East Europe: Baltic Beverages Holding AB sold 14% more beer in Q1 2005

East European brewery, Baltic Beverages Holding AB (BBH), announced on May 10 first quarter results (January to March 2005). BBH posted a 14 % rise in first-quarter beer volumes. BBH registered EUR 292 million of net sales (+15%) or USD 383 million (+21%). The company saw a net revenue of DKK 1,086m (+14%) driven by a solid development in volume (+15%) in Q1 2005.

BBH thus continued its strong growth from last year and once again underlined its leading position in particularly the Russian market, achieving a 16% increase in beer volumes compared to the general market development of almost 3%.

In total, BBH increased its market share in Russia to 36.1% in Q1 2005 against 31.9% in the same period last year. Operating profit rose by 37% and the profit margin was 2.1%-point up on last year. The integration project involving the individual breweries in Russia is proceeding according to plan. Anton Artemiev, who has been acting CEO since 1 January 2005, has now been appointed CEO and together with a new joint management team, he will be in charge of the continued integration of the Russian activities.

In the Ukraine BBH has followed a value strategy in the first quarter leading to market share being lost
(-3.2%pts v 1Q04 to 19.8%). Importantly, profitability was improved in the quarter and pricing was strong. The re-organisation of the sales and distribution system continues and this will lead to an improved business model.

BBH is owned 50 % each by Britain's Scottish & Newcastle (S&N) and Denmark's Carlsberg and is a key source of growth for both brewers, which are largely dependent on sluggish Western European beer markets. BBH’s main asset is a majority shareholding in Russia's biggest brewer Baltika.

"We believe that BBH is well placed to grow in its markets and we are confident of maintaining margins in 2005," John Nicholson, S&N's chairman of its Greater Europe and U.S. business, told a conference call.

The company stated: “The robust performance of BBH’s major markets, and its strong growth in volume and sales in the first quarter gives continued confidence that it is well placed for profitable growth in 2005. The momentum shown in the second half of 2004 has continued into 2005 with BBH gaining share in all segments of the Russian market. The move to integrate Russian operations and an unrivalled brand portfolio underpin the sustainability of margins and the strong cash flows.”

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