RUSSIA: BBH Q3 benefits from tax stamp fiasco

By | 8 November 2006

Baltic Beverages Holding has posted yet another rise in quarterly sales and profits.

The company, which is jointly-owned by Carlsberg and Scottish & Newcastle, announced today (8 November) that net sales in the three months to 30 September were up by 23.4% year-on-year in Euro terms, at EUR685m (US$876m). EBITDA for the quarter leapt by 47% to EUR248m.

For the first nine months of 2006, sales climbed by 20% to EUR1.6bn, with EBITDA jumping by over a third - 35.9% - to EUR521m.

"We have seen strong top line performance across the summer months giving rise to operational leverage and we have seen an acceleration of the benefits from operational integration in Russia," the company said. The Russian beer market also benefited as a whole in the quarter, BBH noted, thanks to changes in legislation for the wine and spirits categories.

While the Russian beer market grew by 14% in Q3, BBH volumes were just ahead of this at 15%, resulting in a small share gain. BBH said its cumulative market share in Russia is now at 36.3%. The introduction of tax stamps for wine and spirits in Russia in July led to widespread shortages, which benefited the beer market. "We estimate this will drive an approximate 3% annual uplift to the Russian beer market," BBH said.

BBH currently holds a 17.9% market share in Ukraine, where the market grew by 14.2% in the first nine months of this year. BBH Ukraine volumes, however, increased by only 7.8%. "Exceptional weather" in the Baltic states helped sales in the summer, as BBH's combined market share lifted by 1% to 44.5%. In Kazakhstan, BBH outstripped market growth of 19.4%, leaping in volume terms by 37.7%.

BBH, which is in the process of consolidating its operations in Russia, concluded that it believes it is on course to complete the merger of its four brewing companies by the end of this year. The integration should provide synergy benefits in the region of US$80m by the end of 2006, ahead of the previous guidance of $60m - $80m by 2008.

Sectors: Beer & cider

Companies: BBH, Carlsberg

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