Russia: Baltika, Russia's biggest brewery announced on May 26 its first quarter 2004 net profit totalled $13.7 million, little changed from $13.6 million in the same period last year. Baltika, jointly owned by Denmark's Carlsberg and Scottish & Newcastle, said in a statement that revenues grew to $170 million from $130 million according to U.S. Generally Accepted Accounting Principles. Baltika sold 338 million litres of beer, or 6.8 % more than in the same period of 2003.

The company retained a 20 % share of the world's fifth largest beer market, the level held in the fourth quarter last year, although its market share increased to 20.5 % in April, Baltika spokeswoman Marianna Volodina said. "The first quarter is usually very slow, especially for beer," she said. Earnings Before interest, taxation, depreciation and amortisation (EBITDA) rose to $39 million from $31 million. But EBITDA margin, an indication of a company's effectiveness, slipped to 22.9 percent from 23.8 percent. "The market has overestimated Baltika's ability to return to profitability," said Alfa bank analyst Alexander Svinov, adding that Baltika's net profit margin had been in the 20s since 2001.

Net profit margin for the first quarter this year was 8%, he said. Christian Ramm-Schmidt, the chief executive of Baltic Beverages Holding, through which the two Western brewers control Baltika, has said its big investments in new breweries and distribution, which caused the margin erosion, were coming to an end.

Baltika has recently completed restructuring its distribution network and restyling its main brands, which have also affected sales, Svinov said. He added that the rise in volumes of beer was an encouraging sign, as sales volumes have not grown for some time. "The first quarter does not really signify much," he said. "Judging by what they are doing, Baltika should have a good year."

31 May, 2004