Profits slashed at Stock Spirits as Polish market woes take their toll

By Mathew Lyons

Published: 10 March, 2016

FTSE-250 Central and Eastern European branded spirits producer Stock Spirits posted disappointing 2015 results today on the back of problems in the pivotal Polish market.

Profits after tax at the Buckingshire-based busines fell sharply to £15 million, almost half the 2014 total of £27.8 million.

Total 2015 revenues of £204 million were down from £227.8 million the year before, while operating profit slumped 22.3% to £32.4 million.

Volumes also contracted, with Stock Spirits shipping 2.6 million less nine-litre cases than it did in 2014, when it moved 14.4 million.

In a rare bright spot for the company, net debt also fell significantly, from £64 million in 2014 to £44.4 million.

The company was forced to issue a revised profit guidance in November last year, as turbulence in the key Polish market severely dented performance.

It's market share in Poland declined sharply from 38.1% to 30.9% across the year, although it remains the leader in the flavoured vodka category, and holds the number two position in total vodka.

Chris Heath, chief executive of Stock Spirits, said: "Our team in Poland have worked incredibly hard to put in place the necessary building blocks to return the business to growth and I acknowledge their hard work and commitment during this difficult period.

"In other markets, I am very pleased with the results we achieved in 2015 and it reassures me that our commercial strategy remains valid and robust.

"We have recently completed a thorough strategic review of the group and a detailed 'root and branch' review of our operations in Poland.

"Whilst both reviews have reaffirmed the principal elements of our strategic goals, they have also identified a number of areas where we need to adapt our strategy and actions, to reflect changes in the Polish competitive environment."

The group is looking to acquire further spirits businesses in central and eastern Europe to broaden its geographic footprint, but has struggled to identify suitable targets.

Connor Campbell, a senior market analyst at www.spreadex.com, said: "With problems in Poland causing a whopping 46% fall in pre-tax profit to €19.4 million even a hiked dividend couldn't save Stock Spirits this Thursday, the company falling just shy of 3% as the day went on.

"It's an issue that could have long-term ramifications for Stock Spirits given that Poland makes up the bulk of its business."

Stock Spirits floated on the London Stock Exchange in autumn 2013.

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