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BALTIKA BREWERIES Q1 2006 Results. May 12, 2006 St. Petersburg. CONTENTS Financial Results Russian Beer Market and Baltika Breweries Future . Overview of Developments in Q1 2006. Russian market volume growth of 2% Frozen volume s - PowerPoint PPT Presentation
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May 12, 2006 St. Petersburg
BALTIKA BREWERIES
Q1 2006 Results
CONTENTS
• Financial Results • Russian Beer Market and Baltika Breweries• Future
• Russian market volume growth of 2% • Frozen volumes
– Baltika total volumes 4.1 MHL, -1,7 %, Group* total volumes 6.2 MHL, -0.7%
– Baltika export volumes 0.3 MHL, +11%, including licence production growth +20%
– Baltika market share in Russia 23%, -1.1 %pts, Group * 34.9%, -1.2%pts
• Solid profit performance by Baltika ― Net Sales 188.2 MEUR, +13.8%
– EBITDA 50.2 MEUR, +11.7 %
– EBIT 32.2 MEUR, +9.4 %
• Merger plan approved by shareholders of Baltika
• License production of Baltika started in Ukraine
Overview of Developments in Q1 2006
* Baltika, Vena, Pikra, Yarpivo
Financial Results
Baltika Financial Results Q1 2006
Q1’06 Q1’05 Change
Volume, MHL 4.10 4.17 -1.7%
Net Sales, MEUR 188.2 165.4 +13.8%
EBITDA, MEUR 50.2 44.9 +11.7%
EBITDA Margin, % 26.7% 27.1% -0.5% pts.
EBIT, MEUR 32.2 29.4 +9.4%
EBIT Margin, % 17.1% 17.8% -0.7 %pts.
IFRS
Baltika Net Sales Development in Q1 2006
- 1.7%
+7.7%
+13.8%
Beer volume Price/SKU
Forex Net Sales(EUR)
+6.2%
+1.6%
Other sales
MEUR Q1’06 Q1’05 Change
Net Sales 188.2 165.4 +13.8%
Cost of sales* 91.6 87.0 +5.3%
Gross profit 96.6 78.4 +23.2%
Logistics expenses* 28.9 26.9 +7.5%
Marketing, sales etc. expenses* 23.9 15.1 +58.3%
Administrative expenses* 11.6 7.0 +65.7%
EBIT 32.2 29.4 +9.4%
Net profit 24.0 23.3 +3.0%
Q1 2006 Results Breakdown
IFRS* Including depreciation
Development of Baltika Operating Margin
17.8% 17.1%
EBIT MarginQ1 2005
COGS Administrativecosts
Sales andmarketing
costs
EBIT MarginQ1 2006
+3.9% -1.9%-3.6% +0.9%
Logistics costs
Russian Beer Market and Baltika Breweries
Russian Beer Market Development
34
6
11
2
16
9
7
-1
17
-3
2
7
12
17
2005 Q1 Q2 Q3 Q4 2006 Q1
Market growth Baltika Group
Market share % Q1’05 Q1’06Baltika 24.1 23.0
Baltika Group* 36.1 34.9
Sun Interbrew 18.1 19.4
Heineken 12.9 13.7
Efes 12.7 12.1
SABMiller* 5.0 5.6
Ochakovo 5.9 5.4
Others 9.3 9.0
Source: State Statistics Committee, BreweriesNote: Domestic Volumes
* Baltika, Vena, Pikra, Yarpivo* *EstimateSource: BBH, State Statistics Committee, Breweries
Price Segments Development
Baltika’s share in segment
Q1’05 Q1’06
Licensed 7.0 7.6
Premium 28.1 29.7
Mainstream 37.5 33.4
Lower mainstream 28.9 26.8
Discount 16.2 11.6
6,9% 8,9%
21,2% 19,6%
28,6%28,4%
25,1% 23,4%
18,1% 19,2%
0,4%0,3%
Q1'05 Q1'06
Imported
Licensed
Premium
Mainstream
Lowermainstream
Discount
Baltika Group’s share in segment
Q1’05 Q1’06
Licensed 19.3 20.6
Premium 41.8 44.5
Mainstream 52.4 49.8
Lower mainstream 36.9 33.8
Discount 26.1 23.3
Share of different price segments of the total beer market volumes
Source: Business Analytica
Packaging Segments Development
38,7% 39,5%
41,6%42,7%
12,8% 12,7%
5,8% 6,2%
1Q05 1Q06
Keg
Can
Glass bottle
PET
Baltika’s share in segment Q1’05 Q1’06
Keg* 16.3 18.4
Can 41.7 39.8
Glass bottle 22.3 22.2
PET 26.3 21.1
* Total HoReCa
Baltika Group’s share in segment Q1’05 Q1’06
Кеg* 26.7 28.8
Can 58.4 57.6
Glass bottle 33.1 34.0
PEТ 36.9 31.8
Share of packaging segments of the total beer market volumes
Source: Business Analitica
Positions of Baltika Group Brands in Q1’06• Baltika and Arsenalnoye – two leading brands of Russia
• Tuborg is brand №1 in license segment, growth in Q1’06 +47.0%, Carlsberg +11.5%, Foster’s +52.2%
• Premium brand Nevskoye grew +37.1%
• High growth of regional brands: Leningradskoye +31%, Don +29.8%, Samara +8.3%
• Baltika Group market share in license segment +1.3%pts – share 20.6%
• Baltika Group market share in premium segment +2.7%pts – share 44.5%
Baltika Group Innovations in early 2006 • Foster’s in 0,5 l bottle with a ring-pull crown cap
• Kronenbourg 1664 in 0,46 l bottle, brand switch to a twist-off cap
• A new brand in the Baltika umbrella – Cooler, a beer for young adults in a transparent bottle with a NLL label and ring-pull crown cap and in a can
• A new license brand Tuborg Twist in a transparent bottle with a NLL label and ring-pull cap
• Carlsberg in a new bottle format with a unique bottom opener
• PET 2,5 l for several brands – Kupecheskoye and Arsenalnoye the first
Future
Integration of BBH Russian companies around BaltikaToday:
4 separate enterprises After integration:
Leader of Russian beer market
Major stages of the merger in 2006
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 on 27.4
Voting on merger resolutions
FASSecurities RegulatorOthers
Baltika shareholders Retain ownershipor Accept cash offer (redemption 8.3- 22.5; contractual purchase 23.5-6.7)
Pikra, Vena, Yarpivo shareholders
Accept exchange offer or Accept cash offer or Retain ownership (July 2006)
Voting on merger resolutions
Final conversion of remaining Pikra, Venaand Yarpivo shares intoBaltika shares
Bal
tika
beco
mes
maj
ority
sha
reho
lder
in P
ikra
, Ven
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d Ya
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o
Bal
tika
Gro
up b
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es a
sin
gle
lega
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ity
March 7 May ~August ~October ~End 2006
Company expects to complete the merger process by the year end
Converting shares and contractual purchase
Baltika shareholders approved all resolutionson merger
Stock issueplacement and cash offers
EGSMs ofPikra, Vena and Yarpivo
Regulatory approvals andregistrations
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• Market share 35%
Portfolio of United Key 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
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-DON2,5 МHL
2,5 МHL in 2006 growth up
to 4,5 МHL
3,0 МHL
1 МHL
6 МHL
Thank you!
Baltika BreweriesQ1 2006 Results