Stock Spirits profits rise as turnaround strategy progresses

Central and Eastern European drinks group Stock Spirits has reported a 32% rise in operating profits in the first half of 2017, as strategic initiatives put into place last year begin to deliver results.

Stock Spirits has reported a double-digit rise in operating profits in H1

Total revenue in the six months to 30 June 2017 grew by 3.3% to €119.8 million, while profit before tax soared by 23% to reach €15.7m.

More than €2.5m of savings were recorded in the period thanks to initiatives introduced in 2016, indicating that Stock Spirits’ plans to cut costs, lower prices and increase market share are taking effect.

The restructuring of operations and legal teams is expected to generate incremental savings of €1.5m from the beginning of next year, the firm added.

Stock Spirits, which has been addressing declines in its key Polish business, said total vodka volumes in the market remained in growth in the first half of the year, up by 1.4% – a slowdown from the 2.4% growth achieved last year due to the impact of price reductions.

“Significantly higher” levels of growth were reported within the flavoured vodka segment, where volumes grew by 7.7% Overall, the group has increased its volume and value market shares in Poland by 1.8% and 1.5% respectively to 26.2% and 26.9% since December 2016.

Mirek Stachowicz, CEO of Stock Spirits Group, said: “We are pleased to have delivered good financial and operational progress during the first half of the year.

“This performance is a clear sign that the business has stabilised and that the initiatives put in place in 2016 are beginning to deliver tangible results including in Poland.

“While our core markets remain competitive, we believe that our strategy of further developing our existing brand portfolio whilst continuing to invest in markets and categories with strong potential leaves us well placed to continue delivering long-term and sustainable growth.

“As always, I would like to thank all of Stock Spirits’ employees for their hard work and commitment in helping us to deliver the plans and ambitions that we have for this business.”

In July Stock Spirits entered the Irish whiskey category with the purchase of a 25% stake in Quintessential Brands’s Dublin Liberties Distillery Company for up to €18.3m, granting the firm access to The Dubliner Irish Whiskey and The Dublin Liberties ranges.

With the construction of the distillery slated to take one year to complete and the maturation of Irish whiskey taking a minimum of three years, the group expects investment to be earnings accretive in year four following “accelerated investment” behind the brands in the early years.

Executive update

The company also announced that Lesley Jackson, the group’s chief financial officer, is to retire on 7 November 2017, and leave the company with effect from 8 August 2018.

Jackson will be replaced by Paul Bal from New York listed company Tupperware Brands, where he has been vice-president: CFO & strategy – Europe, Africa & Middle East since 2014.

Stock Spirits’ chairman, David Maloney, said: “We are pleased to announce Paul Bal’s appointment as chief financial officer. His extensive finance, commercial and IT experience will enable him to play an important role in the ongoing growth and development of the business.

“On behalf of the board, I would like to thank Lesley for her contribution and to express my appreciation for her dedication and professionalism. We wish her well in her retirement.”