LONDON (Alliance News) - Stock Spirits Group PLC Thursday declared its maiden interim dividend and said that it remains on track to deliver on its full-year targets as it swung to a pretax profit in its first-half, despite revenue taking a hit on the impact of a sales duty hike in Poland and the devaluation of the Czech koruna.
In its half-year results for the six months to June 30, 2014 the Central and Eastern European branded spirits producer said it swung to a pretax profit of EUR19.5 million from a EUR9.3 million loss last year.
Revenue came in 10% lower for the half-year at EUR137.7 million, compared to EUR153.1 million in the comparable period last year. The FTSE 250-listed said the drop reflects the impact of the Polish duty sales re-phasing and adverse foreign exchange movements in the Czech Republic.
At the beginning of this year, the Polish government imposed a big excise tax hike for spirits only, its second increase since 2009, when the levy was raised for both spirits and beer. Earlier this year, Stock Spirits, the owner of brands including Stock 84 brandy, Wodka Zoladkowa and Fernet Stock bitter, warned that the tax hike in its largest market would hit sales and earnings in the current financial year.
The company declared a maiden interim dividend of 0.0125 euro cents per ordinary share.
Operationally, the company said total volume in the first-half reduced to 6.8 million nine litre cases, down from 7.8 million last year, again reflecting the Polish duty impact. The company noted that the impact of the 15% excise duty increase, which resulted in the pulling forward of EUR5 million of operating profit into 2013, has been mitigated by management action.
Operating profit for the period declined 23% to EUR23.2 million from EUR30.3 million, said Stock Spirits, as incremental costs of being a listed company also hit its balance sheet.
While market share in Poland - Stock Spirits' largest market - continued to grow in the first-half despite the duty changes, in Italy and the Czech Republic market share slightly reduced, said the FTSE 250-listed company.
Stock Spirits said that its first-half results are in line with its internal targets and that it remains on track to meet its full-year expectations.
"We have continued to grow our share of the key profit pools in Poland and have successfully launched a number of exciting new products in all of our core markets," said CEO Chris Heath.
"We are also pleased to have added a new distribution agreement with Beam Suntory in Croatia in line with our strategic aim of increasingly premiumising our portfolio in our core markets. Along with our existing agreements with Beam Suntory in Poland and Diageo in the Czech Republic, we are now working in partnership with global spirits leaders in three of our six core markets," he added.
In May the company said the year had started well, reporting first-quarter trading and cash flow in line with management expectations, but said that it was too early to tell the longer-term impact of the new excise duty increase in Poland.
The company joined the FTSE 250 following its initial public offering in October last year, priced at 230 pence per share, valuing the company at GBP470 million. Stock Spirits was created through the integration of two long-established businesses, Eckes & Stock and Polmos Lublin, in 2008.
Shares in Stock Spirits were Thursday morning trading 0.17% lower at 293.50 pence per share.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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