The first quarter of the year was marked by significant year-on-year sales growth for the Kofola Group

01.06. 2022

The end of the pandemic measures and the opening of the market helped the Kofola Group to a significant year-on-year growth of 30% in sales for the first quarter to CZK 1,506 billion. The fact that this trend started at the beginning of the year and is stable is positive. Sales are matching and, in selected segments, even exceeding the pre-Covid sales of 2019. The Group has offset the significant increase in costs with financial discipline and a partial price increase, which have ensured that it continues to meet this year's financial plans. Based on the year to date, Kofola's management confirmed its original estimate for this year's operating EBITDA in the range of CZK 1,080 - 1,200 billion.

The first quarter of the year was marked by significant year-on-year sales growth for the Kofola Group

"We entered this year with the determination to make the most of the market opening and the lifting of the long-term restrictions caused by the Covid-19 pandemic. We prepared for this moment with a number of activities for individual brands and channels. Sales have been very good and improving since the beginning of the year. In fact, this March was our best ever in Czechia and Slovakia. On the other hand, the commercial success has been affected by a significant increase in costs. We managed to compensate for this with financial discipline and an unavoidable price increase. The war in Ukraine affected us first and foremost on a human level, and like most of society, we have helped and are helping. From an economic perspective, this means we must continue to be prudent on the expenditure side and ensure that we have sufficient raw materials for production in the future," comments Jannis Samaras, CEO of the Kofola Group, on the first quarter results.

All parts of the Group contributed to the year-on-year revenue growth. "The opening of the market benefited the beverage business in the Czech Republic and Slovakia, as well as the Fresh and Herbs division, i.e., LEROS and UGO. Similarly, the opening of restaurants in the Adriatic region helped us achieve growth in that region. In addition to the reopening of the market, the positive start to this year is also due to the launch of a number of innovations, which, as always, follow current market trends or support the company's long-term strategy," adds Martin Pisklák, CFO of the Kofola Group, commenting on the quarter's results.

One trend that is significant in the sweetened beverage segment is the reduction of sugar content in beverages. The Group has responded to this with two new products. Firstly, by reducing the sugar content in the flavoured Kofola LessMore range, which now contains 30% less sugar, and a new version of Royal Crown Cola No Sugar, which is completely sugar-free. The new Semtex Street Water range responds to the growing demand for functional waters. Special preparations for this season have been made for two mineral waters that became part of the Kofola Group's portfolio in spring 2020 - Korunní and Ondrášovka. Both have undergone a significant change in design and eco-modulation of the bottles, during which their colour was unified for better recycling. In addition, Korunní has made a significant investment in a new production line and bottle lightening, which will save 243 tonnes of plastic per year. Ondrášovka began its new era with a brand-new marketing campaign, in which it emphasizes the beautiful environment of the Nízký Jeseník, from which it comes, as well as the long history dating back to the 13th century. Ondrášovka is thus one of the oldest mineral waters in the country.

The company's long-term goal is the circularity of glass bottles, PET bottles, and cans

Important innovations have been made in the area of packaging sustainability. The first, revolutionary step this year was the introduction of a PET bottle and can deposit system in Slovakia, in which Kofola has participated significantly and is continuing to participate. Preparation for this was a challenging logistic task. "Slovakia has taken a significant step for the sake of the environment. We are happy to be part of it. We have two production plants in Slovakia and we are the market leader there. This brings us closer again to our goal of being zero waste by 2030," says Jannis Samaras. Kofola is also seeking to introduce a deposit system for PET bottles and cans in the Czech Republic, where it is a founding and active member of the Initiative for a deposit system, bringing together the efforts of five major beverage companies in this area.

Another practical step towards circularity in packaging was the launch of a glass returnable one litre bottle at the end of March, which Kofola named Cirkulka. "Returnable glass is one of the best packaging types in terms of carbon footprint. That is why we have been working on Cirkulka for more than two years and I am very happy that it started to appear in the first stores in the Czech Republic and Slovakia from the end of March," Jannis Samaras adds. Cirkulka is available throughout the Tesco chain in Slovakia. In the Czech Republic, it is currently available in selected stores and is also offered by the online retailer

The plan for this year envisages double-digit growth in sales and EBITDA

"Our outlook for 2022 remains unchanged. EBITDA operating profit in the range of CZK 1,080 - 1,200 billion, double-digit sales growth, and debt around three times EBITDA. The first five months of this year have been very good for us despite the macroeconomic and political situation," says Martin Pisklák, CFO of the Kofola Group, commenting on the plans.