Baltika still on course
preliminary financial results for the year 2003 which show that it
is continuing to return a solid performance, despite a substantial
restructuring programme and distinct signs that market growth is
starting to slow up.
Baltika described the results as being "above avereage for the sector"although the precise figures will not be e released until March. In 2002 the company recorded full year net profit of $137 million. It is now at an advanced stage of the accounting procedure the year's results and that it was clear that they were on course for a respectable performance.
In 2003 Baltika reorganised the structure of the company, which it believes strongly influenced the performance. The main changes were to the sales structure which the company said was highly successful and did not cause a fall in sales volumes.
"The annual financial results show that sales volume increased from 16.06 million hectolitres in 2002 to 16.17 million hectolitres in 2003. It was determined that sales increased both on the territory of Russia and in export markets. In 2003 these figures stood at 15.17 million hectolitres and 1 million hectolitres respectively," said a company statement on the sales volumes.
The year 2003 also saw Baltika bring on line two new production facilities - at Samara and Khabaroysk - as well as upgrading and expanding two of its existing factories. The company said that the basis for these investments was to strengthen the company's market position.
The company also initiated a programme in 2003to reorganise its distribution within the domestic market. A company spokesman said that the programme was on course for completion in the middle of 2004.
"The result will be to achieve maximum presence of the Company's products at points of sale, to ensure the transparency of product flow and control over the entire chain of price formation from producer to final consumer," the spokesman said.
The spokesman added that the reorganisation of its distribution system was expected to lead to a slight decrease in sales, but that this had already been factored in to the results for last year.
Baltika was set up in 1990 and since 1996 has been the leader on the Russian beer market. Currently it is a jointly owned venture between Denmark's Carlberg group and the UK's Scottish and Newcastle group, with both groups beers being brewed under license in Russia.
Although profits have been seen to slide throughout 2003, the heavy restructuring programme should start to reap its benefits by the end 2004, the company says.
"Against this background the Company continues to generate high positive cash flow, thereby creating the necessary precondition for completing the structural reorganization and for carrying out new investment plans in the coming year," the spokesman added.
As an added bonus the company said that its position had been further strengthened after it received a $9 million refund from the Belarussian government for an investment it made in a project which was later canceled. This sum had already been written off as a bad debt by the company earlier on in the 2003 financial year.
