Zwack earnings slip on bar, restaurant restrictions

Drinks

After-tax profit of Zwack Unicum, Hungary's biggest spirits maker, fell 15% to HUF 1.4 billion in its business year ended March 31, earnings report released on Wednesday shows, according to state news wire MTI.

Net revenue declined 6% to HUF 13.1 bln as restaurants and pubs, which generate about half of Zwack's sales in Hungary, were closed for periods to contain the spread of the coronavirus.

Material costs fell at a slower rate, dropping 3% to HUF 5.1 bln, causing gross margin to narrow 9% to HUF 7.9 bln.

Payroll costs rose 3% to HUF 3 bln, but other operating expenses slipped 16% to HUF 3 bln as Zwack plowed less into marketing because of the cancellation of entertainment and gastronomy events.

"We hope that the toughest period of the pandemic is behind us," Zwack said in the report, although acknowledging the possible longer-term impact of additional lockdowns or consumer caution on domestic demand for spirits and the company's growth prospects.

In a separate disclosure, Zwack said its board will propose payment of a HUF 700-per-share dividend on the business year's earnings at an AGM scheduled for June 30.

The dividend fund comes to HUF 1.4 bln.

A year earlier, Zwack paid a HUF 300-per-share dividend.

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