Financial results of Kofola Group in 2009 – Strong brands immune to crisis

Kofola S.A. – the soft drinks producer, operating in Central and Eastern Europe – has achieved in 2009 consolidated sales revenue in excess of 1.5 billion PLN. Consolidated net profit amounted to 72.6 million PLN and net profit attributable to equity holders of the parent –62.3 million PLN, which represents an increase to the results of 2008, representatively: 37.5% and 533.4%.

The Group increased its revenues and improved profitability significantly, despite adverse changes in the environment resulting from the crisis.

2009 was a year of operational integration of the acquired company – Hoop Polska – to the structures of the Capital Group, organizing and optimizing the operations of the Kofola Group. Kofola S.A. incorporated the following companies: Paola S.A. and PPWM Grodziska Sp. z o.o within the integration and sold the subsidiary distribution company Maxpol Sp. z o.o. Implementation of the SAP system in Poland was a completed successfully. The group has consistently invested in the promotion of their most important brands (Kofola, Rajec, Vinea, Hoop Cola, Jupi, Jupik and Paola),what resulted in good sales results, which were above the market (in Czech Republic, Russia and Slovakia).

We have increased our revenues and improved the profitability of the business, despite the fact that all markets in the region were affected by the financial crisis. – said Jannis Samaras, President of Kofola S.A. – Group EBITDA margin improved by 1 percentage point to 13.6% and net profit margin up by 3.7% percentage points to 4.7%. We owe the improvement of the financial results to the concentration of sales on the most profitable brands, better control of operational costs, suppliers’ greater willingness to negotiate prices and to the centralization of purchases strategic raw materials. In addition, we reduced our financial costs by reducing working capital requirements. We have maintained the second position on the Slovakian market, the third in the Czech Republic and the sixth in Poland by improving sales force effectiveness and consistentbrand building. We managed to reduce the net dept by more than 110 million PLN, despite the realized investment plan of nearly 83 million PLN, and this is mainly thanks to a successful program to optimize the Group’s working capital. Financial results would be even better if Euro hadn’t been strengthened on the costs of raw materials in Poland and Czech Republic.

2009 was very successful year for Kofola Slovakia and Megapack in Russia. These companies have developed the best financial results in its history. In case of Slovakia, it was an outcome of good results of the strongest brands: Kofola, Rajec and Vinea and in case of Megapack it was due to the sale of low-alcohol products strongly above average in the market.

The company realized in 2009 a number of investments; the most important of those was finishing the construction of the warehouse and production hall at the plant Rajecka Lesna in Slovakia. The value of this project was approximately 47 million PLN. What’s more, Kofola S.A. launched a direct distribution on the Slovak market, so that it will gradually improve its margins, which previously had to share with distributors.

2010 will be a very interesting year, mostly because of the 50-year-anniversary of the Kofola brand. On this occasion the Group has planned a series of marketing and PR activities, which should result in an increase of sales of this popular drink. Direct distribution in Slovakia addressed to shops and restaurants will be developed. Streamlining of internal processes and cost optimization will be continued. The company planned to introduce a series of innovations in 2010, such as: Jupik Shake, ice tea Pickwick - Just Tea, new flavored waters Rajec and fruit drinks from Top Topic portfolio. In Poland activities will be focus on three key brands: Hoop Cola, Paola syrups and Jupik – drinks for children.

It is also planned to introduce a new category of beverages. Quality of distribution and efficiency of sale forces will also be improved.

Selected consolidated financial data for the years 2008-2009:

(000 PLN)20082009growth y/y
Revenues 1 114 116 1531985+37.5%
EBITDA 140 378 207 704 +48.0%
EBITDA margin 12.6% 13.6% +1.0 p.p.
Operating profit 57 680 118 885 +106.1%
Operating margin 5.2% 7.8% +2.6 p.p.
Net profit 11 465 72 620 +533.4%
Net margin1.0% 4.7% +3.7 p.p.