Zwack Earnings Fall After Stockpiling

Drinks

After-tax profit of Zwack Unicum, Hungary's biggest spirits maker, fell 18% year-to-year HUF 745 million in the second quarter of its business year started April 1, after stockpiling in the first quarter, ahead of tax changes and price hikes, state news wire MTI writes, citing an earnings report.

Zwack's net revenue dropped 4% to HUF 4.2 bln. Domestic sales fell 7% after a spike in Q1 turnover as customers brought forward purchases ahead of tax changes in effect from July 1. 

While the excise tax on alcohol rose by nearly 70% from July, spirits were removed from products to which the public health product tax (NETA) applies. Zwack said the combined effect of the measures raised its tax burden related to alcohol by 6%. To counter that impact, along with the effect of higher raw materials and packaging costs, Zwack announced a 7% price rise, on average, in June, causing wholesalers to stock up.

For the second part of its business year, Zwack augurs a "drastic drop" of "as much as 30pc" in consumption as consumer purchasing power declines because of inflation, but it said earlier guidance for full-year after-tax profit of HUF 2.2 bln is still "realistic".

Zwack noted that first-half CAPEX came to HUF 644 mln. Almost half of that money went toward geothermal and solar power facilities at Zwack's plant in Dunaharaszti, on the outskirts of the capital. The investment will cut gas usage at the plant by almost 90%.

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