Zwack: Price Increase and Lower Sales

Inflation has led to a drop in demand for spirits both at home and in Zwack Unicum's largest export markets, while raw material prices and personnel costs have skyrocketed, the company said in its quarterly report on the website of the Budapest Stock Exchange.

The company's gross sales fell by 10.9% to HUF 8.9 billion on an annual basis, while net sales excluding the public health product tax fell by 6.2% to HUF 5.3 billion.

The comparison is somewhat distorted by the fact that the company reported the reimbursement of brand owners of distributed products in sales this time, while in the comparison period this item was reported in other operating income.

Net sales of domestic products contracted by 7.1%, net sales of own-produced products in the domestic market by 8.6%, including premium products by 7.7%. In the premium segment, sales of Kalumba decreased the most.

Among the quality products, Kalinka achieved sales at the same level as the base, while Hubertus sales fell by more than the average.

According to the company, the overall decline in domestic sales is becoming increasingly noticeable as a result of high inflation.

On average, retail channels saw a drop in volumes of almost 12%, while wholesale channels saw a 26% drop. The high base also played a significant role in the latter.

Export markets were no remedy either, with sales falling by 13.3%. In Italy and Romania, turnover fell by 18% and 24% respectively.

The bright spots, however, were sales in Germany, up 8%, duty free sales up 12% and services up 68.1%.

Meanwhile, personnel expenses jumped by 16%. At the beginning of the financial year, the company implemented an average wage increase of 15.4%.

Operating profit fell by 36.7% to HUF 897 million, while interest income on restricted cash generated net financial income of HUF 99 million. Taxes on profit, on the other hand, fell by 20.4% overall.

As a result, the company achieved a profit after tax of HUF 805 million, 35.8% lower than the base, but still ahead of plan.