Baltika Breweries 2005 Results
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Transcript of Baltika Breweries 2005 Results
Baltika Breweries2005 Results
March 16, 2006
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Contents
• Financial Results• Russian Beer Market and Baltika Breweries• Future Developments
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Financial Results
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• Russian market volume growth of 6% • Strong volume growth
– Total volumes 22,7 MHL, +13.8 %
– Beer Volume 22,4 MHL, +13.1%
– Export volume 1,4 MHL, +23%
– Market share in Russia 24.1%, +1.3 %pts
• Excellent profit performance
― Net Sales 977.2 MEUR, +22.2 %
– EBITDA 302.9 MEUR, +37.6 %
– EBIT 233.0 MEUR, +44.4 %
Overview of Developments in 2005
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Financial Results 2005
MEUR 2005 2004 Change
Volume, MHL 22.7 19.9 +13.8%
Net Sales 977.2 799.7 +22.2%
EBITDA 302.9 220.1 +37.6%
EBITDA Margin 31.0% 27.5% +3.5%pts
EBIT 233.0 161.4 +44.4%
EBIT Margin 23.8% 20.2% +3.7%pts
Significant volume growth and high financial results
IFRS
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4Q 2005 Financial Results
MEUR 4Q2005 4Q2004 Change
Volume, MHL 4.9 4.7 +3.6%
Net Sales 219.6 178.9 +22.7%
EBITDA 64.1 46.1 +39.1%
EBITDA Margin 29.2% 25.8% +3.4%pts
EBIT 45.4 31.3 +45.3%
EBIT Margin 20.7% 17.5% +3.2%pts
IFRS
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Baltika Net Sales Development in 2005
13.1%
+8.5%
+1.6%
22.2%
Volume Price
(/SKU)
Forex Net Sales (EUR)
-1.0%
Mix
Volume growth and average price increases contributed to net sales growth*
* beer volumes only
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MEUR 2005 2004 Change
Net Sales 977.2 799.7 22.2%
Cost of sales* 469.7 418.3 12.3%
Gross profit 507.5 381.3 33.1%
Logistics expenses* 136.2 112.1 21.5%
Marketing, sales etc. expenses* 101.3 73.4 38.0%
Administrative expenses* 37.0 34.4 7.6%
EBIT 233.0 161.4 44.4%
Net profit 190.4 110.6 72.1%
2005 Results Breakdown
IFRS
*Including depreciation
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20.2%
23.8%
3.7%0.5% 0.1%
-0.8% 0.1%
EBIT Margin 2004
Cost of sales Administrative Expenses
Marketing, sales, etc. Expenses
EBIT Margin 2005
DepreciationLogistics Expenses
Baltika Margin DevelopmentReduction of production, administrative and material costs contributed to margin development
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Russian Beer Market and Baltika Breweries
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Russian Beer Market Development
*With all Heineken acquisitions of 2005** EstimateSource: BBH, State Statistics Committee, Breweries
10 9
35
6
11
32
24
20
9
2
43
0
5
10
15
20
25
30
35
40
45
2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4
Market growth Baltika volume growth
In 2005 Baltika grew twice as fast as the market in whole.
Source: BBH, State Statistics Committee, BreweriesNote: Domestic Volumes
Market share, % 2004 2005Baltika 22.8 24.1
Sun Interbrew 15.5 17.5
HeinekenHeineken total*
7.414.9
7.113.4
Efes** 6.2 6.8
Yarpivo 6.4 6.3
Krasny Vostok 6.9 5.9
Ochakovo 6.4 5.7
SABMiller** 4.6 4.9
Vena 3.8 4.6
Others 20.0 17.1
100% 100%
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Packing Segments Development
36,8 40,1
41,644,9
12,6 12,5
5,8 5,8
2004 2005
Keg*
Can
Glass bottle
PET
Share of the different packaging segments of the total beer market volumes
Baltika has increased market share in all packaging segments and HoReCa
* ITotal HoReCa
Source: Business Analitika
Baltika’s share in segment
2004 2005
Keg* 13.5 16.7
Can 35.4 41.4
Glass bottle 19.9 22.9
PET 19.4 24.1
Source: Business Analitika
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Price Segments Development
Baltika’s share in segment
2004 2005
Licensed 6.3 8.2Premium 23.6 30.2Mainstream 31.9 35.9Lower mainstream 26.5 29.0Discount 6.1 13.0
5,5 7,5
21,2 21,5
28,230,3
24,1 24,8
18,5 17,7
0,20,2
2004 2005
Imported
Licensed
Premium
Mainstream
Lowermainstream
Discount
Share of different price segments of the total beer market volumes
Source: Business Analitika
Source: Business Analitika
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Leading European Brands in 2004
108,5
82,0
78,9
72,8
66,1
54,7
88,1
85,3
82,3
0 20 40 60 80 100 120
KROMBACHER
FOSTERS
EFES PILSEN
KRONENBOURG (INC. 1664)
STELLA ARTOIS
AMSTEL
CARLSBERG
CARLING
BALTIKA
HEINEKEN
Mdkl
Baltika is brand №1 in Russia and brand №2 in Europe
Volume in 2004, Mdkl
2005 - 106,690,3
Source: Canadean
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Beer Consumption Per Capita in Russia
30 28 28 27 2522 21
18 17 16 16 1519
24
30
36
4347
51
5760
0
10
20
30
40
50
60
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: State Statistics Committee, Baltika internal estimate
L/year
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Performance of Baltika Brands in 2005
• Baltika (market share 10.9%) and Arsenalnoye (5.4%) are the two leading brands of Russia
• Baltika brand volumes growth +11.5%, Arsenalnoye up +6.2%
• Significant growth of regional brands – Leningradskoye +49%, DV +35%, Samara + 17%
• Most growth noted in segments*: premium +6.6 %pts (market share 30.2%), mainstream +4 %pts (35.9%), discount +7,0 %pts (13%)
* Source: Business Analitika
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Innovations at Baltika in 2005• Re-styling of all Baltika sub-brands • First in Russia “Cash-Can” (can with cash inside) for Baltika
brand national promo-action• Re-styling of Arsenalnoye and Medovoye brands • New sub-brand Arsenalnoye Zakalennoye with spicy chili launched• Re-styling of regional brands DV, Samara, Don• First produced brand in a bottle with transparent label - Carlsberg• Baltika №9 first produced in PET1,5 L
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Future Developments
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Integration of BBH Russian companiesToday:
4 separate enterprises After integration:
Leader of Russian beer market
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Major stages of the merger
Baltika shareholders approved all resolutionson merger
Stock issueplacement and cash offers
EGSMs ofPikra, Vena and Yarpivo
Regulatory approvals andregistrations
Baltika Breweries Registration of stock issue with Securities Regulator
Voting on merger resolutions
Federal Antimonopoly ServiceSecurities RegulatorOthers
Baltika shareholders Retain ownershipORAccept cash offer
Pikra, Vena, Yarpivo shareholders
Accept exchange offer ORAccept cash offer ORRetain ownership
Voting on merger resolutions
Final conversion of remaining Pikra, Venaand Yarpivo shares intoBaltika sharesB
altik
a be
com
es m
ajor
ity s
hare
hold
erin
Pik
ra, V
ena
and
Yarp
ivo
Bal
tika
Gro
up b
ecom
es a
sin
gle
lega
l ent
ity
March 7 ~August ~October ~End 2006
Having received the approval of Baltika shareholders the company expects to complete the merger process by the year end
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“Baltika Group” in 2006
• 10 breweries: St.Petersburg (2 breweries), Rostov-on-Don, Tula, Samara Yaroslavl, Voronezh, Chelyabinsk Krasnoyarsk, Khabarovsk
• Production Capacity: 40 MHL/year • 4 malt-houses: St.Petersburg, Tula, Chelyabinsk, Yaroslavl
• About 11 000 employees• Total sales in 2005 – 1.4 billion euro
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Group Brewery Network in Russia
ST PETERSBURG
SAMARA
KRASNOYARSK
KHABAROVSK
TULA
CHELYABINSK
YAROSLAVL
YARPIVO
PIKRA
VENA
BALTIKA
VORONEZH
10,5 МHL
4,5 МHL
1,5 MHL
6,0 МHL
1,5 МHL
ROSTOV-ON-DON 2,0 МHL in 2006,
growth up to 2,5 МHL
2,5 МHL in 2006,
growth up to 4,5 МHL
3,0 МHL
1 МHL
6 МHL
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Portfolio of United Brands in 2006Baltika Yarpivo, Pikra, Vena
Baltika after integration
Licensed
Premium
Mainstream
Lower mainstream
Discount
Rating
#6
#1
#1
#1
#3
Rating
#2
#1
#1
#1
#1
Балтика 0, 5, 6, 7, 8
Балтика 2, 3, 4, 9
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Vise-PresidentFinances
and EconomicsEkaterina Azimina
Group Management as of 1 May, 2006
PresidentAnton Artemiev
Vise-President Supply Chain
Alexander Dedegkaev
Vice-PresidentMarketing
Andrey Rukavishnikov
Vice-PresidentSales (West)
Viktor Semak
Director ExportDmitry Kistev
Vice-PresidentPersonnel and Administration Daniil Briman
Director LegalAnton Rogachevsky
Director Corporate Affairs and
InformationMervi Heinaro
Director SecurityVladimir Bezugly Director Sales
DevelopmentElvira Chornaya
Vice-PresidentSales (East)
Oleg Burkhanov
Thank you!
Baltika Breweries2005 Results
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Supplementary Information
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Baltika Worldwide
Export to 38 countries (3 new countries)• in 2005 1.4 MHL, up +23%• 6% of total Baltika salesMore than 70% of Russian beer exportsproduced by Baltika
Award «The Best Russian Exporter»2001, 2002, 2003, 2004
Other Countries1 GERMANY2 ISRAEL 3 USA 4 LATVIA5 LITHUANIA 6 ESTONIA7 UK8 KOREA9 PORTUGAL10 GREECE11 CYPRUS12 NETHERLANDS13 JAPAN14 CANADA15 SPAIN16 IRAN17 FRANCE18 UAE19 POLAND20 CUBA21 AUSTRALIA22 NEW ZEALAND23 TAIWAN24 CHINA25 NORWAY26 IRELAND27 FINLAND
CIS Countries1 BELARUS2 UKRAINE3 MOLDOVA4 UZBEKISTAN5 KAZAKHSTAN6 KYRGYZSTAN7 AZERBAIJAN8 GEORGIA9 ARMENIYA10 TURKMENISTAN11 TAJIKISTAN
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Baltika Investment Structure
60,2
4
56,955,9
149,4
225,7
30,8
28,9
18,8
18,9
42,6
58,7 4
6,6
3,6
4,2
020406080
100120140160180200
2001 2002 2003 2004 2005
Maintenance and modernization ofexisting capacitiesDistribution
Saving on costs
Increase of Company's productivecapacities
199,0
148,8
119,3105,0
Total volume of investments into the company’s development exceeded 1 bln USD
bln USD
83,3
29
87
3127 26 24 24 23
28
36
44
52
6469
74
82
22.4
0.3 0.3 0.6 0.9 1.1 1.7 3.0 4.9 6.610.6
14.0 16.0 16.119.9
0
10
20
30
40
50
60
70
80
90
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Market VolumeBaltika Sales
(MHL)(MHL)
Beer Market Development and Baltika sales
Source: State Statistics Committee, Baltika internal estimate
30
13%
23%
1%
15%
32%
61%
35%
62%
73%
54%
27%
46%
85%
22%
-4%
6%11%
8%8%
21%19%23%
27%23%
0%-7%-6%-11%1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Baltika Volume Growth
Beer Market Growth
Growth of Beer Market in Russia and Baltika Volume
Source: State Statistics Committee, Baltika internal estimate
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24.1%22.8%
20.5%22.0%21.4%
20.1%
14.9%13.6%
10.7%
7.6%
4.7%3.7%
2.4%1.2%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Market Share of Baltika Breweries in Russia
Baltika Market Share Development
Source: State Statistics Committee, internal Baltika estimate
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BBH Group Structure
Baltika • St. Petersburg• Tula• Rostov-on-Don• Samara• KhabarovskYarpivo • Yaroslavl• VoronezhVena • St. Petersburg• ChelyabinskPikra
Saku Aldaris SUA • Klaipeda• Utena
Slavutich • Zaporozhje• KievLvivska
Derbes
50%50%
Russia
Scottish&Newcastle plc Carlsberg A/SBBH AB
Baltics Ukraine Kazakhstan