(Bloomberg) -- Kofola CeskoSlovensko AS said it expected further growth in profitability as the beverage producer begins to reap the benefits of acquisitions and organic growth around central Europe.
Annual earnings before interest, taxes, depreciation and amortization will rise to a record 2 billion koruna ($88 million) in the coming years from 1.25 billion koruna reported in 2023, Chief Financial Officer Martin Pisklak said. He added that Kofola might be able to increase the lower end of its Ebitda guidance range for this year, currently at 1.55 billion to 1.8 billion koruna.
Named after its flagship caffeinated drink devised in the 1960s as a Communist-era substitute for Coke, the company raised funds in a 2015 initial public offering targeting mostly retail investors. Kofola then expanded and diversified into other carbonated drinks, bottled water, juices and most recently beer, with production facilities in the Czech Republic, Slovakia, Slovenia and Croatia.
“We now stand on several pillars, and we can play around with them,” Pisklak said in an interview. “When one is going down, another steps in to help.”
Investors have benefited mostly through a stable payout, with the dividend yield holding around 5% over the past seven years even as the Prague-traded stock itself has struggled to gain traction. While Kofola has gained 9.4% over the past 12 months, that’s trailing a 20% rally for the PX Index of Czech stocks, and the company’s shares are still trading 40% below their IPO price.
Expensive Sugar
Earnings momentum stalled for years as Kofola struggled with its acquisitions in Poland and eventually pulled out of the region’s biggest country in 2019. With many Czech and Slovak restaurants and bars having the flagship Kofola drink on tap along with beer, pandemic lockdowns were another drag on the company’s growth plans, as were surging costs of sugar and energy.
With the inflation crisis easing, Kofola’s Ebitda rose 13% in 2023 from a year earlier. Kofola wants to keep expanding, with a plan to focus on smaller nearby countries, the Balkans and the yet-untapped Baltic states, according to the CFO.
“Taking a pause could be dangerous in business,” said Pisklak. “The pressure to expand and to grow, I think, is crucial for long-term success.”
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