STCK.L Share News (STCK)

LONDON (Alliance News) - Stock Spirits Group PLC boosted its dividend Wednesday after reporting 2017 profit fell due to an Italian impairment charge, despite revenue growing amid improving trading conditions in its main Polish market.

In 2017, pretax profit fell to EUR27.3 million from EUR39.2 million the year prior. This was despite revenue growing to EUR274.6 million from EUR261.0 million in 2016.

Profit performance at the spirits maker was hurt by a EUR14.9 million exceptional costs in 2017 compared to 2016. This was a result of a goodwill impairment charge in relation to its Italian brands identified after a review.

The Italian market - which represents 10% of its total revenue - remained "challenging", Stock Spirits explained, with high young-adult unemployment hitting its brands. Revenue fell 4.4% to EUR28.1 million in 2017.

Stock proposed a 5.72 euro cent final dividend per share, up 5.0% from 5.45 cents the year prior. For the full year, the dividend was advanced 4.9% to 8.10 cents from 7.72 cents the year before.

"2017 was a year of stabilisation for Stock Spirits, and one in which we embedded the significant changes accomplished in 2016," Stock Spirits Chief Executive Officer Mirek Stachowicz said. "Turning around the performance in our largest market, Poland, was the group's top priority during the year and, through a combination of strategic investment, realigned pricing and numerous other operational initiatives, we believe that the business has now stabilised."

"As a result," Stachowicz said, "we are delighted to be reporting today that we have delivered growth in volume, revenue, market share, profitability and cashflow across the group during the year."

In 2017, revenue from Poland - which represents 54% of total revenue - grew 6.8% to EUR147.7 million. Stock Spirits emphasised, however, its main competitor continued to undertake an aggressive pricing strategy. Despite this, Stock Spirits continues to grow share in volume and value in the country since December 2016.

"Whilst these results are encouraging, we remain vigilant and the market, though stable, remains highly competitive," Stachowicz explained.

"In addition, a strategic review undertaken during the year has made it clear that there is a greater need than ever before to focus on our brands in order to keep pace with the changing needs and tastes of our end consumers," Stachowicz added. "As a result, continuing to premiumise our brands, becoming more relevant to millennials, investing in digital marketing, and carrying out strategic M&A, are all areas of priority. This renewed focus, as well as the improvements that we are making across all areas of our operations, mean that we continue to feel well positioned to achieve sustainable long-term growth."

Shares in Stock Spirits were 0.9% lower at 279.00 pence on Wednesday.