Moscow, Russia — September 2, 2004 — Wimm-Bill-Dann Foods OJSC [NYSE: WBD] today announced its financial results for the six months ended June 30, 2004.
During the first half of 2004, Wimm-Bill-Dann’s sales rose 22.8% compared to the same period last year. Gross profit increased by 12.3% year-on-year, while gross margins declined to 27.7% from 30.3%. Adjusted EBITDA* increased 14.4% compared to the same period last year, while net income was down 27.1%.
Commenting on today’s announcement, Sergei Plastinin, CEO of Wimm-Bill-Dann Foods OJSC, said: “In the first six months of 2004 we saw positive results of our regional modernization program: our sales increased 22.8% due to strong dairy sales, which grew 33.4% year on year, driven primarily by increased regional production. We remain committed to our regional expansion strategy and we are constantly widening our regional product offering as consumer spending is growing steadily in the regions. Profitability for the group is continuing to suffer from the higher cost of raw milk, increases in personnel and transportation costs and high depreciation charges. At the same time we are taking concrete steps to improve our margins and operational efficiency, including setting management targets linked to profit as opposed to volume, product range optimization and tight control over costs.”
Key Operating and Financial Indicators of 1H 2004
|
2004 H1 |
2003 H1 |
Change |
|
US$ 'mln |
US$ 'mln |
|
Sales |
580.4 |
472.6 |
22.8% |
Dairy |
429.2 |
321.7 |
33.4% |
Juice |
149.7 |
150.6 |
(0.6%) |
Water |
1.6 |
0.3 |
- |
Gross profit |
160.8 |
143.2 |
12.3% |
Selling and distribution expenses |
(84.7) |
(69.2) |
22.4% |
General and administrative expenses |
(44.4) |
(37.9) |
17.2% |
Operating income |
29.0 |
31.5 |
(7.9%) |
Financial income and expenses, net |
(7.1) |
(6.8) |
(4.4%) |
Net income |
12.9 |
17.7 |
(27.1%) |
Adjusted EBITDA* |
50.8 |
44.4 |
14.4% |
CAPEX including acquisitions |
32.9 |
59.1 |
(44.3%) | |
* Note: See Attachment A for changed definitions of Adjusted EBITDA and Adjusted EBITDA margin and reconciliations to net income.
Wimm-Bill-Dann sales reached US$580.4 million in the first half of 2004 compared to US$472.6 million in the first half of 2003.
Sales in the Dairy Segment increased 33.4% from US$321.7 million in the first six months of 2003 to US$429.2 million in the first six months of 2004, while the average selling price increased 17.9% from US$0.64 per 1 kg in the first of half 2003 to US$0.75 per 1 kg in the first half of 2004. This increase was primarily driven by ruble price increase and change in the mix in favour of higher priced products, as well as by ruble appreciation. Gross margins in the Dairy Segment declined from 28.4% in the first half of 2003 to 25.0% in the first half of 2004. This change was primarily caused by 19% year-on-year increase in the average ruble price of raw milk as well as rising personnel costs and depreciation charges.
Sales in the Juice Segment slightly decreased from US$150.6 million in the first half of 2003 to US$149.7 million in the first half of 2004 while the average selling price increased 15.2% from US$0.56 per liter in the first six months of 2003 to US$0.65 per liter in the first six months of 2004. This increase was primarily due to ruble price increase, change in the product mix in favour of higher priced brands such as J-7 in PET bottles and 100% Gold, as well as due to ruble appreciation. Higher average price, coupled with decreased cost of raw materials, resulted in gross margin improvement in the Juice Segment from 34.6% in the first six months of 2003 to 35.4% in the first half of 2004.
Selling and distribution expenses remained flat as a percentage of sales, while in absolute terms they grew 22.4% in the first six months of 2004 due to higher advertising and marketing costs, personnel and transportation expenditures as a consequence of rising transportation tariffs per ton.
General and administrative expenses decreased as a percentage of sales from 8.0% during the first six months of 2003 to 7.6% in the same period this year, but grew in absolute terms by 17.2% as a result of the increased personnel costs and the repeal of the property tax privilege in the Dairy Segment due to changed legislation.
Financial expense in the first six months of 2004 totaled US$7.1 million compared to US$6.8 million in the first half of 2003. Interest expenses rose from US$9.5 million to US$11.4 million and were partially offset by US$4.3 million foreign currency gain compared to US$2.6 million during the same period last year.
Net income fell 27.1% and stood at US$12.9 million mainly due to substantially higher raw milk prices, personnel and transportation costs, as well as depreciation. Adjusted EBITDA in the first six months of 2004 increased 14.4% year-on-year and amounted to US$50.8 million. Adjusted EBITDA margin was 8.8% compared to 9.4% in the first six months of 2003. Wimm-Bill-Dann Foods OJSC announces interim 2004 financial results To view this information you will need the Adobe Acrobat Reader.
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