Poland's vodka price war annihilated this spirit maker's profits

London-listed spirit maker Stock Spirits put out its interim results on Thursday and they're not pretty.

Pre-tax profit collapsed from around €20 million (£14 million, $22.25 million) in the same period last year to just €2 million (£1.4 million, $2.2 million).

Revenue dropped from €137 million (£97.2 million, $152.4 million) to €108 million (£76.6 million, $120 million).

The drops were caused by a price war and tax hit in one of its key markets, Poland, where 60% of sales come from.

CEO Chris Heath says in today's statement: "Aggressive competitor pricing in Poland following the excise tax increase in January 2014, resulted in a very poor first quarter for the Group. Trading in Poland improved significantly in the second quarter, but not enough to fully offset the poor first quarter."

Excise tax, a form of sales tax, on vodka increased by 15% in Poland in January and shortly after cheap producers launched a price war to try and win market share while rivals were raising prices.

The total vodka market in Poland shrunk by 2.7% in the first six months of the year, but discounters grew by 10.2% in the same period.

Despite profits and revenues taking a big hit, Stock Spirits is keen to reassure investors that everything is back on track now.

Heath says: "Having come through a very difficult period, we have put the building blocks in place to ensure that the Group is well placed to capitalise on the opportunities available in the Central and Eastern European region and the improved trading conditions we experienced in quarter 2 have continued into the start of quarter 3."

Investors aren't so convinced - shares are down 3.4% this morning: