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The Kofola Group's revenues and costs grew significantly in the second quarter of the year. Management has therefore refined the annual EBITDA target.

1. 9. 2022

The positive trend in the development of Kofola Group's sales from the first quarter of the year also continued in the second quarter. Sales in this period exceeded expectations, growing by 23% year-on-year, and reaching CZK 3.717 billion in the first six months - CZK 763 million more than in the first six months of last year, and an all-time record. All parts of the Group experienced good growth: Kofola in the Czech Republic and Slovakia, companies in the Fresh&Herbs segment, and the Adriatic region. However, the high sales growth was accompanied by significantly increased costs, led by energy, material inputs, and salary costs. As a result, the Group's operating profit fell by 19% year-on-year in the second quarter. In view of this development, the Group's management refined its estimate of the annual EBITDA target to CZK 1.080 – 1.150 billion. It will also propose to the General Meeting a slight reduction in the dividend to CZK 11.30 per share.

"In terms of volumes and revenue, the second quarter reinforced the positive trend from the beginning of the year, when we were doing well in sales - not only year-on-year, but also historically. June's Czechoslovak sales are the highest in history. Like the sales of the entire Group, LEROS, UGO, and the Adriatic region had a very good quarter. In addition, we were able to achieve significant growth in operating EBITDA in these segments. However, we are facing extreme cost growth in the Czech Republic and Slovakia.  This was reflected in the overall results. In order to minimize the impact of input growth on the annual financial target, we have adjusted our plans and activities for the rest of the year," comments Jannis Samaras, CEO of Kofola Group, on the quarterly results.

Open market and active consumers

While last year the market was affected by pandemic restrictions until May, this year the situation is completely different. "The openness of the market has fully manifested itself in society. Since the beginning of the year, we have seen increased activity from people in all markets. People want to spend time actively outdoors, travelling, going to concerts and other events, enjoying holidays. All of this was reflected in increased demand in all segments. Significant year-on-year increases were recorded, especially in On the go and gastronomy segments, which, naturally, have been positively influenced by this trend," says Martin Pisklák, Kofola Group's CFO.

Kofola ČeskoSlovensko was well prepared for this development. In addition to its standard portfolio, led by Kofola on tap, it entered the main season with a number of new products launched in the first quarter. At the end of April, it expanded its offer with a key innovation in the area of sustainability and packaging circularity - the Cirkulka project, which offers consumers Kofola, Rajec, and Vinea in returnable glass litre bottles.  "The expert analyses we commissioned show that returnable packaging is one of the best solutions with regard to the environment. I am glad that neither the pandemic nor the difficult economic situation prevented us from realising our dreams and that we have brought the Cirkulka project to a successful end, or rather, beginning," says Jannis Samaras. With a new design, and, what’s more, with newly fine-tuned recipes, F.H. Prager cider is now on the market. The portfolio includes three types of alcoholic ciders and the very first Czech cider in a non-alcoholic version, which is already gaining success on the international cider scene.

The increased movement and activity of people, including visits to gastronomic establishments, also had a very positive effect on the growth in sales of both LEROS and UGO. Both contributed to the more than 50 percent year-on-year growth in sales of the Fresh &Herbs segment. Its EBITDA in the second quarter increased by as much as 73% year-on-year.

The Adriatic region has seen a resurgence, thanks to people's active lifestyles and increased tourism in the new holiday season. In both Croatia and Slovenia, sales in the second quarter increased by more than 25% year-on-year. Exports also rose. EBITDA in the region grew by 21%.

Rising prices, savings and financial discipline

"Since the beginning of the year, sales of the entire Kofola Group have continued to grow beyond our expectations. However, we are facing enormous pressure on the cost side. We have had to respond to this trend by increasing the price of our products and by making savings. We continue to operate in a regime of financial discipline. We have entered into an amendment to our loan agreement with our banks to change the currency of 60% of our loans from CZK to EUROs, which should lead to significant savings in interest costs. At the same time, the regular quarterly principal repayments have been reduced. We remain optimistic about achieving our annual financial target. However, given the development of the situation, we have refined our estimate of the annual EBITDA target to CZK 1.080 - 1.150 billion," comments Martin Pisklák, CFO of Kofola Group.

Slight dividend reduction

"Despite our record sales, we must react responsibly to the cost trends and the expected market slowdown. We want to prepare the Kofola Group as well as possible for the coming period. We are therefore reviewing our investment plans and looking for further potential savings to increase our efficiency. We have also decided to propose to the General Meeting for approval a slightly lower dividend than in previous years - CZK 11.30 per share. I believe that with these measures we will manage the upcoming period and meet our targets," adds Jannis Samaras, CEO of Kofola Group.

Further information can be found in the section Reports and presentations.