Baltika Brewery has posted a 10% drop in net profit for 2003. The company announced yesterday that increased spending on its organisational restructuring led to operating profit falling to US$123m from $137m in 2002.

Net sales, on the other hand, rose by 7.9% to $737m from $683m year-on-year. In a statement, the brewer said: "The fourth quarter of 2003 was especially successful as sales growth came close to the market's growth at 7% above the level of the fourth quarter of 2002.

"This was accomplished thanks to new marketing solutions and to the first positive contribution arising from the new distribution system," the company added.

At the end of 2003, Baltika held a 20.6% share of the Russian beer market. A policy of actively promoting its products abroad and new marketing initiatives made it possible to increase export sales by 9% compared with 2002. Sales volume amounted to 1 million hectoliters.

Operating profit fell by 12% year-on-year to $168.5 million, while earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 3% to $227 million.

No guidance was given for 2004, but Baltika said that, during the first half of 2004, there are plans to complete the reorganisation of the system of sales with a view to attaining 100% penetration in the retail sales network and strengthening its control over route to market and price formation.