Polish woes persist for Stock Spirits as sales dive

Leading Central and Eastern European spirits group Stock Spirits has seen its half-year sales nosedive more than 20% as difficulties in Poland persist.

Stock Spirits has reported “disappointing” H1 financial results

In the six months to 30 June 2015, total revenue fell from €137.7 million in to €108m, while profits plummeted an enormous 77%, from €23.2m to €5.2m.

Stock Spirits blamed ongoing “market disruption” in its key Polish market for the poor results.

Duty hikes implemented in 2014 and a subsequent customer destocking, loss of market share, market decline and very aggressive competitor pricing contributed to what the group called “a very difficult first quarter in Poland”.

However, the group notes that in Q2, it returned to “more normal” trading in the country.

“As reported at the time of our AGM in May, the disruption in the supply chain and aggressive competitor pricing in Poland following the excise tax increase in January 2014, resulted in a very poor first quarter for the group,” said Stock Spirits CEO Chris Heath.

“Trading in Poland improved significantly in the second quarter, but not enough to fully offset the poor first quarter. All other markets have traded in line with our expectations. Therefore as expected, the group’s overall results for the first half of the year 2015 have been disappointing.”

Stock Spirits has aimed to turn around its fortunes in Poland by restructuring its management team and premiumising its portfolio in the country.

As such, the group said it is “cautiously optimistic” about its performance in H2 due to its more positive Q2 results in Poland, adding that “aggressive” pricing and “erratic customer ordering patterns” could remain a challenge.

Performance in other markets was described as “in line with expectations”.

In Czech Republic, overall spirits volumes grew 7.9%, driven by an “improving economy” and “growing consumer confidence”. Despite a 10% duty hike in Italy in January this year, Stock Spirits’ rate of volume decline slowed, while value sales showed some growth.

“Having come through a very difficult period, we have put the building blocks in place to ensure that the group is well placed to capitalise on the opportunities available in the Central and Eastern European region and the improved trading conditions we experienced in Q2 have continued into the start of Q3,” continued Heath.

Stock Spirits estimates its full year EBITDA will be within the range of €60m to €68m.