Stock Spirits issues profit warning as tax bites

Stock Spirits, one of Central Europe’s largest spirits groups, has warned it may miss its full-year profit forecast due to duty increases in Poland and “aggressive competitor pricing”.

Stock Spirits has warned investors its full year profits for 2013/14 may not meet expectations

The group, maker of Stock Prestige vodka, revealed today that it had experienced a “tough” third financial quarter, with negative trends continuing into Q4.

As such, the firm said that “unless trading conditions improve”, there was a risk its full year results could be between €5m and €10m below expectations.

In Poland, where Stock Spirits reports 60% of its sales, market share remained “strong and stable”, but the group continued to see disruption in the supply chain resulting from tax increases.

In January this year, Stock Spirits warned the Polish government’s decision to increase excise duty on strong alcohol by 15% would harm its sales figures.

The group also said that its third quarter margins have also been squeezed by “very aggressive competitor pricing and promotional activity”.

“Looking forwards we believe that some level of disruption may continue into the early part of next year, after which we expect to see a return to more normal trading patterns,” a statement from the firm read.

Reporting its half year financial results in August, Stock Spirits saw a 10% drop in revenue to €137.7 million from €153.1 million the previous year, again blaming Polish duty increases and adverse foreign exchange movements in the Czech Republic.

In its full-year financial results for 2013, the company saw a huge profit decline to €8.9million compared to €26.2m in 2012 despite a 16% sales increase. The fall in profit was attributed to various “exceptional costs”, predominantly those attached to its Initial Public Offering (IPO) before floating on the London stock market.

The UK-headquartered spirits producer and distributor, which operates primarily in Central and Eastern Europe, made the decision to sell a quarter of its shares in a bid to raise £52 million.