5th Nov 2014 07:48
LONDON (Alliance News) - Stock Spirits Group PLC Wednesday warned that third-quarter revenue growth had fallen short of expectations after it was hit by aggressive pricing by competitors and heavy promotional activity in the trade market in the latter half of the quarter, and its full-year results could miss expectations as a result.
In a statement, the branded spirits producer in central Europe said trading had become "very tough" in the latter half of the third quarter, particularly in Poland where it continued to see disruption in the supply chain resulting from a duty increase. It also warned the trends had continued into the start of the fourth quarter.
It said its market share in Poland had remained stable and "strong", and customers appear largely to have accepted price rises. However, volumes in the market have continued to decline at about 3.6%, it said, citing data from Nielsen.
"However we have experienced very aggressive competitor pricing and promotional activity to secure distribution into the trade customers. This has resulted in considerable pressure on margins and whilst we have been able to increase margins slightly compared to last year, we have not yet been able to achieve the growth in revenues expected," it warned.
It said it faces a challenge to make up the shortfall in its key fourth-quarter trading period. Unless conditions do improve, there "is a risk" its full-year earnings before interest, tax, depreciation and amortisation could be between EUR5 million and EUR10 million below expectations, it said.
"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," it said.
By Steve McGrath; [email protected]; @stevemcgrath1
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