Russian brewer Baltic Beverages Holding said today that a growth in sales had driven a strong second half to the year, despite an increase in investments.

For the full year, the Carlsberg and S&N joint-owned brewer reported total volumes growth of 18%, with Russian and the Ukraine performing particularly well with volumes up 19% and 17% respectively. In the Baltics, volume was up 4% while Kazakhstan leapt 67%. The volume gains led to a rise in net sales of 19% in euros and 30% in dollars.

Net sales reached  €1377m or US$1704m.

Sales volumes in Q4 were up 23.1%, and net sales up 20% in euros and up 31% in US dollars.

The company said its domestic Russian beer market grew by 11% in 2004 due to robust consumer demand and high levels of competitor activity particularly in the lower priced PET sector. BBH lost some share in the first half, but a strong sales-led recovery, with an increased investment in advertising, sales force and distribution in the second half of the year resulted in an increased full year market share of 34.2%, up 1.2%points.

Christian Ramm-Schmidt, BBH managing director said: "BBH's results demonstrate the strength of our brands and business model, particularly in Russia where the second half performance was very strong, with domestic beer volumes growing by 22%.

"In Russia, BBH has an excellent brand portfolio, brewery network and sales and distribution system. There is a considerable opportunity to operate the five BBH businesses more closely together, giving them greater operating authority to offer even more value to customers and consumers.  In line with the long held vision, initiatives are being taken to develop a shared brand portfolio and sales and supply-chain structure leveraging the common strengths of our Russian operations.

"In our other markets we expect continued good progress in the Baltics and in Kazakhstan, but we are cautious for the prospects for the Ukraine in 2005 following a difficult period over the last couple of years.

"Profits for the period were affected by increased investments in sales and market activities, but despite this EBITDA increased by 10% to EUR 388m. BBH generates strong cash flows which will enable it to continue investing in its key markets as well as beginning to provide dividend payments to its shareholders.

Overall, BBH remains confident in the prospects for its markets and its businesses and believes that it is well positioned for continued growth in 2005."

BBH paid a dividend of €100m to its two shareholders Carlsberg and Scottish & Newcastle.