US: Exchange rates pull back CEDC 2009 forecasts

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Central European Distribution Corporation (CEDC) has lowered its full-year sales and profit guidance for 2009, on the back of weakening local currencies.

The US-based company, which operates in Central and Eastern Europe, said yesterday (2 February) that it expects net sales in 2009 to be between US$1.25bn and $1.40bn, down from the previous forecast of between $1.93bn and $2.03bn.

CEDC said the revision is based upon an approximate 35% weakening of the Polish zloty and the Russian ruble since its last guidance, given in November.

Subsequently, its comparable fully diluted earnings per share guidance has also been revised downwards, from between $3.75 and $4.00 to between $2.50 and $2.80.

The prior guidance was based upon exchange rates of Polish Zloty to US$ of 2.50 to 2.60 and Russian Ruble to US$ of 26.00 to 26.50; the revised guidance is based upon exchange rates assumptions of 3.30 to 3.50 for the Polish Zloty to US$ and 35.00 to 37.00 for the Russian Ruble to US$.

"Our revised 2009 full year comparable earnings guidance ... is only 10% lower than our forecast 2008 full-year comparable earnings guidance," said company president and CEO, William Carey.

"This highlights the strong underlying earnings growth of our business of approximately 25% in local currency. Our number one market position and strong management teams in Russia, Poland and Hungary have enabled us to weather the current international/local financial crisis much better than many of our competitors.

"We look forward to the challenges ahead of us for the year 2009 as our key management objectives continue to focus on growing our margins, improving operating efficiency and lowering our interest cost."

Carey also noted that spirit prices in Russia have dropped by about 20% in the last two months. "[These price drops] should have a positive impact on our gross margins," Carey said.

CEDC is scheduled to release its Q4 and full-year results for 2008 on 2 March.

Among CEDC's spirits portfolio are the Parliament, Green Mark and Absolwent vodka brands.

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