Why a small sales dip hit Kofola's profit so hard

A familiar bottle, a thinner year

Kofola is the dark, herbal cola sold on supermarket shelves and on tap in pubs across Czechia and Slovakia. The company that makes and sells it in Czechia, Kofola a.s., is a joint-stock company (that is what a.s. stands for) based in Krnov, in the country's north-east. Its figures below cover that company on its own, not the wider group, under Czech accounting rules, in CZK, for calendar 2025 against calendar 2024.

In 2025 revenue came to CZK 4.8bn, down from CZK 5.2bn. That is a fall of 6.4%, or CZK 329m less money coming through the door. For a drinks maker, a single-digit dip is not a disaster. Weather, retail promotions and the timing of contracts with chains can move it.

Profit moved harder. Operating profit, what the company earns from making and selling drinks before interest and tax, dropped from CZK 482m to CZK 389m, a fall of 19.1%. Net profit, the bottom line left for the owner, went from CZK 363m to CZK 300m, down 17.5%.

The operating margin, the share of each koruna of sales left as operating profit, slipped from 9.3% to 8.1%, a loss of 1.3 pp points. Sales shrank. The part the company kept shrank faster.

Why a smaller year costs a bottler more than it seems

A soft drinks business looks simple from the shop: syrup, water, a bottle, a label. Behind the shelf sits a heavy machine. Bottling lines, warehouses, lorries, depots, cooling equipment in pubs and the people who keep all of it running cost much the same whether the lines run full or not. The sugar and the plastic go down when fewer bottles are sold. The building, the lines and most of the payroll do not.

That is the lever. When revenue rises, most of each additional koruna above those fixed costs falls to profit. When revenue falls, the loss comes almost straight out of profit. In 2025 the lever worked against Kofola a.s.

A second force pushed in the same direction. Depreciation and amortisation, the yearly cost of wearing out machines, buildings and other long-lived assets, rose from CZK 142m to CZK 152m. It grew in a year when sales fell. Total assets also rose, from CZK 2.4bn to CZK 2.6bn. The company carried a bigger base of assets into a year with smaller sales, and those assets charge their cost whether they earn it back or not.

You can see the split by looking at EBITDA, which here means operating profit plus depreciation and amortisation: a rough measure of what the business earns before the cost of wearing out its kit. EBITDA fell from CZK 624m to CZK 541m, down 13.3%, and its margin went from 12.1% to 11.2%, a drop of 0.9 pp points. That is a gentler fall than operating profit. So most of the damage came from lost sales meeting fixed costs, and the rest from the heavier depreciation bill.

The accounts do not say whether revenue fell because fewer litres were sold, because prices or the product mix changed, or because some sales now run through other companies in the group. A breakdown of revenue by volume and price would settle it, and each answer means something different for the next year.

The market backdrop is mixed. Kurzy.cz, in its monthly strategy for October 2026, described the listed Kofola group as a defensive stock, the kind people buy because soft drinks sell in good times and bad, and noted that its higher debt could weigh on investor sentiment. That concerns the group as a whole, not this company alone, but it fits the picture of a business with a growing asset base that now has to earn its keep.

Still profitable, with a lever that cuts both ways

None of this makes Kofola a.s. a weak business. A net margin of 6.2% is respectable for a maker of everyday consumer goods. Against a set of 7 Czech companies from very different trades, from LEGO's factory in Kladno to a heating plant in Písek and a brewery in Strakonice, the median net margin was 3.3%. Kofola a.s. sat 2.9 pp points above it. Its operating margin of 8.1% was 1.6 pp points above that group's median of 6.5%. I would not read too much into a comparison with a toy factory and a piano maker, but it does show the cola business is far from the bottom of the table.

For the people who buy Kofola, the lever explains a lot of what they see. A bottler with costly lines and depots needs them full. That is the pressure behind multi-pack discounts, new flavours, seasonal editions and the push to get the brand onto more taps in more pubs. Every extra crate through a line that runs anyway is cheap to make. Every empty shift on that line is a cost nobody gets back.

For the market, the story is about weight. A drinks company that keeps investing in plants and equipment makes a bet that volumes will follow. In a growing year that bet pays twice: higher sales and lower cost per bottle. In a shrinking year it shows up as a margin that slides faster than sales.

For anyone running a business with machines, vehicles or premises, the check is simple. Put the yearly change in depreciation next to the yearly change in revenue. If the cost of wearing out your assets is rising while sales are flat or falling, your margin will thin before your sales figures look alarming, and it will keep thinning until the new assets bring the business they were bought for.

Kofola a.s. still earns good money from a brand people know by taste. In 2025 it carried more machinery into a smaller year, and paid for it in margin. I would watch whether the bigger asset base brings back the litres to fill it, because that, not the recipe, decides which way the lever moves next.