The market thirstily imbibed drinks maker Stock Spirits Group's (STCK) half-year results, sending the shares up 10 per cent on the day they were released. The move to publish full-year guidance for the first time - full-year cash profits of €60m-€68m - may have helped gloss over the precipitous drop in adjusted operating profits to just over €5m (£3.6m).
Chief executive Chris Heath summed the performance up in sober fashion as "disappointing". The main issue was the eastern European group's hefty exposure to the Polish market. A confluence of factors - an excise duty increase in January 2014, aggressive competitor pricing and a change of the local management team - weighed heavily on trading in the first quarter, but business improved thereafter.
Lesley Jackson, chief financial officer, said the group had a clear plan that involves, among other things, focusing on premium brands and not chasing low-margin volume trade. It also has what management views as a strong pipeline of new products, and has renegotiated customer agreements in Poland to discourage what it described as "erratic customer ordering patterns" - customers holding out to the end of the period in hope of a better deal. The Czech Republic, Slovakia and Croatia all posted positive numbers.
Analysts at house broker Nomura expect pre-tax profit of €39m, leading to EPS of 14¢, down from €49m and 18¢ in full-year 2014.
| STOCK SPIRITS (STCK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 192.75p | MARKET VALUE: | £386m | |
| TOUCH: | 1192-193p | 12-MONTH HIGH: | 316p | LOW: 172p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 176¢* | NET DEBT: | 26% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 138 | 19.5 | 8.0 | 1.25 |
| 2015 | 108 | 2.0 | nil | 1.25 |
| % change | -22 | -90 | -100 | - |
Ex-div: 27 Aug Payment: 25 Sep *Includes in tangible assets of €360m, or 180¢ a share £1=€1.37 | ||||
