News and current reports
Despite market downturn, Kofola manages to stay on plan
1. 6. 2023
Stable energy prices and internal cost discipline, as well as the increasing popularity of UGO fresh juices and healthy meals and LEROS herbal teas, contributed to the good result in the first quarter.
The first quarter is the least significant part of the year for beverage companies in terms of overall results. The Kofola Group has been showing stable results for a long time and this year, despite the market downturn, it has so far managed to achieve its planned targets.
"Aware of the consequences of the economic crisis, we had planned for a reduction in the volume of litres sold of our soft drinks both in Czechoslovakia and in the Adriatic. The increase in price which we had to make at the end of the year due to higher input prices has helped us to cover the fall in consumption. At the moment it seems to be sufficient," comments Martin Pisklák, CFO of the Kofola Group. "The year-on-year EBITDA growth to CZK 218 million is driven not only by the excellent result of Adriatic, but also by the continued growth of our fragrant and fresh divisions, i.e., UGO and LEROS. However, the result to date should be treated with caution. The success of the whole year is determined by the main season, and one bad month can wipe out all previous growth. But I believe we are well prepared for it."
Kofola has prepared several product innovations for this summer. The Targa Florio brand is entering the tonic category with the launch of two tonics with Sicilian ingredients. It is also innovating in the field of fermented beverages with the launch of Prager's Kombucha under the F.H. Prager brand. The group is also strengthening its presence in the functional water sector, launching Radenska FunctionALL in the Adriatic and the redesigned Semtex Street Water in Czechoslovakia. In the category of flavoured waters, Kofola in Slovakia is relaunching Rajec Tea Cold Herb.
"Although we are ahead of last year in terms of sales in Czechoslovakia, we are behind in litres. This is mainly in retail, especially in the water segment. We had counted on the fall in demand in our estimates, so we are actually exceeding our plans both in sales and litres," says Daniel Buryš, CEO of Kofola in the Czech and Slovak Republic. "With regard to our forecasts, gastro is currently doing slightly better. However, the question is how the government's proposals to change VAT will affect the entire segment and how much the resulting stabilisation package will affect the beverage business as a whole," concludes Buryš.
A positive trend in the first quarter is the overall increased interest in healthy drinks and catering. This is confirmed by Kofola's subsidiaries. "UGO is performing beyond our expectations. This is mainly due to higher sales, driven by the new loyalty programme, but also by product innovations. Among the most successful are UGO Superbowls, which are selling like hot cakes," says Marek Farník, founder and CEO of UGO, with a smile.
LEROS, which has launched new functional teas and expanded its presence in the herbal cosmetics segment, is increasing its sales in both e-commerce and traditional channels. "Today, LEROS not only sells teas – both functional and medicinal with the hallmark of the highest quality, available only from pharmacies – in total, we now sell over 250 different products, including syrups (the only ones on the market without preservatives) and natural cosmetics. This is generally a very interesting segment with higher added value," confirms Martin Mateáš, CEO of LEROS.
In terms of sustainability, Kofola has come full circle in the management of PET material. Since spring, it has started bottling Kláštorná Kalcia mineral water in 100% rPET bottles made from packaging collected through the Slovak Deposit System. Selected formats of Rajec water are now available in rPET.
A highlight in terms of the circular economy of the beverage business is Kofola's entry into General Plastic, a.s., based in Kolárov, Slovakia. It is the producer of hot-washed PET flake and PET preforms. Until now, its sole owner has been the company GP Alliance, s.r.o. of entrepreneur Ján Sabol. Since May, Mattoni 1873 and Kofola have become the owners of one-third shares.
The Kofola Group's sales development for April and May indicates that the trend of declining consumption (especially of waters and syrups) is continuing. "Nevertheless, we are still sticking to our EBITDA target, or increasing its lower limit. We expect the Kofola Group to end the year in the range of CZK 1,150 – 1,250 million,” concludes Martin Pisklák.
Further information can be found in the section Reports and presentations.