US: CEDC "disappointed" by Q3 as Russian fires quell sales
- Year-so-far net losses - just
- Healthy net profits in Q3, but sales slide
- "Expected positive trends" hit by the heat in Eastern Europe
CEDC is hoping for a strong Q4 to pull FY profits back to black
Central European Distribution Corporation (CEDC) has seen its net profits turn to losses in the first nine months of 2010, as sales in the third quarter slowed markedly.
The US-based spirits company, which operates predominantly in Central and Eastern Europe, said today that net profits of US$173m for the nine months to the end of September 2009 reversed to losses of $1.5m in the first nine months of this year. The drop into the red comes in part from a one-off gain in the first half of 2009 relating to the drinks distributor's acquisition of Russian Alcohol Group in April 2009, CEDC said. It was also hit by an impairment charge of $28.2m in the nine-month period this year.
Sales in the period were up by 11.3% to $483.2m, while operating profits plunged by 66% to $10.3m.
For the third quarter, again to the end of September, net profits performed far better, more than doubling – up 112% -to $99.9m. However, sales struggled in the period, coming in 15.9% down year-on-year at $157.8m. Operating profits held steady, lifting 7.6% to $29.1m.
“We were disappointed by the results in the third quarter of 2010, which were a result of a combination of factors including external events, currency movements, commodity prices and negative sales mix that occurred in our core markets,” said CEDC's president, William Carey. “The expected positive trends from the second quarter were heavily impacted by the record heatwave across Eastern Europe and fires which spread across key parts of Russia.”
Total vodka sales in Russia were down by around 14% in the quarter due to the external factors, Carey added.
“We were able to see strong volume and market trends in September; however, these trends were not sufficient to cover the shortfall for the first two months of the quarter.”
Carey added that CEDC will conduct its “biggest ever new product launch” in Poland next week.
While forecasting high single-digit volume growth and double-digit value growth in the fourth quarter, CEDC still lowered its full-year fully-diluted earnings per share guidance range from $2.10 and $2.20 to between $1.50 and $1.70.
To read the official announcement, click here.
Companies: Central European Distribution Corporation
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