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Stock Spirits moves upmarket

The group has beaten its two-year 'premiumisation' target
December 4, 2019

Stock Spirits (STCK) has been looking to drive growth through its 'premiumisation' strategy – repositioning its brands as more prestigious and more aspirational. It adopted the strategy as a key pillar of its growth plans two years ago, and has already beaten its target of generating 30 per cent of revenues from premium brands, reaching 31.7 per cent in the year. 

IC TIP: Buy at 200p

The group has changed its financial year-end, flattering the reported numbers, but on a pro-forma basis it still achieved constant-currency sales growth of 10.1 per cent, with adjusted cash profits up 7.3 per cent. Strong performance in both Poland and the Czech Republic drove volumes up 8 per cent. 

Stock Spirits is the third-largest volume player in the European spirits market, and management is betting it can continue its growth through consolidation of local spirit companies. In the year it made two acquisitions – Czech-based Bartida and Italian grappa business Distillerie Franciacorta. Chief executive Mirek Stachowicz said the group would look to make further deals where it could find companies with strong local brands it could enhance. “We know how to premiumise brands,” he said. 

Broker Numis is forecasting adjusted EPS of 20¢ (16.9p) for the September 2020 year-end, up slightly from 19.7¢ in FY2019.

STOCK SPIRITS (STCK)  
ORD PRICE:200pMARKET VALUE:£400m
TOUCH:199.8-201p12-MONTH HIGH:241pLOW: 188p
DIVIDEND YIELD:3.8%PE RATIO:17
NET ASSET VALUE:181¢*NET DEBT**:9%
Year to 30 SepTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
201526331.510.04.60
201626139.214.07.70
201727027.35.708.10
2018†19426.59.718.50
201931238.214.38.94
% change+61+44+47+5
Ex-div:30 Jan   
Payment:21 Feb   
*Includes intangible assets of €377m, or 188¢ a share £1=€1.18 **Does not include lease liabilities £11m †Nine-month period, all prior periods ended on December 31