E-Malt.com News article: 3593

East European brewer Baltic Beverages Holding has reported a big 22 % jump in third quarter beer volumes and upgraded its forecast for the key Russian beer market as it shrugs off a beer advertising ban, Reuters posted on November 4. BBH, 50-50 owned by Scottish & Newcastle and Denmark's Carlsberg, said it expected Russian market beer volumes to grow at 10 percent for 2004 after seeing its Russian market share rise and profit margins recover.

The brewer, whose key asset is a majority stake in Russia's biggest brewer Baltika which provides 80 % of BBH profits, had expected the Russian market to grow at 8 percent at the half-year stage before a bumper third quarter. Despite sweeping restrictions on beer advertising which came into effect in early September, BBH expects the Russian beer market which along the China is one of the fastest-growing in the world, to expand by around five percent in 2005.

The restrictions were aimed at curbing concern over alcoholism in Russia where attempts to wean people off their love for vodka helped fuel a post-Soviet boom in beer drinking, but BBH says it will switch much of its advertising spending to promotions at retail outlets. "We have had a good quarter and things are going well, market share is up and sales are rising," said S&N's finance director Ian McHoul in an interview after BBH results.

He added the third quarter was seasonally the biggest quarter for beer drinking, and BBH had reaped the benefits from its heavy investment in marketing, sales and distribution as the group looked towards continued profitable volume growth in the fourth quarter of 2004.

S&N and Carlsberg see BBH as a major area of growth as they both operate in mature western European beer markets, while Russia -- the world's fifth-biggest beer market after China, the United States, Germany and Brazil -- is one of the fastest growing beer drinking nations in the world.

BBH Russian beer volumes rose 20 percent in the third quarter, twice the growth of the overall Russian beer market at 10 percent, with its Russian beer market share in the third quarter rising 2.9 points to 35.9 percent. BBH's Russian volumes rose 16 percent in the first nine months of 2004 in a overall Russian market up 12 percent.

BBH's third-quarter sales rose 27 percent to $527 million (285 million pounds), while earnings before interest, tax, depreciation and amortisation (EBITDA) increased 19 percent to $180 million in the July-September quarter of 2004.

The group's third quarter EBITA margin dipped 2.8 points to 27.5 percent from the previous third quarter, but this was well above the first-half margin of 17.4 percent, and the group looked for a 2004 full-year margin of 19-20 percent.

BBH operates in six eastern European markets -- Russia, Ukraine, Kazakhstan and the three Baltic states.Carlsberg also reported third quarter results on Thursday posting a 4.6 percent rise in nine month operating profits as it cut its full year profit forecast mainly due to disappointing results in its Swedish market.


05 November, 2004