Stock Spirits CEO attempts to supress revolt

Chris Heath, CEO of Stock Spirits, has insisted that his company review is “delivering results” days after the firm’s main shareholder staged a revolt.

Chris Heath, CEO of Stock Spirits, claims his “root-to-branch” company review is “delivering results”

Last week, Western Gate Private Investments Limited – the largest individual shareholder in Eastern European producer Stock Spirits with a 9.7% stake – asked Heath to step down from his role and requested Stock Spirits to employ an executive search firm and find a “suitable replacement”.

The shareholder cited Stock Spirits’ declining market share in Poland, an “under-performing” share price, and “spiralling” corporate costs as reasons for its concern.

In the 12 months to 31 December 2015, the group’s operating profits fell 23% to €41.7 million, compared to €53.6m in 2014, while total revenue dropped almost 11%, from €292.7m in 2014 to €262.6m in 2015.

Stock Spirits has now issued a trading statement outlining more positive results from 1 January to 31 March 2016.

In the period, total revenue grew 29% to €55.3m while operating profit increased to €6.3m following a €4.2m loss in 2015. Net dent also reduced by €13.6m to €43.6m.

The company’s market share in Poland, which has been hit by tax hikes and “severe pressure” from competitors, also edged up from 29.5% in December 2015 to 27.2% in February 2016.

“The positive momentum we saw in the second half of last year has continued and we have seen a strong start to 2016, with volume, sales revenue and EBITDA growth,” said Heath. “All markets have recorded EBITDA growth in the first quarter. Especially pleasing is a return to profit in the quarter in Poland following a loss in Q1 2015.

“There is still much to do but the initiatives we have been implementing since making the management changes in January last year and following the ‘root and branch’ review this year are clearly delivering results.

“It is still early days, but we are pleased with the start the new products we launched in 2015 have made and the recent medal awards for both our core brands, and several new products launched in 2015, continues to confirm the outstanding quality of our brands versus their competitive set.”

Stock Spirits also announced that in order to “respond fully” to the concerns of Western Gate, its AGM has been moved forward to 23 May.