, Analyst, ABG: Thank you. I’ve got two questions in addition. First one on the market, you mentioned that the cold weather impacted negatively in Q2. And I’m curious whether the better or even good weather in Q3 has impacted the market positively, if you could give some color to the market development as you’ve seen in Q3?
Emil Salnes, CEO, Vivo Wine Group: Well, if you look at the weather report to start with, of course, July was very good, August less so. So in combination, I think the weather has been maybe according to expectations overall. But July was a strong month. And if you look at the publicly available numbers from the monopolies so far, the sales have been very strong in July.
Unidentified Speaker: Okay.
Emil Salnes, CEO, Vivo Wine Group: But I think you should read also that they are slightly less so in August, although we’re not finally over the lining in August yet.
Fredrik Iverson, Analyst, ABG: Yes. Sure. Thanks, Himal. And my last question, a detailed one somewhat. But you mentioned that adjusted EBITA from Delta was SEK 9,000,000.
Was that excluding or including the SEK 9,000,000 transaction costs?
Lynn Gauver, CFO, Vivo Wine Group: I haven’t said that number. We were talking about the OpEx number where the acquisition cost was SEK 9,000,000 of total OpEx and Delta Wine’s OpEx of that number is approximately 18,000,000 to 20,000,000.
Fredrik Iverson, Analyst, ABG: But it says in the report that Delta Wines makes a positive contribution of 9,000,000.
Lynn Gauver, CFO, Vivo Wine Group: Okay. Yes. That number is the same as the acquisition costs. Yes. And what was the follow-up on that?
Fredrik Iverson, Analyst, ABG: Yes. Is that including or excluding the SEK 9,000,000 transaction costs? I guess it’s including.
Lynn Gauver, CFO, Vivo Wine Group: Including? They are contributing with that number. And as we say also in the report as our current business where we have the sales development over the year it’s very similar Delta Wines compared to our old business. Also then in profitability the strongest quarter Q4 is also the strongest quarter for Delta Wines. So it will have the same seasonality effect.
Fredrik Iverson, Analyst, ABG: Excellent. That’s all my questions. Thanks so much.
Conference Operator: The next question comes from Rauli Juva from Indiers. Please go ahead.
Johan Fred, Analyst, SEB: Hi, Roli from Indiers here. Just one question basically from me. I was wondering how do you see the current market outlook in your markets for the remainder of the year? And if there’s any major differences in the markets like the Nordics to your European markets?
Emil Salnes, CEO, Vivo Wine Group: No. I mean, if you look at the Nordic markets, I think we should expect them to behave in a quite similar fashion as they’ve done so far this year. So of course, Finland, there is this the shift to supermarket sales that affects the alcohol sales. Norway, we expect to decrease in sales somewhat. And and Sweden, we basically around zero, maybe minus 1%, something like that.
Difficult to say. But because, I mean, it’s really no no change in our our market outlook in terms of the monopoly markets. In in there are less as I mean, of of course, the advantage with the monopoly markets that there are public figures that are actually very, very correct because it’s
Johan Fred, Analyst, SEB: a monopoly in the other markets. It’s more difficult to
Emil Salnes, CEO, Vivo Wine Group: say so say say anything about the market growth, and we haven’t done so far. So but we we don’t see the Dutch market and the German market are behaving as we have explained before.
Conference Operator: The next question comes from Nicholas Elhammer from Carlsquare. Please go ahead.
Unidentified Speaker: Yes. Hello. Thank you. Thank you for clear answers already. Just a follow-up question regarding the development of Delta.
You said sales were as expected. Is it possible to elaborate a little bit what does that mean? Is it growing or is it stable?
Lynn Gauver, CFO, Vivo Wine Group: The sales is in line with expectations. And currently we as we stated in our press release, those are the numbers that we display of what they had 2024 numbers. So the sales is in line with that number.
Unidentified Speaker: Okay. Thank you. And just finally regarding the gross margin, maybe I missed it, but did you provide any guidance on gross margins going forward?
Lynn Gauver, CFO, Vivo Wine Group: Well, if we’re looking at the gross margin percentage, we have the Swedish market where we expect small improvements going forward. And especially in Q4, we expect an improvement both year on year and also going forward. And total level, the gross margin percentage when we include Delta Wines will be a bit lower, but that’s only because of the margin structure where we guided I think it was last call that the GM percentage is approximately around 14% for that business. So adding that as we go on consolidating that will of course impact the margin structure. However, we expect our ongoing business in that segment to strengthen.
Unidentified Speaker: Okay, got it. Thank you. Thank you very much.
Conference Operator: There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.
Emil Salnes, CEO, Vivo Wine Group: Thank you. There are some written questions from Alexander. We have a question on current trading. Pairs are talking about good weather and strong July. Any comments regarding that?
That has been already answered. Gross margin at current Eurosec levels, do you expect a positive contribution from gross margins in Q3 and Q4?
Lynn Gauver, CFO, Vivo Wine Group: Yes. As mentioned, this is related to Sweden, which is of course our biggest contributor to the B2B segment. And there we expect in Q4 that it will have a positive effect in gross margin.
Emil Salnes, CEO, Vivo Wine Group: Regarding Delta Wines, can you share some more data especially regarding the organic growth profile? Is it reasonable to expect mid single digit organic growth for Delta this year and in the medium term? Well, I think that as mentioned in when we present the Delta Wines, we expect them to be in line with our general growth targets. So yes, if a single digit means 4%, this is the goal which we aim to which we expect to reach. On OpEx, I think the answer has been done given already, but OpEx was 40% up or 50,000,000.
How was that related to communicated OpEx ramp up versus increase from Delta related numbers? Also is any of the OpEx increases related to one off costs related to the acquisition?
Lynn Gauver, CFO, Vivo Wine Group: Yes. We have one off costs related to acquisition as mentioned. But we remain of the guidance of the total level for the year where we guide that the OpEx towards net sales will be in line with the percentage in 2023. So that is the guidance for this year and perhaps slightly below. That is the update.
Emil Salnes, CEO, Vivo Wine Group: Got it. So then there is a question from Anders Persson. Hi, is the gross margin of Delta Wines for Q2 lower than expected? Do they have seasonal effects? And do you expect the gross margin to increase due to synergies related to the merge of the operations?
Lynn Gauver, CFO, Vivo Wine Group: Yes. Well, they have a seasonal effect in the gross margin percentage in Delta Wine, but it’s not lower than expected. The communicated number in last call was approximately around 40% that is for the full year. Then they also have the seasonality effect where Q4 is the strongest period for gross margin. So that could vary between 2% up and down.
But the full year is according to expected. And what we see now in the gross margin for this year, we don’t see any immediate effects, but we are working very good together with operational synergies and our integration. So no immediate effects this year in the gross margin related acquisition, but of course we are working on it long term.
Emil Salnes, CEO, Vivo Wine Group: And then there’s a follow-up from Anders regarding dividends. Do you expect to keep the same dividend policy after the acquisition? And the answer is yes. And then a follow-up from Alexander. Adjusted EBITDA, please confirm that we understood correctly.
Adjusted EBITDA SEK101 million did include SEK9 million in one off transaction costs?
Lynn Gauver, CFO, Vivo Wine Group: Yes, that is correct.
Emil Salnes, CEO, Vivo Wine Group: Perfect. That concludes the Q and A session. Thank you very much, and see you when we report on the Q3 on November 20. Thank you all, and hope to see you soon.
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