Please ensure Javascript is enabled for purposes of website accessibility

SodaStream International Ltd. Achieves Positive Cash Flow as Profits Sink

By Demitri Kalogeropoulos - Feb 18, 2016 at 3:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The maker of machines that make carbonated beverages still has plenty of work ahead to return to profitable growth.

At-home carbonated-beverage machine maker SodaStream (SODA) posted fourth-quarter earnings on Feb. 18 that included a double-digit sales decline and sharply lower profits as it officially transitioned its brand away from sugary soda and toward a sparkling-water focus. After a year of preparing for the shift, investors finally have some hard data about how consumers are warming up to the new business approach.

Here's how the holiday quarter results held up against the prior year:


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)


$113 million

$127 million


Net Income

$5 million

$7.5 million






Data source: SodaStream's financial filings.

What happened this quarter?
The headline numbers aren't strong, especially compared to a 2014 holiday period that was marked by a brutal 25% sales decline. Yet SodaStream did manage to hit management's Q4 sales target. Here's a look at key highlights from the quarter.

  • Sales fell by 1% after accounting for currency changes as a 6% decline in the U.S. market was partially offset by gains in Europe.
  • SodaStream sold 24% fewer sparkling-water machines year over year, and 8% fewer flavor packets. In the prior quarter, the comparable figures were -22% and -12%, respectively.
  • Carbon dioxide canister refills, a key indicator of demand, rose by 7% compared to a 10% jump in Q3.
  • Gross margin dipped to 48% of sales from 50%, and operating margin declined as well, falling by 1 percentage point to hit 5% of sales.
  • SodaStream swung to a cash-flow-positive result as it generated $1.4 million of cash, compared to a $2.4 million cash burn in the prior year.
  • Cash on hand fell to $35 million from $47 million due to investments in the supply chain and debt repayments that were only partially offset by positive operating results.

What management had to say

Source: SodaStream.

"During the fourth quarter, we began to witness the benefits of our efforts to create a stronger, more efficient organization and capture the market opportunity as consumers rapidly shift from sugared soft drinks to healthier water-based products," CEO Daniel Birnbaum said in a press release.

He highlighted the fact that SodaStream's sales were up against the prior quarter and roughly flat year over year.

Profits were higher than executives expected, he explained: "Operating income was ahead of plan as we meaningfully leveraged selling and marketing expenses." SodaStream's marketing and selling costs fell to 31% of sales from 34%.

"There is still work ahead of us in order to position the company for consistent profitable growth," Birnbaum continued, "but I am confident that our recent actions have us heading in the right direction and will create value for shareholders over the long term."

Looking forward
The clearest indication of SodaStream's huge challenge ahead is the fact that starter kit sales dove by 24% over the holiday quarter. And while it's good news for profits that marketing costs are dropping, the decline suggests that the company hasn't yet found a new advertising message that resonates strongly with consumers.

On the other hand, SodaStream is cash-flow positive, which takes pressure off of the balance sheet and buys executives crucial time to work to reconnect with customers who have abandoned the brand. Many of them are still sparkling-water fans, as demonstrated by the fact that carbon dioxide refill sales rose by 460,000 in Q4 to 6.7 million.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SodaStream International Ltd. Stock Quote
SodaStream International Ltd.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.