Synergy announces its financial results for the full year 2015

Synergy PJSC (Synergy, Synergy Group of Companies, Group or Company) (MOEX: SYNG), one of the leading spirits producers in Russia, today announces consolidated financial results for the full year 2015 prepared in accordance with International Financial Reporting Standards (IFRS). 

Key financial figures for the full year 2015 and major corporate events:

- Synergy signed important long-term agreements with companies Allied Brands S.R.L. and Sazerac on the distribution of Italian absinthe Xenta and American bourbons     Benchmark and Buffalo Trace in Russia; 

- The import portfolio of the Company now includes the legendary Caribbean rum Sailor Jerry and whiskey-based liqueur Drambuie from William Grant & Sons;

- Super-premium Beluga brand line has been supplemented with 3 new products: the limited Beluga Celebration series, as well as bitters Beluga Hunting Herbal and Beluga Hunting Berry;

- Synergy launched new brands: «Georgievskaya Vodka», «Kapitanskiy» Rum and Gin, cognac «Sokrovischa Tiflisa», as well as a brand line of «Vogue» sparkling wines.

Commenting on the financial results, Chairman of the Management Board of Synergy Alexander Mechetin said: “In 2015, despite of the difficult conditions, the Company continued to implement a long-term development strategy, focusing on business diversification and increasing its operating efficiency. Against the backdrop of general unstable economic situation in 2015, Synergy demonstrated growth of certain financial figures due to proactive approach to all activities.

The Company increased its net revenue by 9%, the alcohol segment revenue by 6% and gross profit by 5%, despite of a 10% decrease in shipments in volume terms. Decrease in shipments was associated with a set of factors typical for crisis: decrease in purchasing power of the consumer and, as consequence, overall decrease in trade in the country, plus the persisting significant market share of illegal products.

At the same time, the Company’s net profit showed drop due to a significant increase in the cost of financing in the first half of 2015. The Company has created a solid foundation to improve profitability in 2016 and beyond due to new programme for improving business performance launched last year. The programme included the following measures: reduction in operating expenses, particularly administrative costs; innovative restyling of products with a focus on import substitution of components; optimization of the production platform.

It is worth mentioning a number of positive changes in the industry taking place from 2016. We note the intensified fight of the government against illicit alcohol, which has a positive effect on the shipments performed by legal players. In particular, according to preliminary data as of the 1 quarter of 2016, the shipments of Synergy have shown double-digit growth compared to the same period in 2015. The similar dynamics is typical in general for the legal market of vodka and distilled beverages at the beginning of the current year.

It should also be noted that in the 1 quarter of 2016, Synergy signed an unprecedented agreement for the Russian alcohol market with Bacardi on the opening of bottling line of whisky William Lawson’s on the plant Traditsii Kachestva (Traditions of Quality). In the next two years, it is planned to produce 10 million litres under this brand.

Currently, Synergy takes the leading position on the market of distilled beverages, possessing a diversified portfolio consisting of leading brands, great and unique distribution platform, while being the No. 1 independent importer of premium spirits.

Over the reporting period, guided the strategy of maximum diversification, the Company has brought to the market a number of brands with considerable potential. These include: Georgievskaya Vodka, Kapitanskiy Rum and Gin, cognac “Sokrovischa Tiflisa”, as well as a broad brand line of “Vogue” sparkling wines. The Company has developed its flagship super-premium Beluga brand. Here, we expanded our presence through the limited Beluga Celebration series, as well as bitters Beluga Hunting Herbal and Beluga Hunting Berry.

In 2015, the Company rapidly developed distribution of imported products from partner companies. According to the results of 2015, the Company’ imports showed a 32% increase (to 461 thousand dcl.).

Synergy signed exclusive contracts with new partners such as Allied Brands S.R.L. and Sazerac. Now, the Company represents Italian absinthe Xenta and American bourbons Benchmark and Buffalo Trace on the territory of the Russian Federation. In addition, Synergy’s portfolio has been supplemented with the legendary Caribbean rum Sailor Jerry and whiskey liqueur Drambuie from the Company’s strategic partner William Grant & Sons. Currently, Synergy continues to strongly operate in the majority of highly profitable fields, which has positive impact on the Company’s profitability in general and directly influences its stability.”

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