Zwack Unicum : Half yearly Report

About this update from Zwack Unicum Nyrt.

Quick Report on the results of the Zwack Unicum Plc. in the first half of the 2024-2025 business year The Board of Directors of the Zwack Unicum Plc. has approved the Management's report about the results of the Company in the first half of the 2024-2025 business year. The data have not been audited. 1. Analysis of the Management Report Total gross sales of the Company were HUF 18 234 million - a year-on-year increase of HUF 1014 million (5.9%). The total gross sales include revenues from the deposit-refund system (DRS), which was introduced in Hungary on 1 January 2024. During the first half of the business year they amounted to HUF 165 million. Net sales (that is, sales revenues minus excise tax and revenue from DRS deposit fee) were HUF 11 289 million, a year-on-year increase of 8.6% (HUF 890 million). In the first half of the business year the net domestic sales of products had a year-on-year increase of HUF 472 million (5.3%). Net sales of own-produced goods in the domestic market had a year-on-year increase of HUF 565 million (8.5%) (HUF 7240 million instead of HUF 6675 million). Broken down in more detail, sales of premium products increased by 11.1% while sales of the quality products hardly edged upwards. Within the premium category the sale of products belonging to the Unicum brand increased by 12,8% and that of products belonging to the Kalumba brand increased by 37,1% while that of other drinks in the premium category increased to a lesser extent. Net sales of traded products had a year-on-year decrease of 4.2%. Broken down in more detail, the revenues of the Diageo portfolio went down by 1.4% and the revenues of the other traded products decreased by almost 18%. In the latter category the revenues of wines came down more than the average decrease for that category. 1 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) According to the April-September 2024 market research data for the retail turnover, the Hungarian country-wide taxed spirits market decreased by 4.1% in volume and stagnated in value. In the same period, this Company's sales of spirits in the retail category had a year-on- year increase of 6.5% in volume and a year-on-year increase of 12.6% in gross value. The grace period of the deposit-refund system (DRS), which was introduced in Hungary in January 2024, expired on 30 June 2024. The Company had to fulfil tough tasks: handle related administration and IT solutions, packaging, the procurement of labels, and organize related production. During the first quarter the Company managed to complete most of the task of introducing into the market its newly labelled, returnable bottles - carrying the label showing that consumers are entitled to a deposit of HUF 50. The Management of the Company coordinated the replacement of bottle labels successfully and on time. That is why the introduction of the DRS system had little influence on the size of the turnover in the first quarter of the business year. Following a relatively weaker first quarter of the business year, during the second quarter the volume of products sold in the domestic market reached the level of the previous business year while its sales revenue was by 6.1% higher. The Company's sales revenue in retail continues increasing thanks mainly to the dynamically growing discount channel. However, volumes continue decreasing in the wholesale and revenues from that category were at par with that of the previous business year. Exports fetched HUF 1205 million - a year-on-year increase of 15.1% (HUF 158 million). As it has been decided to increase export's share in total revenue, in this business year the Unicum brand is being supported with television campaigns in several important target markets. During the first quarter new, country-specific television commercials of the Unicum brand were broadcast in Romania and Slovakia and that was an important factor in raising sales there. In summer the Company organized an intensive advertising campaign of several weeks in Italy as encouraged by the success of similar campaigns in previous years. In the second quarter export earnings had a year-on-year increase of nearly 13%, which was mainly due to exports to Germany, where sales jumped by over 140%. Revenues from the Duty-free category also increased considerably (by 25%) in the second quarter. Revenues from services were HUF 755 million - a year-on-year increase of 52.5% (HUF 260 million). The earnings derived from marketing expenditure reimbursement paid by brand owners went up. Material-type expenses decreased by HUF 179 million (4.4%) while the net sales went up by 8.6%. The gross margin ratio was by 4.6 percentage points higher than a year before (65.3% instead of 60.7%). Decrease in the per unit price of materials was due to decrease in the prices of raw materials purchased and a favourable change in the product mix (the ratio of own- produced high-margin products went up). The employee benefit expenditure rose by HUF 189 million (9.2%). At the beginning of the business year the Company gave an across-the-board pay hike averaging 12%. The Annual General Meeting of 26 June 2024 resolved to pay a dividend of HUF 1400 per share. Under the 2 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) IFRS, the dividend payable after liquidation preference shares, and any change in related liabilities, have to be posted as a personnel type of cost. Consequently, the dividend that was lower than in the previous business year decreased the employee benefit expenditure by HUF 11 million and the change in related liabilities reduced the employee benefit expenditure by HUF 21 million. Overall, there were no noteworthy changes in the other employment benefit expenditure. Overall, depreciation decreased by HUF 12 million (3.7%). Depreciation figures were almost identical for property, plant and equipment as well as the immediate depreciation of pallets. The other operating expenses had a year-on-year increase of HUF 854 million (33.7%). That was mainly due to increase in marketing expenditure (which amounted to HUF 554 million). In the first half of the business year the Company increased expenditure especially on festivals and other events to promote the image of traded products, and on television commercials of Unicum Brand in export markets. The expenses grew by a total of HUF 129 million due to the joining fee and service fee the Company paid when joining the extended producer responsibility (EPR) system - introduced in July 2023 - and the fees paid when joining the deposit-refund system (DRS), introduced in January 2024. Furthermore, there was an overall year-on-year increase of 126 million in expenditure in the following areas: transport charge (HUF 33 million), costs of maintenance (HUF 32 million), fees paid to experts (HUF 34 million) and fees paid for labour recruitment services (HUF 27 million). In other operating expenses not mentioned above (especially property surveillance, warehousing, insurance, operating costs, sewerage charges and IT services) there was an increase of HUF 45 million. The other operating income decreased by HUF 64 million (72.7%). Income from the sale of packaging materials went down by HUF 20 million because - unlike during the first half of the previous business year - unused pallets were not sold. The profit from the sale of used motorcars showed a year-on-year decrease of HUF 25 million and the exchange-rate gain had a year-on- year decrease of 19 million. The profit from operations stood at HUF 1461 million - lower than that a year before by HUF 26 million (1.7%). During the period under review the Company gained a net financial income of HUF 74 million - the exact amount of interest income derived from the Company's fixed deposits in banks. Total taxes levied on profits grew by HUF 17 million. The corporation tax the Company had to pay was by HUF 9 million (6.8%) lower. The local business tax and the innovation contribution went up by HUF 28 million (14.8%) however the deferred tax expenditure showed a year-on- year decrease of HUF 2 million (28.6%). The Company's profit after taxation in the first half of the business year was HUF 1190 million, which is lower than that a year before by HUF 75 million (5.9%) but is slightly above the plan target. 3 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) Cash and cash equivalents dropped by HUF 580 million (31.5%). The main cause of that change is as follows: in the previous business year, the Company's account temporarily showed a credit of HUF 1155 million but in the current business year it has not had to raise a credit. Note that in this business year the Company paid in dividends HUF 600 million less than a year before. There were no further noteworthy changes in the lines of the balance sheet. The Zwack Unicum Plc. spent HUF 435 million on fixed assets during the first half of the business year. A considerable part of that sum was spent on maintaining the Company's fleet of motorcars, strengthening market promotion and retrofitting the Heritage Visitors' Centre with the rest having been spent mostly on improving the efficiency of operation and promoting the Company's other manufacturing efforts. Purchase of a labelling machine for our plant in the town of Kecskemét is underway, and during the first half of the business year an advance of HUF 32 million was paid for that purchase. 2. Business Environment of the Company Zwack Unicum Plc. is the biggest player in Hungary's spirit market. As the Hungarian domestic market accounts for nearly 90% of the Company's revenues from selling products, the domestic demand plays a decisive influence on the Company's results. In the pre-pandemic period, the consumption of premium alcoholic drinks increased in Hungary but in 2020 it sharply fell amid the pandemic conditions. Following the post-pandemic bounce-back, consumption considerably decreased, which in turn was caused by a steep inflation and a related drop in real wages. Then disinflationary measures were swiftly introduced, and in their wake, the decline in consumption was reduced in the past half a year. 3. Objectives and Strategy of the Company The Company's primary activity is producing and selling branded premium and quality alcoholic drinks. The principal aim of Zwack Unicum Plc. is to maintain its market leading role in spirits in Hungary. Furthermore, we aim to strengthen the export markets. In Hungary the Company is the official distributor of several international brands like the Diageo portfolio. Thus, in addition to the self-manufactured premium brands of outstanding importance in the Hungarian market (Unicum, Fütyülős, Vilmos, St. Hubertus, Kalumba and Kalinka), Zwack Unicum Plc.'s portfolio is enriched by world brands such as Johnnie Walker, Baileys, Captain Morgan and Tanqueray. With such a portfolio our Company offers an impressively rich assortment of branded products for consumers. Product innovation and successful product launch are crucial means of keeping and strengthening the market leader position. Regarding exports, we intend to increase their share 4 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) in sales revenue of products from an actual 11% to 15% in the next three years. The Company's principal export markets are Italy, Germany, Romania and Slovakia. As from autumn 2019 the Company has been exclusively using green electricity. Having completed a project to have a heat pump and solar panels installed in our plant at Dunaharaszti, the Company is planning further steps to introduce into its operation components of the circular economy. Assessment and design of further investments in green projects are underway (affecting our plants each in Kecskemét and Soroksári plant in Budapest). To see our Sustainability Report 2023/24, please visit our website. ( https://zwackunicum.hu/en/fenntarthatosag/ ) 4. Main Resources and Risks of the Company's Activities Material Resources Production and Plant The Company has three production plants. Unicum production and part of early maturation are done in the Unicum plant in Soroksári út, Budapest. The Dunaharaszti plant takes care of additional maturation and bottling of Unicum, and also the bottling of the majority of the other products produced by the Company. The fruit palinka and gin distillery operates in Kecskemét, and this is where the small series products are bottled. The Company intends to maintain those three production plants in the long run. The output capacities of the plants concerned are appropriate for bulk production and bottling. The Company has started efforts to replace obsolete components in one of its bottling lines with new machines in the Kecskemét plant. As a first step, in this business year, the labelling machine will be replaced. The Company continues being committed to the cause of environmental protection and will realize energy-efficiency projects with unabated enthusiasm. The value of investments in fixed assets will be slightly above the annual Depreciation and amortisation expense. Financial Position The Company's financial position is stable and it always fulfils its financial obligations on time. Financial transactions were made by UniCredit, Erste and K&H Bank from among the largest commercial banks. Human Resources In the first half of the business year the Company's average statistical headcount was 253 (it was 257 in the corresponding period of last year). 5 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) The Company's Chief Executive Officer, Mr Frank Odzuck, is about to be retiring from his current post in summer 2025 after having spent more than twenty successful years in that position. The Company's responsible staff, the Board of Directors - acting with the participation of Mr Odzuck - has been taking measures in order to find a successor to the General Manager. In the Hungarian spirits market the Zwack Unicum Plc. has the biggest human resources for sales and marketing. Indeed, the related competitive edge in distribution and innovation are among the Company's most important strengths. Risk factors In Hungary, as well as in the rest of the world, the post-pandemic economic rebound has created an environment of high inflation. Other negative factors include a weak local currency, the war in Ukraine, and sanctions against Russia. Those factors have a strong impact on the purchase price of raw materials and, thereby, on the retail price of our products. Furthermore, reductions in the purchasing power of households in Hungary have made the domestic demand for spirits precarious. Important risk factor affecting our Company are the possible changes of the regulatory environment that may have a negative effect on consumption and consequent sales volume decrease. Company activities are exposed to various financial risks: market risks, credit risks and liquidity risks. Seen the high volatility and uncertainty of the current financial market, the Company seeks keeping the possible negative implications affecting Company finances at the minimum. Regarding its market risks, to reduce the foreign exchange risks arising from the export and import activities and from the Euro deposits, the Finance Department monitors, in line with the hedging policy, the foreign exchange liabilities, and keeps the relevant amounts of forex on its bank accounts. Occasionally the Company can enter into derivative transactions to reduce said risks. Having said that, if the exchange rate changes during the business year, that can have a major impact on the Company's comprehensive income and the Shareholders' equity. The Company has no significant credit risks, nor related to accounts receivables, due to the diversity of its customers. Also, a significant portion of the accounts receivable is insured by financial institution up to 95% of single liabilities. The Company applies no other credit rating methods since this credit guarantee method is deemed to be effective enough to manage credit risks. Most of the Company's cash and cash equivalents and fixed deposits are denominated in forints. The counterparty risk is low since Zwack Unicum Plc. placed its funds with reliable financial institutions. 6 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) Liquidity management of the Company covers the necessary number of financial tools and also the necessary credit lines. The Management continuously monitors the necessary liquidity provisions based on the expected cash flow. This management report has been made according to the relevant accounting regulations and the financial statements made on the basis of our best knowledge. It gives a truthful and reliable account of the assets, liabilities, financial standing and profits of Zwack Unicum Plc. This report gives a reliable picture also of Zwack Unicum Plc.'s situation, development and performance. Additional information: There was no change in the ownership structure of the Company. During the first half of the 2024-2025 business year there was no change in the organization of the Company. The Company does not possess shares of its own, just as before. 5 November 2024 On behalf of the Board of Directors of the Zwack Unicum Plc., Sándor Zwack Frank Odzuck Chairman Chief Executive Officer 7 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) Financial Statements PK3. Statement of financial position (according to IFRS) data in HUF million Change to Change to 30.09.2023 31.03.2024 30.09.2024 30.09.2023 % 31.03.2024 % ASSETS Non-current assets Property, plant and equipment 3 838 3 755 3 809 -29 -0.8% 54 1.4% Intangible assets 77 77 72 -5 -6.5% -5 -6.5% Employee loans 1 0 0 -1 -100.0% 0 Deferred tax asset 92 88 83 -9 -9.8% -5 -5.7% 4 008 3 920 3 964 -44 -1.1% 44 1.1% Current assets Inventories 4 427 3 686 4 292 -135 -3.0% 606 16.4% Trade and other receivables 5 072 3 735 5 157 85 1.7% 1 422 38.1% Cash and cash equivalents 1 843 3 622 1 263 -580 -31.5% -2 359 -65.1% 11 342 11 043 10 712 -630 -5.6% -331 -3.0% TOTAL ASSETS 15 350 14 963 14 676 -674 -4.4% -287 -1.9% Shareholders' equity Share capital 2 000 2 000 2 000 0 0.0% 0 0.0% Share premium 165 165 165 0 0.0% 0 0.0% Retained earnings 4 960 6 601 4 991 31 0.6% -1 610 -24.4% 7 125 8 766 7 156 31 0.4% -1 610 -18.4% Liabilities Non-current liabilities Other liabilities 675 683 677 2 0.3% -6 -0.9% 675 683 677 2 0.3% -6 -0.9% Current liabilities Trade and other liabilities 6 395 5 507 6 843 448 7.0% 1 336 24.3% Short term loans 1 155 0 0 -1 155 -100.0% 0 - Provisions 0 7 0 0 -7 100.0% 7 550 5 514 6 843 -707 -9.4% 1 329 24.1% Total liabilities 8 225 6 197 7 520 -705 -8.6% 1 323 21.3% TOTAL EQUITY & LIABILITIES 15 350 14 963 14 676 -674 -4.4% -287 -1.9% 8 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) PK4. Statement of comprehensive income (according to IFRS) data in HUF million 2023-2024. 2024-2025. Variance % I. half year I. half year Gross Sales 17 220 18 234 1 014 5.9% Excise Tax 6 821 6 780 -41 -0.6% DRS deposit fee 0 165 165 Sales net of excise tax and DRS deposit fee 10 399 11 289 890 8.6% Material-type expenses 4 092 3 913 -179 -4.4% Gross Margin 6 307 7 376 1 069 16.9% 60,7% 65,3% 4.6% Employee benefits expense 2 055 2 244 189 9.2% Depreciation and amortization 322 310 -12 -3.7% Other operating expenses 2 531 3 385 854 33.7% Operating expenses 4 908 5 939 1 031 21.0% Other operating income 88 24 -64 -72.7% Profit from operations 1 487 1 461 -26 -1.7% Financial income 132 74 -58 -43.9% Financial expenses 26 0 -26 -100.0% Net financial income/loss 106 74 -32 -30.2% Profit before tax 1 593 1 535 -58 -3.6% Income tax expense (corporate income, deferred, local business tax and innovation contribution) 328 345 17 5.2% Profit for the year 1 265 1 190 -75 -5.9% 9 Data sheet heading (general) Company name : Zwack Unicum Plc. Telephone 456-5218 Company address: 1095 Bp. Soroksári út 26 Telefax 216-4981 Business branch Food E-mail [email protected] Period 2024-25. business year, I. half year Investor Relations Balázs Szűcs (01.04.2024-30.09.2024) PK4/2. Statement of comprehensive income, II. quarter (according to IFRS) data in HUF million 2023-2024. 2024-2025. Variance % II. quarter II. quarter Gross Sales 8 309 9 103 794 9.6% Excise Tax 3 254 3 316 62 1.9% DRS deposit fee 0 125 125 Sales net of excise tax and DRS deposit fee 5 055 5 662 607 12.0% Material-type expenses 1 945 1 862 -83 -4.3% Gross Margin 3 110 3 800 690 22.2% 61,5% 67,1% 5.6% Employee benefits expense 965 1 089 124 12.8% Depreciation and amortization 157 157 0 0.0% Other operating expenses 1 443 1 985 542 37.6% Operating expenses 2 565 3 231 666 26.0% Other operating income 45 5 -40 -88.9% Profit from operations 590 574 -16 -2.7% Financial income 33 24 -9 -27.3% Financial expenses 26 0 -26 -100.0% Net financial income/loss 7 24 17 242.9% Profit before tax 597 598 1 0.2% Income tax expense (corporate income, deferred, local business tax and innovation contribution) 137 154 17 12.4% Profit for the quarter 460 444 -16 -3.5% 10 Attention : This is an excerpt of the original content. To continue reading it, access the original document here .

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