Krynica Vitamin enjoys an over 15-percent increase in revenue on beverage sales despite turmoil on the international markets
Krynica Vitamin, one of the top Polish producers of non-alcoholic and low-alcohol beverages, faced many challenges in the second quarter of this year, which influenced the delivered financial result in the first half of 2021.
Krynica Vitamin, one of the top Polish producers of non-alcoholic and low-alcohol beverages, faced many challenges in the second quarter of this year, which influenced the delivered financial result in the first half of 2021. The key factors influencing the achieved results included, in particular, the unpredictability on the raw materials market, which translated into low availability and increased prices of packaging, coupled with growing transport costs, including freight. According to published estimates, the WSE-listed company achieved $52 million (PLN 202.5 million) in sales revenue in H1 2021, which converted into operating profit of $1,3 million (PLN 5.2 million) and net profit of $1,2 million (PLN 4.8 million).
Krynica Vitamin stresses that in its core business, beverage revenue increased by more than 15 percent year-on-year. The Company’s goal is to attract customers with high production volumes. In the second half of the year Krynica Vitamin will focus on further improvement of its standing on the beverage production market, and geographical diversification, looking for customers also in Europe and customers that can be reached by truck, for example France.
Our financial situation is stable and our development is not threatened, despite turbulences. The coronavirus pandemic has shaken the global market, disrupting the supply chain, while the rise in commodity prices has caught businesses by surprise. This has translated into limited access to packaging, particularly aluminum cans, as well as other materials needed to package products like wooden pallets, foil and cardboard. We also experience a continuous increase in labour costs, as well as transport costs – said Piotr Czachorowski, President of the Board of Krynica Vitamin SA.
The Company’s Board notes an increase in transportation costs, primarily by sea. In 2021, the two major markets were the U.S. and Germany.
When we shipped beverages to New Zealand and Australia at the beginning of the year, we did not consider intercontinental trade restrictions. Not even six months later we noted a nearly tenfold increase in the cost of deliveries. This is a huge challenge in overseas exports. Not only have freight prices risen, but Europe is suffering from a shortage of containers, with delays in unloading operations at U.S. and Chinese ports. Many industries have been affected by this disrupted supply chain. The obstruction of the Suez Canal for a just a few days or restrictions on the operations of major ports in China, have a negative knock-on effect for the trade. Despite the challenging environment, we are focused on maximizing the use of our resources and assets. We have rescheduled our investment pipeline due to the delays in obtaining administrative permits. Thus, our capex plan of PLN 38 million will be performed at the level of about 60 percent. Other outlays will be moved to later periods – said Piotr Czachorowski.
Krynica Vitamin in the current difficult market conditions is focused on driving the beverage segment, in which it has the highest competence, best experience, and strongest market position. Recently, the Company notified its investors that it has signed new agreements. In order to increase financial efficiency, the R&D is developing new beverage formulas with less sugar, among other things.
For nearly 30 years, Krynica Vitamin has been shaping the beverage market in Poland, creating innovative products in response to health trends. The company is a showcase of the Polish food and beverage industry in the world. The Company’s products are present in nearly 40 markets around the world. In 2020, exports accounted for more than half of revenue, with Germany, the United States, and the United Kingdom being the main overseas markets.