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Stock Spirits' bar brawl yields positive results

The eastern Europe focused drinks maker overhauled its management team and regained market share in Poland by reducing prices
March 9, 2017

The well-documented battle between Stock Spirits' (STCK) board and its largest shareholder, activist fund manager Western Gate Private Investments, resulted in a series of sweeping changes in 2016. Chief among them was the installation of new boss Mirek Stachowicz, who was tasked, above all, with regaining market share in the group's core Polish market.

IC TIP: Hold at 179p

Under Mr Stachowicz's supervision, the maker of premium branded spirits and liqueurs immediately made moves to overhaul its management team and recruit experienced sales personnel. Somewhat tellingly, only one new role was handed to an internal candidate. Efforts were then made to reduce prices in line with local competitors in Poland. Cost-saving initiatives were implemented to cushion the impact of heavy discounting, including closing the group's Swiss office and abandoning new product launches.

A cut in prices succeeded in driving volumes in Poland up 5 per cent. Meanwhile, Mr Stachowicz is confident that Stock Spirits will continue to regain market share in the year ahead after the group's main competitor, Roust, filed for bankruptcy and the other leading player, Marie Brizard, signed over its distribution to Eurocash.

Analysts at Numis expect adjusted pre-tax profit of €38.6m in 2017, leading to adjusted EPS of 13.4¢, up from €36.2m and 12.6¢ last year.

STOCK SPIRITS (STCK)
ORD PRICE:179pMARKET VALUE:£358m
TOUCH:178-180p12-MONTH HIGH:185pLOW: 131p
DIVIDEND YIELD:2.6%PE RATIO:15
NET ASSET VALUE:174¢*NET DEBT:17%

Year to Dec 31Turnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
2012**29229.00.2nil
2013341-8.75.0nil
201429349.018.03.80
201526331.510.04.55
2016***26139.214.05.45
% change-1+25+40+20

Ex-div: 4 May

Payment: 26 May

*Includes intangible assets of €364m, or 182¢ a share **Pre-IPO figures ***Does not include special dividend worth 11.9¢ a share paid in July 2016 £1=€1.15