Half-year results from Stock Spirits (STCK) look slightly odd because of a number of exceptional costs and the impact of government regulation. Starting with the top line, a 15 per cent increase in excise duty in Poland and an 8 per cent devaluation of the Czech currency were largely to blame for the 10 per cent decline in revenue.
Moving down the income statement, costs associated with being a listed company - Stock Spirits floated last October - contributed to a 23 per cent fall in underlying operating profit to €23.2m. But then the figures start moving the other way: restructuring costs fell to €479,000, from €8.19m last year, while finance costs slumped by €25.4m to €6.9m, thanks to a debt restructuring. Pre-tax profits consequently surged.
Perhaps more importantly, underlying trading was bang in line with expectations. The group countered the Polish tax hike by growing its market share, improving the product mix and launching new products. That kept profits broadly flat on last year. A new deal with Diageo in the Czech Republic should help offset the loss of a similar contract, and the same also goes for a new distribution agreement in Croatia with Beam Suntory. Finance director Lesley Jackson told us she hoped to see an acquisition soon, but that progress on this front was slow.
JP Morgan Cazenove expects pre-tax profit of €57m for the full year, giving EPS of 21¢.
| STOCK SPIRITS (STCK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 293p | MARKET VALUE: | £ 586m | |
| TOUCH: | 293-293p | 12-MONTH HIGH: | 317p | LOW: 218p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 167¢* | NET DEBT: | 29% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 153 | -9.3 | -8 | 0 |
| 2014 | 138 | 19.5 | 8 | 1.25 |
| % change | -10 | - | - | - |
Ex-div: 03 Sep Payment: 26 Sep £1=€1.258 *Includes intangible assets of €352m or 176¢ a share | ||||
