Interim Management Statement for the period from 1 January 2016

REGULATORY ANNOUNCEMENT
Pivovary Lobkowicz Group, a.s. – Interim Management Statement for the
period from 1 January 2016 to 31 March 2016
(Prague, 17 May 2016) Pivovary Lobkowicz Group, a.s. announces its Interim Management Statement
for the period from 1 January 2016 to 31 March 2016.
Trading Highlights
The unaudited consolidated results of Pivovary Lobkowicz Group, a.s. for the first three months of 2016
are corresponding with the overall change of Group commercial and financial strategy:



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Total revenues drop 16,9% yoy to CZK 198,5 million
Total revenues from beer sales amounted to CZK 191,4 million, minus 16,7% yoy
Revenues from the Czech domestic market were CZK 161,3 million, minus 14,8% yoy
Group beer volume drop 23,7% yoy to 140 974 hectolitres
Selected Financial Indicators (consolidated unaudited)
(CZK million)
Q1 2016
% yoy
Total revenues
- Beer revenues
- Other revenues
 Others
 Soft drinks
198,5
191,4
7,1
4,1
3
-16,9%
-16,7%
-20%
-4,7%
-34,3%
161,3
30,1
15,67%
-14,8%
-26,2%
-1.9 pp
140,974
-23,7%
-
Revenues Czech Republic
Revenues export
Export as % of total revenues
Total Beer Volume (hl)
Revenues
In the first three months of 2016, total revenues of the Group amounted to CZK 198,5 million, down
16.9% yoy if compared to the first three months of 2015. The revenues from the beer sales reached
CZK 191,4 million, by 16,7% yoy less than in the first quarter 2015 primarily driven by further planned
reduction of unprofitable sales in the domestic market. The revenues from the domestic beer sales in
the first three months of 2015 went down by 14,8% yoy to CZK 189.2 million. This decrease has been
primarily driven by lower off trade sales to international retail chains especially due to significant
reduction of private labels’ business (domestic as well as export). There was also reduced an intensity
of promotional activity within off trade. As a positive result of these steps the required net sales per
hectolitre as well as the prime margin increase has been achieved.
The revenues from the sale of waste malt reached in the first three months of 2015 CZK 4,1 million,
down 4,7% yoy due to lower production of beer.
In the first quarter 2016, the Group´s beer volume sold represented 140 974 hectolitres, down 23,7%
yoy. The volume of sold soft drinks declined by 34,3% to 3 hectolitres. Reason for such decrease is
termination of production (and selling) old-fashion recipe and development of new craft soft drinks.
Introduction of new soft drinks took place at the beginning of April 2016.
New on-trade customers are being acquired by signing contracts with them. The number of executed
on-trade contracts in the first quarter 2016 has been lower than initially planned. Essential matter for
beer consumption is weather, which was significantly worsen that in prior year.
Exports
In the first three months of 2016 total revenues from beer export amounted to CZK 15,2 million, down
6,7% yoy (on trade only). The total share of exports on total beer revenues represented 7,82%. Export
revenues drop on yoy by CZK 1,5 million. The export decline resulted from lower deliveries to Russia
which was impacted by the negative development of the value of Russian Rouble and changes in
distribution channels in Slovakia.
Costs
Generally, production cost development is in line with revenue decrease. Total production cost drop by
20% which is in accordance with the revenue decrease. Declining production negatively influence
allocation of fixed cost, which leads to higher production cost per hectolitre. This reduction is fully
compensated by better net sales per hectolitre.
PLG found its way how to decrease other non-production cost. There were realized savings in general
administration services and insourcing several activities. In comparison to prior 1Q 2015 there were
also realized savings arising from optimization of organization structure.
Also, PLG carried out in the first quarter 2015 more maintenance on its machinery in breweries. This is
in line with our strategy to be fully focused on value added & high quality beers. Very positive is also
the continuing costs decline in areas of interest expenses, energy and leasing expenses (termination of
leasing of bottling line in Protivín Brewery).
Marketing & Brands
During the first quarter of 2016, PLG has started a new stage of its marketing effort. Unique BTL
activities as “Černohorský pivní pas” or Klášter gift competition have been supporting customer´s
loyalty to certain pub were supported by new way of communication being in line with new
propositions of PLG brands There was also new ATL campaign („The Art of Living“) introduced for
Lobkowicz brand in February and March. As a result of this campaign the Lobkowicz branded premium
portfolio continued in the last three quarters’ growth.
In accordance with the marketing and sales strategy, there were introduced few special beers dedicated
to seasonal celebrations and significant days. First of them was Carnival special brewed during the
February. Carnival special is beer with full malt body and a distinctive bitterness with a subtle lemon
flavour, thanks to the method of cold hopping with special varieties of hops.
As usual, Pivovar Ježek brewed for Easter occasion special green beer. Green colour symbolizes start of
the spring and reminder of Christian feast. Easter special start to tap on Maundy Thursday and is on
tap for approximately a week.
For the summer season, the Group prepared a promotion campaign targeted to its regional brands.
This promotion campaign will be focus on local regions and shall commence on 1 June 2016. Further
significant marketing activity is being prepared for Lobkowicz brand during the Q2 (also connected with
2016 Ice Hokey World Championship).
Outlook for the rest of 2016
For the rest of 2016, the Group will continue to focus on sales performance in terms of higher revenues
per hectolitre sold. In accordance with approved strategy, PLG focus in strengthening own position in
the regions, where the breweries are physically located and PLG brands are traditionally strong. Our
further support of premium brand Lobkowicz is more focused on bigger towns (as Prague). One of
priorities is further development of our own life-style pubs concept ŠNYT. Key aim at domestic market
is to keep current ratio of draught beer versus bottled beers.
Export strategy should take advantage of highly positive perception of Czech beers abroad by
strengthening long-term cooperation with existing foreign distributors and acquiring new distributors.
Beside strong export markets in Europe, Group plans to significantly increase sales to China. Entrance
to China market is scheduled in Q3 2016 in cooperation with majority shareholder CEFC and its business
partners.
In addition, the Company shall further focus on sales of higher margin premium beers and special
beers. The aim is to be able to meet the changing customer requirements and promptly react to market
trends, introduction of new beer types while maintaining economies.
For more information please contact
Pivovary Lobkowicz Group, a.s.
Lucie Tučková, spokeswoman
Tel: +420 731 686 091
E-mail: [email protected]
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