Kofola Group – consolidated results for 2010

Despite difficult market situation (high unemployment rate, aggressive promotions of competitors, increase of material prices) and unfavorable weather conditions, Kofola Group reached adjusted consolidated net profit assigned to shareholders of parent company in amount of 12.6 million PLN in 2010. Adjusted EBITDA (operating profit adjusted for depreciation charges and impact of one-off non-recurring accounting transactions) amounted to 114.3 million PLN.

Year 2010 was for Kofola Group difficult mainly due to unfavorable weather conditions – long and frosty winter and big snowfalls. These were the main factors which caused people decreased consumption of non-alcoholic drinks and also transport became more complicated. The situation was even worse during spring floods in Czech, Poland and Slovakia. Since January 2010, new legal regulation has prohibited alcohol promotions and has increased alcohol excise duty in Russia. Additionally, sale of alcohol after 10p.m. became prohibited in second half of the year. Also Kofola’s competitors, who started aggressive price promotions – mainly in cola drinks segment, have affected .
difficult market conditions.

All of these factors had a significant impact on decrease of Group sales what caused, together with selling costs (increased in all countries at the end of 2009) and logistic costs (model of direct distribution), the decrease of adjusted consolidated net profit in 2010.

Consolidated results in 2010 (consolidated net loss of 28.6 million PLN) were affected by one-off non-recurring costs of 43.2 million PLN. Brands were tested for impairments and some of them resulted in adjustments amounted to 33.9 million PLN. Additionally, impairment of unused fixed assets in amount of 6.4 million was recognized and restructuring provision of 2.9 million PLN was recognized in Hoop. – says Jannis Samaras, Chairman of Board of directors and majority shareholder of Kofola Group.

However material prices increased, gross profit rent ability unchanged due to product mix improvement and production optimization in 2010. We successfully decreased administration costs by 3.9 million PLN, financial costs by 18.9 million PLN, net debt by 46.2 million PLN and working capital by 26.9 million PLN.

We have aunched few of new innovative products which were very successful in Czech and Slovakia – e.g.: flavoured waters Rajec “Mystery of trees”, natural spring water with Rajec with oxygene and Orangina (produced in license from Orangina Schweppes Internationa).

2011 just began and it will be not an easy year. We have to deal with high material prices (sugar, packages, fruit concentrates) and fuel which increases the product price in the stores. We will increase our presence in gastronomy segment, improve our productivity, reduce selling, logistic and administration costs. We will improve working capital management as well. – says Jannis Samaras, Chairman of Board of directors and majority shareholder of Kofola Group.