The main selling market of the Śnieżka Group is the Polish market which contributes 78% of sales (yoy increase of 1 percentage point). Other key countries in which Group companies operate are Ukraine and Belarus. Despite the difficult political and economic situation, in 2016 Ukraine maintained its 12% share in the Group’s sales structure at the 2015 level. The Belarusian market closed the year 2016 with a 5-percent share in the Group’s sales, which was 1 percentage point less than in the previous year. Other countries (including Russia and Moldova) account for 5% of the Group’s total sales.
The Parent Company remains one of the leaders of the domestic paint and varnish market, ranking second on the market according to its own estimates. Its key competitors on the Polish market are: PPG Deco Polska Sp. z o.o., Akzo Nobel Coatings Sp. z o.o. and Tikkurila Polska S.A. The Group’s products are sold through all the distribution channels, mainly through wholesalers, retail stores and home improvement centers. The Group’s 2016 revenue on the Polish market amounted to PLN 445,856 thousand, which was PLN 20,612 thousand more than in the previous year.
Despite the declining sales in the previous year, following the geopolitical crisis, the position of Śnieżka Group on the Ukrainian remains strong; according to the estimates, Śnieżka is the market leader. The Group’s products are available throughout Ukraine, but most revenues are earned in the Western and central part of the country. The products are distributed mainly using the traditional channel (wholesalers, retail sales points) and through a chain of home improvement centers, such as Epicentr and Nova Linia (Ukrainian establishments) and Leroy Merlin and Praktiker (foreign establishments). The Group’s 2016 sales on the Ukrainian market reached PLN 71,216 thousand, compared to PLN 64,215 thousand one year earlier.
The Śnieżka Group is one of the important paint and varnish manufacturers on the Belarusian market with a strong position in the putty segment. In terms of market share, according to the estimates made by the Parent Company, Śnieżka ranks second on the market, as it does in Poland. On that market, its products compete with both international and local manufacturers, as well as with Russian brands, which because of the free trade within the Eurasian Economic Union (which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan) are becoming increasingly competitive. The sales of the Group’s products on the Belarusian market are mainly through the traditional channel. Śnieżka products are currently available also in local home improvement center chains. In 2016, the Group’s sales on the Belarusian market amounted to PLN 28,283 thousand, compared to PLN 33,944 thousand one year earlier.
The Group also conducts sales in the territory of the Russian Federation, mainly in the regions of Kaliningrad and Moscow regions and in the Southern Russia. On that market, it competes, among others, with: Tikkurila, Caparol, AkzoNobel, Lakra, Empils, Jaroslawskie Kraski, Ruskije Kraski, VGT, Ptimist, Knauf, Prestiż. In 2016, the Group’s sales on the Russian market reached PLN 10,400 thousand, increasing the revenues by PLN 1,241 thousand as compared to the previous year.
The Group also exports its products to Moldova (1% in the sales structure with 2016 sales at the level of PLN 7,888 thousand) where sales fell by PLN 365 thousand. The largest player on the market is Supraten; the Group’s products also compete with products manufactured by Romanian companies. Other markets, which include Hungary, Romania, Slovakia and others, posted an increase of PLN 2,677 thousand (with total sales of PLN 11,993 thousand) as compared to the sales levels achieved in the previous year.
The Parent Company’s revenue posted in the reporting period is presented in the chart below.
As it was the case for the Group, Poland was the leading market for the Parent Company, with an 86-percent share in the sales structure (up by 1 percentage point yoy). Other key countries where FFiL Śnieżka SA sells its products are Ukraine and Belarus. In the case of Ukraine, in 2016, the share in the sales structure was 4%, at the previous year’s level. The Parent Company’s revenue earned in Belarus also represent 4% of all the sales (down by 1 percentage point from the previous year.) Other markets (including Russia and Moldova) account for 6% of the Company’s total sales. In the reporting period, the Parent Company’s 2016 revenue on the Polish market reached PLN 445,887 thousand, which was PLN 20,609 thousand more than in the previous year. The Company’s 2016 sales on the Ukrainian market were PLN 21,900 thousand, up by PLN 408 thousand from the previous year. In the reporting period, the Parent Company achieved PLN 20,084 thousand of sales on the Belarusian market, which was PLN 3,228 less than in the previous year. Revenues on sales of FFiL Śnieżka SA products on the Russian market amounted to PLN 10,400 thousand, which was PLN 1,241 thousand more than in 2015. The Parent Company also exports its products to Moldova (PLN 7,888 thousand of sales in the analyzed period) where sales fell by PLN 365 thousand. Other markets, which include Hungary, Romania, Slovakia and others, posted an increase of PLN 2,678 thousand (with total sales of PLN 11,993 thousand) as compared to the sales levels achieved in the previous year. The Parent Company and the subsidiaries have signed agreements with all the distributors defining the terms and conditions of their trading cooperation. At the same time, the Group conducts actions to increase its share in other markets in which the individual Group companies operate, while seeking new directions for export sales.
The Śnieżka Group has used many raw and technical materials that are necessary for its correct operation and to ensure continuity of production processes. The Group has used a number of supply sources, cooperating with entities from both Poland and abroad. The Group has been purchasing its strategic materials from suppliers with considerable production capacities, while ensuring the optimum level of diversification. The Group has signed supply agreements with all the key suppliers that define the terms and conditions of cooperation, but it never stopped looking for new domestic and foreign suppliers, to optimize the supply sources, reduce costs or shorten the term of delivery. In every possible case, the Group analyzes offers, acting in accordance with the applicable procedures, to ensure the best possible terms of purchase for raw materials, technical materials or equipment. In the opinion of the Parent Company’s Management Board, relations with the suppliers do not cause dependence on any single supplier in a manner that might adversely affect the operation of the entire Group. In 2016, the raw material market featured stable prices and general availability of materials.
