In the first six months of 2012, despite very high prices of raw materials in the world markets and the economic slowdown in Europe, the results were significantly improved over those of the last year. This is mostly the result of increase in proceeds (especially in the most profitable companies in the Czech Republic and in Slovakia) and the costs optimisation programme implemented throughout the Group in 2011. The Group recorded the highest increase in sales (in %) in syrups and carbonated beverages, that is in the two segments strategic for it.
The increase in proceeds in the Czech market is a special reason for optimism, where we had a slight decrease in sales in 2011. Even higher increase in proceeds came from Slovakia, where we increased sales in both the retail channel and in the dropping HoReCa segment. We managed to increase results of sales in Russia from the level recorded in the first quarter of the year following deliveries in low-alcohol drinks in December 2011, said Jannis Samaras, President and the majority stockholder of the Kofola S.A.
Proceeds in Poland were also slightly increased, which was due to the shift in sales from traditional channels to discount facilities. The results for Hoop Cola, the flagship beverage in Poland, were good due to the increase in its market share in the cola segment.
A major part of increase in proceeds came from the novelties introduced in 2012, including 0.25l can drinks (Hoop Cola, Kofola, Pickwick Ice Tea, Vinea, Semtex), new Rajec taste waters, Jupik Aqua Sport with vitamins, Rajec water for infants and a new line of superthick Jupi syrups. The novelties, majority of which are in the impulse format, helped us (apart from increases in prices) to protect gross margin on sales.
The costs reduction programme implemented throughout the Group in 2011 brought in the first six months of 2012 PLN 10.5m in savings in costs of sale and overhead costs as compared with the first six months of 2011, as a result, along with the increase of proceeds from sales, contributing to the increases in operational profit by PLN 10.6m, i.e. 43%. The increase in operational profit translated to the increase in net profit for shareholders of the dominant unit from PLN 8.5m to PLN 14.8m.
In the first six months, the whole Group Kofola managed to reduce net debt by over PLN 57.1m, to the level of 263.5, which, along with improvement in the operational result, reduced the debt level to the safe 1.8 multiple of the EBITDA index.
The investment expenditures for purchase of fixed assets amounted only to PLN 17.9m, as compared with PLN 21.9m last year.
The simplification of the structure of the capital group continued. At the beginning of August, right after the balance sheet date, the Group was notified about completion of the liquidation process of its company in Hungary where a local distributor took over trade activities several years ago.
In the second half of 2012 we intend to introduce further innovations, based on the observations of good sale effects of this tactics. Now these will be both further taste versions of the brands already known and completely new drinks under new brands, which will appear in our portfolio in the fourth quarter of this year. We also continue observing the market in terms of interesting acquisitions. The prolonging economic slowdown, combined with the continued high prices of raw materials, resulted in tiredness of many owners of companies in the beverages industry in their management of business and are considering selling their companies, which creates some opportunities to purchase brands with potential. The industry in the region is still scattered and the Kofola Group has ambitions to be its consolidator, added Jannis Samaras.