www.wbd.com
Wimm-Bill-Dann Foods OJSC[NYSE: WBD]
Investor Presentation1H 2006
2
Forward Looking Statements
This presentation contains forward-looking statements that reflect Wimm-Bill-Dann’s current views and estimates, which
are based on many factors and assumptions.
Changes in such factors or assumptions could produce significantly different results.
3
Who is Wimm-Bill-Dann?
Headquarters: Moscow
Founded: 1992
Manufacturing: 31 production sites in Russia and the Commonwealth of Independent States (CIS)
Products: A full range of diversified branded dairy products, over 150 types of juice, nectars, water and fast growing baby food
Listing: WBD: NYSE - Level 3 ADR
Market Cap: US $2.0 Billion
Employees: 18,500
Market Position: Russian dairy market leader
Revenue Structure: Dairy ~75%; Beverages ~20%; Baby Food ~5%
Corporate Governance: WBD assigned highest corporate governance score in Russia by Standard & Poor's Governance Services
Russia’s Largest Food Company with Growing CIS Business
4
MoscowN.Novgorod
KazanUfa
Volgograd
Samara
Ekaterinburg Omsk
Tuimazy
Timashevsk
Krasnodar
Rostov-na-Donu
Voronezh
BelgorodTula
St.Peterburg
Ramenskoe
Kiev
Sumi
Kharkov
Bishkek
Almaty
Tashkent
Obninsk
Kursk
Essentuki
Pervouralsk
Growing National & CIS Platform
Dairy production sitesBeverages production sites
Large distribution centers
Baby Food production sitesFarms
31 Production facilities in Russia & CIS
Surgut
Novosibirsk
Rubtsovsk
Krasnoyarsk
Irkutsk
Vladivostok
Khabarovsk
Dairy production sites with beverages lines
5
1H 2006 Operational Highlights
• Profitable growth continues in 1H 2006
• New CEO Tony Maher appointed
• Beverage segment turnaround plan in place
• Optimization of the corporate structure
• Baby food segment continues rapid growth
• Dividend payments approved for 2002-2004, 1Q’06, future policy determined
• New regional dairy plants – Pervouralsk & Surgut (3Q’06) acquired
• New Head, new Head of Marketing, and new Commercial Director appointed in Beverages segment (3Q’06)
• New Group Head of Marketing and Innovation appointed
6
1H 2006 Financial Highlights
1H 2006 1H 2005 Change, %
US$mln US$ mln
Sales 813.6 681.7 19.4%Dairy 595.0 479.5 24.1%Beverages 163.7 159.5 2.6%Baby Food 55.0 42.6 28.9%
Gross Profit 253.8 187.8 35.2%Selling and distribution expenses 112.0 98.3 13.9%General and administrative expenses 62.9 53.5 17.6%Operating income 75.1 30.8 143.5%Net income 46.7 8.3 465.2%Adjusted EBITDA* 104.9 56.6 85.3%CAPEX including acquisitions 50.4 38.9 30.1%
Profitable growth across all segments
* Non-GAAP indicator: for reconciliation of Adjusted EBITDA to US GAAP Net Income see www.wbd.com/f_reports/
7
New Team – New Horizons
Tony Maher – CEO: 30-year veteran of Coca-Cola system, former Regional Director for CIS & a number of WE markets for CCHBC, served as COB of Multon. Appointed April 2006.
Visited all WBD facilities, launched wide-range review of beverages business & cost structures in all businesses.
Working to ensure sustainable market leadership and profitable growth
Silviu Popovici – Head of Beverages: veteran of global companies BMS & Coca-Cola in EE, Russia & Ukraine. Most recently head of CCHBC in Ukraine, fastest growing Coca-Cola market in the world. Appointed August 2006.
Grant Winterton – Group Head of Marketing & Innovation: extensive experience in marketing and sales with WellaHaircare, Australian National Dairies, Campbell Soup Co and Coca-Cola in Australia, Russia, Ukraine, Belarus and China.
8
Dairy – Market Overview
WBD34%
Unimilk7%
Ochakovsky5%
Danone14%
Ehrmann2%
Campina2%
Others36%
WBD remains clear market leader with room to grow
0 20 40 60 80 100 120
Spain
Germany
France
GB
Italy
Poland
Russia
Dairy consumption, kg/person Structure of Russian Dairy Market (2005)
Source: Datamonitor, Reuters Business Insight, GKS Source: ACNielsen Retail Audit; value terms
• Russian dairy consumption trails CEE & WE peers
• Market remains fragmented with many small producers
• Sustainable growth outlook in higher margin yogurts & desserts
• Continued growth in traditional segment in the regions
• WBD maintains market share in 2005 (34.0% vs 33.8% in 2004)
9
4,04,55,05,56,06,57,07,58,0
Jan Feb Mar Apr May Jun Jul Aug Sep Octv Nov Dec
RUR
2003 2004 2005
-5
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005
Milk producer ruble prices change y-o-y WBD Raw Milk Purchase Price (rubles/ liter)
Source: GKS Source: WBD
Dairy – Raw Milk Challenge
WBD is working to ensure predictable supply, smoothing out seasonality
• Move toward long-term supply contracts & direct contracts with farmers
• Milk Rivers program leases milking & refrigeration equipment to farms
• Working with Russian government to develop plan for sector and increase investments
• Agro SBU established to gauge vertical integration
10
Dairy – Successful Regional Strategy
Central48%
Urals8%
Volga7%
South11%
Central Asia2%
North West8%
Ukraine7%
Siberia & Far East
9%
Regional, CIS markets provide long-term basis for growth
Dairy Segment – Regional Sales (2005) Dairy Segment – Regional Sales (1H 2006)
Source: WBD Source: WBD
• All regions profitable since 2005
• Fastest growth in Urals, Ukraine & Siberia
• Diversification – Central region now less than half of dairy sales
• Product portfolio optimized – from 340 to 221 SKUs in Central region
• Market leadership achieved in Ukraine, South, Urals & Volga in 1H 2006
Central45%
Siberia & Far East10%
Urals9%
South11%
Central Asia2%
Ukraine8%
North West8%
Volga7%
11
Dairy – New High Margin Products
Continued launch of innovative products to ensure leadership
• La Frut smoothie launched in 2005
• Dairy drink based on Chinese recipe
• Chudo-lunch with spoon
• New ready-to-eat dairy porridges
Ads – new products with enduring values
= New products for the Russian market using trusted brands
New products under existing umbrella brands
12
Dairy – Cheese Brands Strengthened
Increased capacity and strong brand in cheese segment
• New line at Rubtsovsk dairy plant doubles Lamber production
• Lamber challenging imports on price & quality basis
• New brand & packaging for Happy Milkman soft cheeses
• Cheese accounted for 4% of dairy in 1H 2006
Lamber hard cheese #1 domestic mid-market brand
13
0
100
200
300
400
500
600
2002200320042005e2006e2007e2008e2009e
mln USD
Baby Food – A ‘Young’ Market
0 500 1000 1500 2000 2500 3000 3500
France
UK
Germany
Portugal
Poland
Hungary
Russia
Baby Food – Estimated Mkt Value 2002-2009 Baby Food– Annual Per Capita Consumption (kg)
Source: Euromonitor Source: Euromonitor
More than 11% CAGR projected for Russian mkt up to 2009
• Russian baby food consumption still trails CEE & WEE peers
• Companies establishing leadership by sub-segments (WBD in dairy)
• New niches & regional markets entry expected to continue in 2006-2007
• Regional market potential largely untapped
• CIS markets also have strong long-term potential (i.e. Ukraine)
14
Baby Food – New Segment Delivers
Strong margins & leadership in dairy baby food sub-segment
• Sales up 29% & margins up 42% y-on-y in 1H 2006
• Portfolio expanding into juice, vegetable & meat products
• 56% market share in dairy baby foods
• Kursk baby food plant re-launch anticipated in 4Q’06
• Agusha brand platform for new baby food product launches
Agusha – Symbol of Quality & Trust for Parents
15
0 50 100 150 200
Italy
France
Belgium
Germany
Greece
Portugal
Hungary
Poland
UK
Russia
Beverages – Market Overview
0%
10%
20%
30%
40%
50%
60%
70%
2001 2002 2003 2004 2005e
Juice Market Y-o-Y growth, volume %
Source: WBD
Challenging juice environment, opportunities in water
• WBD No.3 in juice market in 2005 (24%)
• 4 domestic players control 90% of the market
• ‘Commodification’ of juice market in Moscow, St Petersburg
• Regional growth driving market – dominated by lower-middle segment
• Bottled water market fragmented & few true mineral waters
Bottled Water per capita (liters, 2005)
Source: ACNielsen Retail Audit; value terms
16
Beverages – WBD Restructuring
J737%
100% Gold14%
Lovely Garden
42%
Wonder Berry4%
Water2%
Others1%
Strong regional presence, re-invigorated brands key
• Major promotion campaign to re-invigorate brands • New flavors, PET packaging for Lovely Garden – regional leader• Essentuki water production upped, Novoessentukskaya brand added
Beverages – Sales by Brand (2005) Beverages – Sales by Brand (1H 2006)
Source: WBDSource: WBD
J730%
100% Gold12%
Lovely Garden
49%
Others1%Water
4%Wonder Berry4%
17
Beverages – Turnaround Plan
Developing strategy for long-term restructuring of business
• No.1 focus for CEO
• No options off the table
• New team being put in place – new Head & Head of Marketing
• Continued focus on regional markets & production
• R&D team exploring new products
• Cost structure under tight scrutiny
• Historic strength & trust in core brands platform for next stage
18
WBD – Challenges Ahead
Growing strength of retailers & cost growth remain issues
• Growth of hypermarkets & supermarkets putting pressure on producers
• Retail chains reduce intermediaries but have strong pricing power
• Side effects of economic growth: higher wages, higher tariffs
• New TV advertising rules reduce airtime, driving up rates
• Continued market entry by multinational food co’s
• Consolidation among Russian players increases competition
Russian Retail Landscape – end 2005 Russian Retail Landscape – end 2010 (forecast)
Source: GKS, Renaissance Capital Source: Renaissance Capital
Traditional Grocery Stores41%
Supermarkets10%Hypermarkets
3%
Discounters10%
Kiosks & Pavilions15%
Markets21%
Traditional Grocery Stores25%
Supermarkets15%
Hypermarkets12%
Discounters21%
Kiosks & Pavilions12%
Markets15%
19
$1 000
$2 000
$3 000
$4 000
$5 000
$6 000
$7 000
$8 000
$9 000
$10 000
$11 000
$12 000
2001
2002
2003
2004
2005
2006
e20
07e
2008
e20
09e
2010
e
GDP per capita, US$ PPP GDP/capita, US$
WBD – Russian Opportunities
0
50100
150200
250
300350
400
Centr al NW South Volga Ur als Siber ia FE
2000 2001 2002 2003 2004
Avg. Monthly Nominal Wages by Region (US$)
Source: GKS
Rising incomes across Russia driving demand for WBD products
• Current macro outlook for Russia remains strong
• Russian incomes rising across all regions
• WBD loyalty in regions = consumers switch to higher margin products
• WBD’s first-mover advantage persists as markets grow
• Stable operating environment aids long-term planning
GDP per capita Trends to 2010 (US$)
Source: GKS, RenCap
20
500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005
Uzbekistan Kyrgyzstan Ukraine Kazakhstan
WBD – CIS Opportunities
-2.0
.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2000 2001 2002 2003 2004 2005
Kyrgyzstan Ukraine Uzbekistan Kazakhstan
Selected CIS Markets GDP Change Y-o-Y
Source: Business Monitor Int’l
• CIS economies are growing & aiming to diversify
• WBD has production presence in Ukraine, Kyrgyzstan & Uzbekistan
• WBD has strengthening sales presence in Kazakhstan
• Considerable unmet demand for modern dairy & beverage products
• CIS accounts for 9% of all Dairy Segment sales (2005)
Selected CIS Markets GDP per capita (US$)
Source: Business Monitor Int’l
WBD Can Build on Production & Trade Presence in CIS
21
WBD – ADR Performance
Closing price of ADR on NYSE (US$)
ADR price on 3 January 2006: $25.33
ADR price on 15 September 2006: $46.10
10
15
20
25
30
35
40
45
50
Jan-
06
Jan-
06
Jan-
06
Feb-
06
Feb-
06
Mar
-06
Mar
-06
Apr
-06
Apr
-06
May
-06
May
-06
Jun-
06
Jun-
06
Jul-0
6
Jul-0
6
Aug
-06
Aug
-06
Aug
-06
Sep
-06
22
WBD – Shareholder Structure
As of 1H 2006
ADRs32,7%Founders of the
company58,4%
Other holders of ordinary shares
8,9%
Danone9,9%
Other ADR holders22,8%
Based on Company’s List of affiliates from 31.12.2005 with later amendments(http://www.wbd.ru/content/files/aff_list_300605.pdf)
23
6m 2006 Financials
Sales growth by segment
160
43
682595
164
55
814
480
0100200300400500600700800900
Dairy Juice Baby food Group
mln USD
1H 2005 1H 2006
24%
3% 29%
19%
24
83 80
97
141
57
105
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005 1H 2005 1H 2006
EBITDA, mln USD
6m 2006 Financials
25
6m 2006 Financials
Operating Cash flow, mln USD
30
72
116
52
84
-7-20
0
20
40
60
80
100
120
140
2002 2003 2004 2005 1H 2005 1H 2006
26
Debt Levels & Ratings
S&P Moody's Corporate credit rating
Global Scale B+ B1 National Scale ruA+
Debt rating
USD Eurobond B+ B3 RUR Domestic ruA+
Corporate governance 7+ (of 10)
Credit Ratings at Top of National ScaleTotal Debt to EBITDA Ratio
Reduced Debt Ratios
3,5
3,02,7
1,5
2003 2004 2005 1H 2006
27
IR Contacts
Also see our re-launched IR site: www.wbd.com
Marina Kagan, Head of Corporate Affairs
Phone: +7 495 105 5805, ext. 1154Fax: +7 495 105 5800e-mail: [email protected]
Natalya Belyavskaya, Senior Investor Relations Manager
Phone: +7 495 105 5805, ext. 1611Fax: +7 495 105 5800e-mail: [email protected]
Wimm-Bill-Dann Foods OJSC13, Solyanka st., Bld. 2, Moscow, 109028, Russiahttp://www.wbd.com
Top Related