The new CEO at Stock Spirits (STCK) has reaffirmed the European drinks group’s M&A strategy despite the past disagreements with major shareholders.
Miroslaw Stachowicz has been appointed as CEO permanently today after taking over on an interim basis from outgoing boss Chris Heath in April, who bowed to pressure in a row with one of the group’s biggest investors.
Western Gate Private Investments, which holds a near 10% stake in Stock, backed the appointment of Stachowicz in April in its major tussle with the board.
The battle ended with Western succeeding in appointing two new non-executive directors and forcing the business to pause M&A activity until the problems in Poland, where market share has declined, were fixed.
“Our strategy is to grow by acquisition and consolidate markets in Central and Eastern Europe, and that has not changed,” Stachowicz told The Grocer after the half-year results. “We have listened to what the shareholders have told us and our major focus is on Poland, but we are not altering the long-term strategy.”
The London-listed business increased sales by €8m to €116m in the six months to 30 June, compared with the “very weak” financial performance a year ago. Stachowicz said the turnaround in Poland was showing early positive signs as the overall vodka market returned to volume growth and Stocks’ market share stabilised.
Operating profits also more than doubled to €12.5m thanks to a number of cost saving initiatives put in place, and adjusted EBITDA rose 66% to €17.9m.
Revenues in the UK, where it has a handful of brands listed in Tesco and in Polish shops, make up a tiny part of the group, with more than 90% coming from core markets in Central and Eastern Europe.
However, CFO Lesley Jackson said progress in the country was “slow but sure”.
“It is a very competitive and expensive market to trade in but we’re very happy to keep developing sustainable distribution with a fairly limited portfolio of brands which will work with the UK consumer.”
She added further major listings were on the radar, with hopes of replacing some “pretender” Polish brands on supermarket shelves with “authentic” ones.
Stock also saw value improvements in the Czech Republic in the first half, maintaining market share in clear vodka. Italy remained a difficult market, but the group managed to hold volume and value share.
Stachowicz said the battle in the boardroom would have no impact on the turnaround of the business.
“What happens at board level has some relevance but it is limited,” he added. “Our problems are at an operational level in countries. The management in charge of fixing the problems does not involve the board or investors. Boardroom issues do not impact the ability to turnaround the business.
We also have a working relationship with Western Gate and want to work with them for the benefit of the company.”
Stockbroker Numis said management actions were at an early stage but were producing “encouraging” results in Poland, with other markets in line.
The note added: “Mirek Stachowicz, who has impressed as interim CEO, has assumed the role on a permanent basis. It is too early to say that Stock has decisively turned the corner, but initial signs are positive and we believe that the appointment of Mirek Stachowicz should be well received by shareholders.”
The broker increased its price target from 135p to 170p. The group’s share price has almost halved from 315p since late 2014 but was up 2% today to 162.5p on news of the appointment and the results.