Stock Spirits (STCK) entered its half-year period assuming excise duty rises in Poland and the Czech Republic would be its biggest concern. Excise duty rose 10 and 13 per cent, respectively, in its two key markets, which account for 84 per cent of the spirits manufacturer’s turnover, and Stock took the opportunity to increase some pricing in Poland. Polish drinkers, meanwhile, traded up to higher-quality vodka with higher prices, and premium vodka sales grew here by almost a fifth.
Stock says that the impact of venue closures has been mitigated by the shift to consuming its products at home. Yet coronavirus has since prompted it to take measures to ensure a supply of customers, building up stock levels and extending payment terms with some customers, who are typically wholesalers. This increase in working capital pushed free cash-flow conversion down to 58.9 per cent from 93.5 per cent in last year’s comparable period.
The coronavirus has also led to Stock markedly writing down the value of its minority stake in its Quintessential Brands Irish Whiskey joint venture. In 2017, it agreed to take a stake of 25 per cent in the Dublin distillery in a deal worth up to €18.3m (£16.2m). Covid-19’s hit to tourism and uncertainty over the distillery’s recovery in sales prompted a €14.2m impairment to the value of Stock’s investment, leaving its carrying value now at €2.1m.
Broker Numis forecasts full-year 2020 pre-tax profits of €49.1m and earnings per share of 19¢, rising to €54.2m and 20.5¢ in 2021.
STOCK SPIRITS (STCK) | ||||
| ORD PRICE: | 212p | MARKET VALUE: | £479m | |
| TOUCH: | 211-214p | 12-MONTH HIGH: | 241p | LOW: 120p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 175¢* | NET DEBT: | 16%** | |
| Half-year to 31 Mar | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 157 | 12.7 | 2.99 | 2.63 |
| 2020 | 190 | 22.8 | 7.41 | 2.77 |
| % change | +21 | +80 | +148 | +5 |
| Ex-div: | 28 May | |||
| Payment: | 19 Jun | |||
| *Includes intangible assets of €365m, or 183p a share **Includes lease liabilities of €12.8m £1=€1.13 | ||||
