Zwack reports rising sales, expects full-year profits over Ft 3 bln

Zwack Unicum, Hungary's best-known spirits maker, had pre-tax profit of Ft 1.863 billion (€7.1 million) on gross sales of Ft 14.468 billion in the H1 of its 2006/2007 business year, according to the company's unaudited consolidated report, prepared with International Financial Reporting Standards (IFRS) and published on Saturday. Sales were up 16.8% from the same period a year earlier, but pre-tax profits fell 6.3% because of an extraordinary item in the base period. Excluding the extraordinary item, Ft 452 million from the sale of a property in central Budapest, pre-tax profits rose a sharp 21.3%. The report also noted that the Easter holiday, a big sales period for Zwack, did not fall in the base period, raising first-half profits further. Based on the first-half results, Zwack's management raised the pre-tax profit target for the whole year to Ft 3.05 billion – Ft 3.1 billion from Ft 2.9 billion projected earlier.

Sales revenue, excluding excise duties, rose 13.6% yr/yr to Ft 9.46 billion in the H1 of the 2006/2007 business year. Exports increased 23.9% to Ft 611 million, mainly because of bigger sales in Italy and Slovakia. Gross revenue from Zwack's own products rose 15% to Ft 12.744 billion, generating operating profit of Ft 1.683 billion, 11.7% less than in the same period a year earlier. Turnover of premium products grew 16%, while sales of mid-range products were up 21% and sales of rail products rose 4%. Gross revenue from products Zwack distributes, but does not make rose 32.5% to Ft 1.723 billion. The segment generated operating profit of Ft 65 million, up 65.7%. Revenue from Zwack's wine segment rose 40%, with sparkling wine sales accounting for three-fourths of the increase. Wine sales alone were up 10%. Among costs, spending on packaging fell 80% because of a fall in stocks. Zwack had total assets of Ft 15.340 billion at the end of September, 9.9% more than twelve months earlier. Stock of liabilities came to Ft 4.411 billion, up 16.3%. Stock of cash was Ft 2.659 billion at the end of September.

The company spent Ft 724 million on investments in the H1 of its 2006/2007 business year, of which Ft 315 million was spent to build a facility to age its drinks at its new plant outside of Budapest. Zwack will soon complete a test of its Zwack Liquer product in the Unite States. Zwack is testing the market with the cooperation of Diageo North America in the states of New York and Ohio. A final decision on introducing the drink will be made in October 2007. Zwack Unicum's ownership remained unchanged. Peter Zwack und Consorten H.AG holds 50% and Selviac BV (Guiness UDV) holds 26%. The rest is free-float. (Mti-Eco)