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Edited Transcript of KOFOL.PR earnings conference call or presentation 15-May-20 7:30am GMT

Q1 2020 Kofola CeskoSlovensko as Earnings Call

OSTRAVA Jun 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Kofola CeskoSlovensko as earnings conference call or presentation Friday, May 15, 2020 at 7:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Daniel Buryš

Kofola CeskoSlovensko a.s. - Vice-Chairman and CEO for the matters of Kofola a.s. (CZ) & Kofola a.s. (SK)

* Marián Šefcovic

Kofola CeskoSlovensko a.s. - CEO of Adriatic Operation & Director

* Martin Pisklák

Kofola CeskoSlovensko a.s. - Group CFO & Director

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Conference Call Participants

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* Jan Raška

Fio Banka, a.s., Research Division - Analyst

* Pavel Ryska

J&T Banka, a.s., Research Division - Analyst

* Petr Bartek

Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Kofola's 2020 First Quarter Results Conference Call. You will now hear a recording of summary of the group's results presented by Group CFO, Martin Pisklák. This will be followed by business insights from Czechoslovakia and the Adriatic presented by country CEOs, Daniel Buryš and Marián Šefcovic.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [2]

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Good morning, everyone. Thank you for joining our call today. Yesterday, we published our results for the first quarter of 2020. As you know, this period was significantly affected by COVID pandemic. Starting from 14 March, beverages market faced a huge consumption and shopping restrictions. Sales to HoReCa segment practically stopped, and Hoop outlets were closed during the last 18 days of March. If we take it purely mathematically, these 18 days represent 20% of total first quarter time. Very similar situation was also in Slovakia, Slovenia and Croatia. Compared to March 2019, during these 18 days, Kofola Group lost approximately CZK 27 million on EBITDA level.

On the other hand, January and February sales were very solid and outperformed beginning of last year by some 8%. Summing these effects together, Kofola Group remained basically flat on both EBITDA and revenues in the first quarter of 2020.

Consolidated net revenues totaled CZK 1,289 million, which represents a decrease of 0.1%. EBITDA reached CZK 119 million, which represents an increase of 0.6%.

Also, our financial position remained very stable during the first quarter. A significant part of our group is located in the countries with euro currency. The most significant fluctuations were related to change of Czech crowns to euro exchange rate. At the end of the March, our net debt totaled 2.4x LTM EBITDA, which is the same value as at the year-end.

As we already mentioned, during 2019, we successfully divested our business in Poland and Russia, which improved our cash position. The second installment from the sale of Hoop as well as the proceeds from the sale of Russian associate occurred just in the first quarter of 2020.

First quarter conclusions is very simple. Kofola had an excellent start of the year, targeting CZK 30 million growth on EBITDA level. However, COVID pandemic caused that we finish flat compared to the same period in 2019.

Ondrášovka and Korunní acquisition was finished in April. We took over both companies and started with integration projects. Both companies were doing well during the first quarter, and we are very satisfied with their current performance. To utilize all synergies and efficiency potential, we are going to fully integrate Ondrášovka and Korunní into Kofola operation in the second half of the year.

Now to COVID pandemic. We reacted very quickly, and we did a lot of preventive steps from the beginning of extraordinary measures. I would like to start with financing. Thanks to successful results in 2019 and beginning of 2020, Kofola Group has sufficient financial sources to overcome the challenging year 2020. We are working with several scenarios. The key assumption is how fast will economy and consumption of beverages recover to 2019 levels. Due to the big uncertainty, we are currently working with a rather conservative scenario, and therefore, Kofola made use of the Czech government's moratorium on bank loans ending 31st of October 2020. Our financing banks are well informed about our projections. We do not expect any financing issues during 2020 as well as later in the midterm period.

Now let's move to profitability. In 2020, we estimate a decrease of EBITDA by approximately 25% to CZK 900 million, plus/minus 10%. Ondrášovka and Korunní are included in this estimate. Please note that this estimate is based on our current knowledge and may change significantly depending on pandemic situation and overall economic recovery. We implemented significant savings, starting with cuts of overhead costs, continuing with postponing of investment to new headquarter building and ending with unpopular headcount reduction. Our estimate will be updated in August and announced together with second quarter results.

Now to dividends. Kofola made use of the Czech government's moratorium on bank loans ending 31st of October 2020. In the meantime, a decision about a new dividend policy and current dividend is prohibited by law. We expect a new shareholder meeting to decide about the 2019 dividend and the dividend policy from 2020 to take place in November 2020. We are currently planning that certain dividend will be paid off in December based on our financial position at the year-end.

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Daniel Buryš, Kofola CeskoSlovensko a.s. - Vice-Chairman and CEO for the matters of Kofola a.s. (CZ) & Kofola a.s. (SK) [3]

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Hello, everybody. Here is Daniel speaking, and I would like to inform you about Kofola Czech and Slovak soft drink business development in Q1.

January, February were very successful, extraordinary sales, and partly, it could cover the failure of sales in March. Market share in HoReCa had the record level in both countries. April was strongly influenced of closure of HoReCa, travel restriction and change of retail consumer behaviors. Decrease was 40%. May is more optimistic because the restaurants are opening now, and we expect full opening in both countries at 25th of May. There is no reason why the main season should be not successful.

We focus now on our main product, which is Kofola in keg, and we partly postponed our innovations and noncore projects. We also implemented cost-saving project, and I'm happy that I can report also successful integration of Ondrášovka and Korunní, our last big acquisition. This integration project will be finalized in Q4.

We expect that HoReCa will be long -- affected of virus for long term, and our expectation is that it will be down to 10%. Retail targets are not changed.

Thank you for your attention, and I'm looking forward to next reporting for you. Bye.

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Marián Šefcovic, Kofola CeskoSlovensko a.s. - CEO of Adriatic Operation & Director [4]

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Hello. My name is Marián Šefcovic, and I'm responsible for the Adriatic region in Kofola Group.

In the Adriatic region, up until 16th of March, we were making excellent results. That is also one of the biggest reason why we managed to stay positive in growth in first quarter despite the COVID situation. Mineral water Radenska and Lipicki Studenac were top brands in sales, with achieved we are very satisfied. To COVID crisis, we are acted very fast and managed to keep production with no interruption. That was very important, while in both countries, we are also the holder of state commodity reserves. Export to neighbors countries as well as to America was executed smoothly. As the biggest decrease, we fell in HoReCa segment, around 80% in the -- we try to learn as much we could about the situation from our business partners. Therefore, in HoReCa, we have made survey where we found out that the biggest challenges facing those who are depending on tourist season and tourists. Now from our side, they asked for -- help them of PS material, visiting inspections, a longer payment with liens and good prices with monthly promotions.

Based on this information, we organized the Slovenia national online campaign, ZASKUPAJ, where Radenska invites you and your friend for a cup of coffee, and of course, mineral water Radenska. In this way, we help people returning back to their favorite bars, and also bars get compensation, and our help for the start of HoReCa running.

Our estimation is that in Adriatic region approximately from 5% to 10% of bars and HoReCa stores will close because of the situation. Although we are prepared for the new season, we are expecting a big fall in April and May. Hopefully, the opening of bars, which is happening now, will help us achieve better results in June. Croatia is strongly pushing to open the borders, as they depend on tourists -- tourism very much. We feel optimistic that the guests are returning to the bars.

A bit different situation is in retail, as consumer developed new habits during the current term. Still, they put chase in stores, only 1 to 2x per week, larger shopping, no trades tourism.

On the early basis, we estimate the fall in Slovenia around 8% compared to the last year; and in Croatia, around 18%. The fall is -- in Slovenia is not so big, as we are a market leader, and before COVID crisis, we managed to align a price increase for our products.

In Croatia, additional reason for fall [has] in the raising excise duty on sugar, which is now valid until 1st of April. Internally, we have made a lot of savings with adjusting the activities till end of the year as well lower the -- also lower the numbers -- number of employees and also to make as much as we can to bring the good results at the end of the year.

Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have the first question from Mr. Pavel Ryska.

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Pavel Ryska, J&T Banka, a.s., Research Division - Analyst [2]

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So first of all, congratulations on the relatively good first quarter. I have 2 questions now for you. The first one touches on your leverage. So I would like to ask you for some comments on your current net debt EBITDA after you took on further debt for the acquisition of the mineral waters. And mainly, what's your, let's say, target net debt to EBITDA in the middle and long run? So where you would like to have your net leverage stand and, of course, certain implications for dividend payments in the future?

And my second question touches on the margin. So if the HoReCa segment is going to be relatively weak this summer, I would like to hear what are the different margins in the retail and HoReCa segments during the summer season so that we could see how much the overall margin of Kofola will be affected.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [3]

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Martin Pisklák speaking. Thank you for this question. Your first question was related so to the current leverage and net debt-to-EBITDA ratio. Now after the acquisition, if we compare -- or let's say, after the April, our LTM EBITDA with net debt, we are slightly above 3x EBITDA, from 3.2 net debt to EBITDA. Yes, in the midterm or long-term run, we are planning that we will decrease this ratio, let's say, to 2.5 net debt-to-EBITDA ratio. Depends very significantly, of course, on the recovery of the economy and recovery of our EBITDA.

Your second question was related to margin between HoReCa and retail. Well, this question needs to be a bit more elaborated because the margins are different very significantly in their respective region. So we have, like, different margins in Croatia, in Czech Republic and in Slovenia.

Generally speaking, I can say that the margins in HoReCa segments are approximately 30% or 1/3 -- or higher by 1/3 compared to the retail. So HoReCa is definitely more profitable. More profitable and -- but I'd like to say, one number, it's very difficult at the moment.

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Pavel Ryska, J&T Banka, a.s., Research Division - Analyst [4]

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Yes. Maybe I will have one follow-up question regarding the first point that we discussed. So we now know the current leverage and your long-term target leverage. And now maybe I would like to know more about the situation with the bank, so I guess that you have some bank covenants for your loans. And now the key issue for the shareholder is whether if you actually happen to be above the leverage, which is stipulated by the bank covenants. Is it possible for you to still pay out something to the shareholders? Or is it forbidden by the bank covenants to do so before you reduce your leverage back below the permitted level? And that would be it.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [5]

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Thank you very much. Like -- of course, net debt to EBITDA is one of our covenants. The covenants are defined on the quarterly basis and slightly different quarter-from-quarter, so I cannot like tell you just one number. But in general, I can say that the covenants, it's like somewhere around 3.5x EBITDA -- 3-point times EBITDA.

If I look at the year-end, so basically, if we will finish on the, say, like, optimistic scenarios and I assume that we will basically fulfill this covenant and we will have no problems with the leverage, if this scenario -- if the more pessimistic scenario will come through, then of course, we will be slightly above. However, we are, like, discussing all of these scenarios with the banks, and basically, we agreed on the individual solution already ahead, so we know what to do. In case that we will be, like, significantly above 3.5x EBITDA, then we will be like, of course, considering if to pay dividend at all. But at this moment, like, we are positive, and we are planning that certain dividend will be paid off based on assumptions and scenarios.

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Operator [6]

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Next question is from Mr. [Stephan Shipo].

And next question is from Mr. Petr Bartek.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [7]

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One more question for the leverage. (inaudible) this already assumes the guidance for CZK 900 million [EBITDA].

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [8]

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We are very sorry, but most probably, you have a wrong connection, and we cannot understand your question at all. Can you please repeat it once more and more loudly, please?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [9]

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So one more question regarding the net debt to EBITDA. So can you hear me now?

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Operator [10]

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Yes.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [11]

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So you said that the net debt to EBITDA after the acquisition was slightly above 3x, yes? And this already assumes the guidance for CZK 900 million EBITDA?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [12]

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No, this is actual ratio, so based on the results of the first 4 months of 2020.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [13]

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So on the -- on your guidance, the leverage would be (inaudible). What leverage would you expect to deliver?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [14]

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At the year-end, we are targeting 3.5.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [15]

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This is already in the guidance for (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [16]

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Well, if we have a guidance around CZK 900 million, then we are, like, going to be very close to 3.5. This will, of course -- the ratio will be, of course, affected also by the level of the CapEx investments and other, like, segments of the net debt. But our target is to be at 3.5x EBITDA net debt. And that's, like included also in the [guidance].

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [17]

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Okay. So for that, your guidance for CapEx is around CZK 450 million?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [18]

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Yes.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [19]

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(inaudible). Okay, so 3.5x EBITDA guidance?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [20]

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Yes, this is the right targeted level.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [21]

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So what's -- what is the effect from the COVID situation (inaudible)?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [22]

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I'm very sorry, but we cannot understand you again.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [23]

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If you can split the EBITDA guidance to the effect of the coronavirus situation, to the effect of Ondrášovka take over (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [24]

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I'm sorry, I missed the second part of your last sentence, like, to split our EBITDA guidance on COVID situation and?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [25]

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Ondrášovka (inaudible)

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [26]

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Okay. So the EBITDA of Ondrášovka and Korunní altogether was, in 2019, slightly above CZK 100 million. Basically, they budgeted the same result for 2020. Post-acquisition EBITDA, which should be, like, included in our financial statements, we approximated approximately to CZK 75 million, so like originally without COVID discount. So if I make it like-for-like, altogether on a full year basis, last year, result of Kofola together with Ondrášovka and Korunní would be slightly above CZK 1.2 billion EBITDA. Now we are targeting CZK 900 million of EBITDA, which is discount for approximately 30 -- CZK 300 million, and that's the COVID impact.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [27]

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All of this is due to the (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [28]

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Sorry, we didn't understand again.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [29]

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All of the impact of the CZK 300 million is related to the coronavirus and are there any other effects of extraordinary, [with weather and] last year, high season (inaudible), which was decreased.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [30]

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No, this CZK 300 million, it's purely basically the COVID impact. We do not expect any big fluctuation based on the weather or some other, like, effects.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [31]

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Second question would be the development (inaudible). This is -- you commented in the Q1 on the results that there will be some (inaudible) PET resin prices (inaudible)

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [32]

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Could you please repeat the question again and a bit loudly, please?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [33]

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I would have a question to the material costs.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [34]

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Yes.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [35]

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You have commented in Q1 that you had a specific impact from PET resin prices. If you can quantify it on the full year basis, what are the prices of PET resin during now? So what's your outlook for the full year?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [36]

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Well, the full year can be approximately CZK 20 million, the impact of PET resin price saving.

Well, just to correct this, it's not for the full year, it's for the first 3 months only. The full year saving should be, of course, a bit higher based on the seasonality. I would estimate it, like, somewhere between CZK 80 million to CZK 100 million. But of course, it depends on the further development of the prices.

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Operator [37]

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Next question is from Mr. [Stephan Shipo].

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Unidentified Analyst, [38]

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I have just one small question, and it was about general meeting this year.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [39]

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Yes, please go ahead.

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Operator [40]

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Mr. [Shipo], what is your question about the general meeting?

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Unidentified Analyst, [41]

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When it would be?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [42]

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Well, basically, at the moment, we are, like, waiting till the end of extraordinary measures implied by the Czech government because (inaudible) higher number of people couldn't met at one moment. So we have some, like, potential risk that we would breach with our general meeting these extraordinary measures.

But at the moment, we expect that the general meeting will took place somewhere in July, let's say. We will announce it immediately once we know exactly when we can organize it. And we expect that this year, we will have 2 general meetings. First general meeting will be, let's say, July. This general meeting will basically approve the annual report for 2019. And the second general meeting, which should take place in November, should decide about the profit distributions and dividends.

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Operator [43]

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(Operator Instructions) Now we have a question from Mr. Jan Raška.

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Jan Raška, Fio Banka, a.s., Research Division - Analyst [44]

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Can you hear me all right?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [45]

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Yes.

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Operator [46]

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Yes.

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Jan Raška, Fio Banka, a.s., Research Division - Analyst [47]

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I have one question. Do you have any signals about decreasing number of your customer base in HoReCa segment due to corona crisis? Or don't you worry that many pubs and restaurants will not open their business again after the restriction will be canceled?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [48]

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Thank you for the question. We did a survey and visiting of our customers in April. And basically, our estimation is that approximately 10% of HoReCa outlets will be closed due to COVID crisis. So we do not expect any, like, a huge like closing of the restaurants, but 10% is some fair estimation at this moment.

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Jan Raška, Fio Banka, a.s., Research Division - Analyst [49]

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Yes. Okay. And the second question, if I can ask you, just about 2 months from the beginning of the crisis, so you could analyze some factors, financial indicators, predict some figures. So can I ask you for quantifying, for example, 1-month shutdown of HoReCa segment on your revenues and EBITDA? If you can quantify.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [50]

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Yes. I can quantify, for example, the actual results we have for April. So basically, in April, the revenues dropped down by 40% compared to last year of, like, overall retail and HoReCa together. If I look on HoReCa only, so HoReCa is approximately 75% below last year.

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Jan Raška, Fio Banka, a.s., Research Division - Analyst [51]

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75% HoReCa and 40% overall?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [52]

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Yes, 75% HoReCa, 40% overall.

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Operator [53]

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(Operator Instructions) We have additional questions from Mr. Petr Bartek.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [54]

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So just to ask about the financing of Ondrášovka. So the takeover is now finished and this is financed partially via loans. So can you provide us the number of additional debt and for conditions from the (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [55]

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Sorry, can you please repeat it again and a bit loudly, please?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [56]

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So the financing of Ondrášovka take over.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [57]

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Yes?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [58]

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If you can provide us the number of additional debt that [should be totaling] for the acquisition? And what are the conditions on this new debt?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [59]

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And what are the?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [60]

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Conditions, interest rates, covenants.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [61]

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Yes. Okay. Basically, the level of the new debt was already published in the report, is approximately CZK 1.1 billion. And interest rates and covenants are very similar to the -- our current loans, current loans we have.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [62]

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So majority of the transaction now was financed with debt, right?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [63]

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Yes.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [64]

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So you retained the cash in the balance sheet.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [65]

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Sorry, I did not understand.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [66]

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You retained most of the cash in your balance sheet.

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [67]

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Yes.

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Operator [68]

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There are no more questions. Now we have a question from Mr. [Jan Tomanik].

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Unidentified Analyst, [69]

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Can you hear me, please?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [70]

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Yes.

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Unidentified Analyst, [71]

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I have one more question regarding the outlook. You say that it includes Ondrášovka, but you actually only control it since middle of April, right? And you said that they are projecting CZK 75 million for the whole year of 2020. Or are they projecting CZK 75 million only since you took control?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [72]

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Only since we took control.

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Unidentified Analyst, [73]

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Okay. And the second question is, you mentioned that you will disclose the price in second quarter. Could you tell us the date when you are going to disclose the price of the acquisition, please?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [74]

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Together with the report for the second quarter.

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Operator [75]

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Mr. Petr Bartek, do you have any additional question?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [76]

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Maybe just clarify the decline by 40% in April revenues, this is for the whole group (inaudible)?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [77]

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Petr, Can you talk a bit loudly, please?

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [78]

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The decline by 40% in the revenues in April, this is for the whole group, right?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [79]

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Yes.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [80]

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So this includes (inaudible) segment. But the EBITDA impact from that, I can assume, about half of this revenue decline (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [81]

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Basically, the EBITDA effect was around CZK 90 million.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [82]

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Do you expect this number to be much lower already in May?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [83]

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Sorry, I did not catch the last part of your sentence.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [84]

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This CZK 90 million, do you expect it to be quite better already in May?

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [85]

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In May, we should be already better, of course. We implemented some savings measures. And also, at the beginning of the, like, the HoReCa shutdown, we had, for example, write-offs of the fresh vegetables and fruits in outlets, so the loss was bigger.

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Petr Bartek, Erste Group Bank AG, Research Division - Head of Equity Research of Czech Republic [86]

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So if I roughly estimate the impact for the March, April and beginning of May, the [I don't know, CZK 150 million], or your guidance is for [EBITDA keeping up to] CZK 300 million. So what's your response from (inaudible).

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Martin Pisklák, Kofola CeskoSlovensko a.s. - Group CFO & Director [87]

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Basically -- if I understood correctly your question, so basically, as I told, we are still working with the key assumption, which is how fast will be the recovery of the economy and consumption of nonalcoholic beverages, like, we have several scenarios. At the current very conservative scenarios, we expect that the sales to HoReCa segment during the seasons will be some 25% lower compared to prior year. That's why we discounted also the full year expectations.

On the other hand, we also implemented a lot of savings measures, so the CZK 900 million is like a combinations of savings and combinations of lost contribution because of mix.

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Operator [88]

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There are no more questions. This concludes today's conference call. Thank you all for your participation. A recording of today's call will be available on our web page. You may now disconnect.