13th May 2014 09:32
LONDON (Alliance News) - Central and eastern Europe brandy and vodka maker Stock Spirits Group PLC said Tuesday it has started the year well, with first-quarter trading and cash flow in line with management expectations, but said that it is too early to tell the longer-term impact of the new excise duty increase in Poland.
At the beginning of this year, the Polish government imposed a big excise tax hike for spirits only, its second increase since 2009, when the levy was raised for both spirits and beer.
Earlier this year, Stock Spirits, the owner of brands including Stock 84 brandy, Wodka Zoladkowa and Fernet Stock bitter, warned that the tax hike would hit sales and earnings in the current financial year.
The group reported a 16% increase in revenues in 2013, but a huge drop in its pretax profit, hit by costs associated with its recent stock-market flotation, Polish duty increases, and the absence of a one-off gain which boosted its profits the previous year, when it benefited from a net gain from the disposal of its US business.
Stock Spirits said Tuesday that as expected, overall spirits consumption has been hit by the Polish excise duty increase, and while it is broadly in line with expectations, it is "too early to tell what the longer term impact will be".
"However, we believe that Stock Spirits is well placed to take full advantage of the anticipated recovery when it happens and we expect to deliver full year results in line with management expectations," the company said.
Stock Spirits said its distribution agreement with beverage giant Diageo PLC in the Czech Republic, which commenced in January, has started well.
Last month, Oaktree Capital Management LP sold its entire shareholding in Stock Spirits, representing a 36.8% stake of the company, for gross proceeds of roughly GBP202.6 million. It sold a total of 73.7 million shares, at a price of GBP2.75 per share, in the placing with institutional investors.
Stock Spirits shares were down 2.0% at 284.00 pence Tuesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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