Atlantic Grupa 2Q 20 - Adj. EBITDA margin preserved despite the weak top line

The top line decline outperformed our expectations and is primarily the result of 30% yoy sales decline of the Beverages unit, which is the one with highest exposure to HoReCa channel, while the drop of the Coffee unit (-15.5% yoy) was partially cushioned by a shift to at home consumption. Pharma units decline stood at -28.7% yoy, which is a result of divesting Dietpharm and Multivita brands in late 2019 and abandoning of pharmaceutical wholesale operations. The like for like sales of this unit grew 1.8% yoy in 1H 2020. The best performing unit was again Savoury Spreads with yoy growth of 6.3%. The unit profited from increased at home consumption and recorded growth in all markets. The pandemic containment measures and the weak tourist season took its toll also on the distribution business, which recorded a 12% yoy drop, foremost in the out of home consumption segment. On the upside, pandemic prevention measures brought significant savings for travel and fuel expenses, which together with marketing expenses represented only 4.4% of sales (vs. 6.9% in 2Q 2019) which resulted in an only slightly lower EBITDA margin yoy (excluding the one-off expenses).