Kofola, despite devastating floods, is heading towards the upper limit of its annual financial result. Price trends and the development of the beverage industry are influenced by government decisions
The Kofola Group published its financial results for the second quarter, confirming the well-managed operations of this family-owned beverage company. All beverage pillars performed well, with draft beverages experiencing the highest growth among all formats. Considering the successful summer season, Kofola, despite the consequences of the devastating floods, is expected to reach the upper limit of the announced full-year financial result (EBITDA).
In the second quarter, Kofola's beverage sales and EBITDA both increased. “The second quarter was successful for us. Compared to the same period last year, we increased our revenue by 13%,” said Daniel Buryš, CEO of Kofola ČeskoSlovensko, adding: “We saw increased sales across all formats. Draft beverages were the most successful, growing by 7%. Individual brands also showed success – Kofola grew by 10% year-on-year, and significant growth was also seen in the mineral water brands Korunní and Kláštorná Kalcia.”
Kofola's management sees great potential in the development of its Fresh & Herbs business. UGO, which supplies fresh fruit and vegetable juices and operates a network of Salad Bars and Fresh Bars, saw a 23% increase in revenue compared to last year. “The success came primarily from packaged pascalized juices, lemonades, and smoothies sold in selected retail chains. The quick-service restaurant (QSR) division delivered exceptional results in both revenue and profitability. As the business model becomes more attractive, interest in developing UGO Fresh Bars and Salad Bars is growing significantly, both from new potential franchisees and existing ones,” confirmed Marek Farník, CEO of UGO Trade. The company plans to expand in Prague, while in smaller towns like Olomouc, Fresh Bars are being upgraded to Salad Bars. New branches are also being opened in other cities, with a Fresh Bar soon to be opened in České Budějovice.
Leros and Premium Rosa, also part of Kofola's Fresh & Herbs pillar, successfully managed the off-season months and are prepared for the upcoming autumn season.
Kofola's Adriatic region showed strong sales in both markets in the first half of 2024. Despite challenging weather conditions in Slovenia and Croatia, sales increased by 13% year-on-year. “Although we faced heavy rains and storms that impacted overall sales and caused damage to the Radenci plant, we achieved good results. Slovenia saw a 5% increase, Croatia 12%, and our export sales grew impressively by 8.5%. We are especially pleased with the double-digit growth in Croatia,” said Marián Šefčovič, CEO of Radenska Adriatic. This year, Kofola in the Adriatic region decided to strengthen the Radenska Naturelle brand and, after a successful redesign of traditional Kofola, launched the transformation of the strong Slovenian brand Oraketa.
At the beginning of the year, Pivovary CZ Group became a significant pillar of Kofola. Thanks to good sales, which grew by 13%, their EBITDA exceeded expectations by 12 million CZK. “We achieved this result primarily due to higher sold volumes, which covered rising costs. The most successful brand in terms of marketing was Zubr, which won the PIVEX 2024 competition, with Zubr Grand winning gold in the pale lager category,” said René Musila, CEO of Pivovary CZ Group.
The growing revenues of the entire Kofola Group are also reflected in its rising EBITDA, which, thanks to the stabilization of energy and material input prices, grew by 66% in the second quarter compared to last year. Summer also indicates good results. Therefore, Kofola's management believes that, despite the damage to the Krnov plant and two beer plants, the excellent season will reflect in the success of the entire year. “Flood damage is estimated to be between 100 to 200 million CZK, part of which will be covered by insurance. The Krnov plant will take the longest to recover, but we can ensure smooth operations thanks to other plants. At this point, I believe we are heading toward the upper end of the EBITDA outlook, nearing 1.8 billion CZK,” concludes Martin Pisklák, CFO of the Kofola Group.
Kofola launched the #zlasky project to help the affected localities. Through a public collection, which it is implementing with the Horní Dolní Association on the Donio.cz portal and to which it has donated CZK 10 million, it wants to invite the public to support specific families and individuals from Krnov, Hanušovice, Litovel and the surrounding area.
In terms of acquisitions, Kofola will focus on stabilizing its new units but is also looking for further opportunities within its segments. The biggest risks to Kofola's growth strategy come from changes in government regulations. The sugar tax in Slovakia, set to be introduced in 2025, could lead to approximately a 10% impact on Slovak sales next year, as well as price increases for products, according to Martin Pisklák. Similarly, the beverage industry could be significantly affected by the Slovak government's interventions with the functioning deposit system. In the Czech Republic, the approval of the system is still pending, with optimistic scenarios suggesting it could be launched by 2027.
