Turkey: Anadolu Efes released 31 March 2006 period ended consolidated financial results

Anadolu Efes Biracılıkve Malt Sanayii A.Ş. (Anadolu Efes) released May 26 its consolidated financial results of and for the period ended 31 March 2006. The company, listed in the Istanbul Stock Exchange, is the holding company of Efes Beverage Group’s beverage interests as well as an operating company, under which Turkey beer operations are managed.

The Efes Beverage Group is composed of Anadolu Efes and its subsidiaries that produce and market beer, malt, soft drinks across a geography including Turkey, Russia, the CIS countries, Southeast Europe and the Middle East.

The Group currently operates in 10 countries with 16breweries, 6malteriesand 12Coca-Cola bottling facilities and has an annual brewing capacity of around 31millionhectoliters, malting capacity of 236,500 tons and Coca-Cola bottling capacity of 530million unit cases per year.

In 1Q2006 Anadolu Efes’ total beer sales volume recorded a 2% growth over 1Q2005 by reaching 3.1 million hectoliters. The total beer sales volume figure does not include the sales volume of Krasny Vostok Brewing Group (“KV Group”) in Russia, which EBI acquired in late February 2006.

Company’s total soft drinks volume including both the Turkish and international Coca-Cola operations grew by 14% reaching 72.6million unit cases in 1Q2006.

Due to the impact of seasonality on the beverage business, 1Q volume performance does not provide an indication for the full year.

Net sales revenues in 1Q2006 increased by 43% over the comparable period of previous year, reaching 424.4 million YTL. In addition to top line growth in each business segment, the substantial increase in net sales revenue is mainly attributable to the proportionate consolidation of CCI (including Efes Invest) in 1Q2006 versus equity pick-up consolidation of CCI and full consolidation of Efes Invest under Anadolu Efes separately in 1Q2005. In order to provide a better basis for comparison, on a proforma basis assuming CCI (including Efes Invest) is proportionately consolidated under Anadolu Efes for both 1Q2005 and 1Q2006, the increase in net sales revenues in 1Q2006 is calculated as 10% over 386.5 million YTL on a proforma basis in 1Q2005.

Consolidated Profit from Operations was up by 23% in 1Q2006 reaching 40.1 million YTL. As described above, for a better comparison basis, increase in Profit from Operations in 1Q2006 is calculated as 17% over 34.4 million YTL on a proforma basis in 1Q2005, while Profit from Operations margin is maintained at 9%.

Consolidated COP reached 83.3millionYTLin 1Q2006, representing an increase of 20% over the comparable period of previous year. As described above, for a better comparison basis, increase in COP in 1Q2006 is calculated as 6% over 79.0 million YTL on a proforma basis in 1Q2005, while COP margin is maintained at 20%.

Consolidated net profit increased by 52% to 24.4 million YTLin1Q2006 from 16.1 million YTLin1Q2005. The large portion of the increase is mainly attributable to the positive impact of the Turkey beer operations’ performance.

As of 31.03.2006 Anadolu Efes had a consolidated net debt position of 817.2million YTL vs. 168.3 million YTL as of 31.12.2005. The increase is mainly attributable to the US$500 million Bridge Facility executed by EBI in February 2006, in order to finance the purchase of the KV Group and certain minority shares in Moscow Efes Brewery (“MEB”).

In 1Q2006, the domestic sales volume of company’s Turkey beer operations decreased by 2%. Sales volume was significantly affected by the exceptionally severe and long winter. Domestic beer sales volume was 1.4 million hectoliters in 1Q2006.��Export volume, on the other hand has increased significantly by18% over the comparable period of previous year and reached 0.11 million hectoliters. As a result, the total sales volume of Turkey beer operations decreased slightly by 1% and was realised as 1.5 million hectoliters.

Net Sales Revenue increased to 167.8million YTL in 1Q2006, up by 6% from 159.0 million YTL in 1Q2005.In 1Q2006 average net sales price increased to 1.14 YTL/liter from 1.07 YTL/liter in 1Q2005.

Gross Profit in 1Q2006 increased by 13% over 1Q2005 and reached 106.4 million YTL. The growth, together with the increase in average prices, is due to the effective management of company’s cost base which resulted in 5% decrease in Cost of Sales. Accordingly the Gross Profit margin increased to 63% in 1Q2006 from 59% in 1Q2005.

Profit from Operations increased 25% to 43.5 million YTL, ahead of revenue growth, while the Profit from Operations margin increased to 26% in 1Q2006 from 22% in 1Q2005.

COP grew by 9% to60.7million YTL in 1Q2006, delivering a COP margin of 36%, representing a one per cent margin expansion over 1Q2005.

Net income increased to 53.4 million YTL in 1Q2006 from 18.7 million YTL in 1Q2005. In addition to the positive operating performance, the increase in Net Profit was impacted by the dividend payment from CCI accrued in 1Q2006, which was accrued after 1Q in 2005.

As of 31.03.2006 Turkey beer operations was at a net cash position of 35.7 million YTL.

Company’s brewing operations in Commonwealth of Independent States (“CIS”), Eastern Europe and the Balkans are managed by Efes Breweries International N.V. (“EBI”), a 70% subsidiary of Anadolu Efes, incorporated in the Netherlands and listed on the London Stock Exchange.

The consolidated sales volume reached 1.6 million hectoliters in1Q2006, representing an increase of 4% over the comparable period of previous year. The figure reflects the organic growth of the business, and does not include the sales volume of the Krasny Vostok Brewing Group (“KV Group”), which was acquired at the end of February 2006.

EBI’s revenue growth in 1Q2006 was slightly over its volume growth. Consolidated revenues increased by 6% in the first three months of 2006 over the same period of previous year, by reaching US$ 86.8 million. The local currency price increases through effective pricing policy is the primary reason of revenue growth ahead of the sales volume growth, in spite of unfavourable brand mix impact due to increased volume of economy brands.

EBI’s gross profit in 1Q2006 reached US$ 38.1 million, representing a 9% increase over 1Q2005. Gross Profit margin in 1Q2006 improved to 44%.

EBI’s operating loss as a percentage of net sales was maintained at approximately 3% in 1Q2006 and EBITDA for the period increased by 5% to US$ 7.8 million. EBITDA margin was maintained at 9% in 1Q2006.

EBI’s Net Loss in 1Q2006 was US$5.5million vs. Net Loss of US$7.1 million in 1Q2005.

At the end of 1Q2006 EBI’s Net Financial Debt was US$516.8 million, which is mainly attributable to the US$500 million Bridge Facility executed in February 2006, in order to finance the purchase of the KV Group and certain minority shares in Moscow Efes Brewery. The Bridge Facility is planned to be refinanced within 2006 by means of various alternative financial instruments, including a planned Eurobond issue, as announced on May 15th2006.

In 1Q2006 EBI finalized the acquisition of the KV Group in Russia for US$364 million (which is subject to working capital adjustment), thereby increasing its annual brewing and malt production capacities to 17.7 million hl and 139.000 tons respectively. In addition to increased production base and cross-brewing potential, which is expected to yield transportation and logistics synergies, the KV Group acquisition also solidified EBI’s #4 position in the dynamically consolidating Russian beer market thereby proving EBI’s commitment to be among the leading players in Russia. The acquisition expands EBI’s presence in the economy segment in addition to its strong positioning in the premium and mainstream segments, further diversifying EBI’s brand portfolio.

In 1Q2006 EBI also increased its shareholding in Moscow Efes Brewery to 83.4% by acquiring 12.4% shares held by one of the minority shareholders in Moscow Efes Brewery.

In addition, as per a license agreement signed on April 26th 2006, Moscow Efes Brewery started to brew, market and sell “Bavaria Premium”, a premium segment beer, and “Bavaria Malt”, a non-alcoholic beer, in Russia under license from Bavaria N.V., enabling EBI to offer a wider and stronger international brand portfolio in Russia.