SWEDEN: V&S reports strong profit growth despite sales dip
V&S Group has reported double digit growth in both operating profit and profit after tax in its first quarter, despite a fall in net sales, which were hit by exchange rate fluctuations.
Operating profit increased by 10% to SEK458m (US$68.2m), whilst profit after tax increased by 21% to SEK303m, the company said today (27 April). However, net sales decreased by 1% to SEK2.2bn. Exchange rate fluctuations reduced sales by approximately SEK100m.
"It is very pleasing to see that our efforts to focus V&S are continuing to yield results. A focus on prioritised markets, prioritised products and lower costs have contributed to our strong figures," said Bengt Baron, CEO of V&S Group.
Sales volumes increased by 5% to 5.5m 9-litre cases , driven by the continued strong performance of Absolut vodka, which rose 10%.
In V&S Absolut Spirits, the group's business area for international brands, operating profit increased by 1% to SEK429m. Net sales decreased by 3% to SEK1.28bn. Adjusted for exchange rate fluctuations and divested units however, net sales rose by 4% and operating profit by 15%. Volumes were up 8% to 2.5m 9-litre cases, primarily due to higher sales volumes for Absolut and the premium rum brand Cruzan Rum, which was acquired in 2006.
"Sales of Absolut vodka are continuing to develop well both in the US and other prioritised markets. In the US, Absolut Vodka grew both in terms of volumes and sales in dollars. The total global volume growth for Absolut Vodka was 10%. It is my hope that Absolut Vodka will continue to develop well during the year," said Baron.
The V&S Distillers business area saw a 27% increase in operating profit to SEK36m, mainly due to higher sales in Poland. The V&S Wine business area had a weak quarter, reporting an operating loss of SEK6m, mainly attributable to lower sales in Denmark.
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