Yesterday, Atlantic Grupa announced that it signed a SPA for the disposal of water and soft-drinks production site in Serbia, together with all its assets, employees and mineral water brand registered on the Serbian market.
Atlantic Grupa has announced the signing of a sale and purchase agreement for the sale of Palanački kiseljak production site in Smederevska Palanka, where in addition to the water brand “Karađorđe”, “Cockta” and “Jupi” are being produced. The buyer is a limited liability company, Vik Pro Univerzal, which has a lot of experience in the segment of water and soft drinks. With the signing of this agreement, it will continue the strategic development of its business.
The subject of the sale and purchase agreement is the whole production site with all its assets, including the traditional mineral water brand on the Serbian market, i.e. Karađorđe, and the new owner will also take over the Palanački kiseljak’s employees. Atlantic Grupa primarily used the site for the production and bottling of products for the Cocta brand, something which they will continue doing in a service form.
The sale of this production site is a part of the process of disinvestment of smaller and non-core businesses, which is in line with Atlantic’s corporate strategy. In this time of pressure on margins of F&B producers, Atlantic is continuing its strategy of divestment of non-core which will improve its standing and is recommendable.
By looking at the performance of the F&B sector through CROBEXnutris we can see that it is down 3.5% YTD, but from 1 Jan 2018 it is up 54%. Atlantic Grupa is down 4.8% YTD, but in a period from 1 Jan 2018 its return without dividend is 85%. Considering that this index consists of four companies, with each company having the same weight of 25% in the index, the movements of Atlantic Grupa is highly correlated with the index’s performance. As we expect to see a deterioration of margins of F&B companies in 2Q, driven by the surge in prices of raw materials, packaging, services, and energy expenses, there could be some more deterioration of the Company’s share price, and as such, the index’s performance. This is especially true if we take into account the fact that an increase in prices of end-products could not be completely offset by inflation of input products.
However, one should also consider the fact that a strong summer season (which all current estimates are pointing to) also has a positive influence on the FMCG industry, which could have a strong impact on the performance of the food companies.
CROBEXnutris and Atlantic Grupa Performance (2018 – today, %)
