On Monday, Lebedyansky released headline financial and operating results for FY06. The company managed to scale up sales in kind by 29% y-o-y to 937 mln l, up 8% on our expectations. Juice sales surged 24% y-o-y to 841.5 mln l in 2006, baby food sales shot up 35.5% to 55 mln l and mineral water reached 40.5 mln l in 2006.
Lebedyansky’s headline FY06 financials ($ mln) compared to 2005 results and Finam’s forecast
| Financials | 2005 | 2006 | 2006/2005 | Finam forecast for 2006 | Deviation from actual result |
| Revenue |
514.6 |
710 |
38% |
668.9 |
-6% |
| COGS |
294.8 |
- |
|
|
|
| EBITDA |
115.5 |
137.5 |
19% |
139.2 |
1% |
| EBITDA margin |
22.40% |
22.40% |
|
20.8% |
|
| Net profit |
74.6 |
85.4 |
14% |
89.97 |
5% |
| Net profit margin |
14.50% |
12.03% |
|
13.45% |
|
| Operating results |
|
|
|
|
|
| Sales, mln l |
725.4 |
937 |
29% |
861.6 |
-8% |
| Juices |
680.8 |
841.5 |
24% |
773.3 |
-8% |
| Share in sales |
94% |
90% |
|
89.75% |
|
| Average price, $/l |
0.68 |
0.74 |
8% |
0.75 |
2% |
| Baby food |
40.6 |
55 |
35.5% |
53.32 |
-3% |
| Share in sales |
5.60% |
5.87% |
|
6.19% |
|
| Average price, $/l |
1.26 |
1.51 |
19% |
1.55 |
3% |
| Mineral water |
4 |
40.5 |
913% |
35 |
-14% |
| Share in sales |
0.6% |
4.3% |
|
4% |
|
| Average price, $/l |
0.1 |
0.17 |
73% |
0.18 |
4% |
Source: Company data, Finam estimates
The company’s topline growth was 38% y-o-y to $710 mln. EBITDA surged 19% in the same period and net profit advanced 14% to $85.4 mln. Topline growth is attributable to a rise in the company’s sales in kind and consolidated results of its new subsidiary Troya-Ultra plus a hike in the average sales price in all segments. Juice prices grew 8% in 2006, baby food prices 19% and mineral water went up 73%.
However, we would like to point to a decline in net profit margin from 14.5% to 12%, which underscores that the company’s cost-containment efforts are insufficient, in particular, over distribution and advertising expenses. In addition, a 40% price hike for juice concentrate led to a spike in COGS.
Be that as it may, we are upbeat on the company’s plans to expand production facilities and built new warehouses. The management reported at a conference for equity research analysts that investments in projects will top $300 mln. In addition to previously announced construction of a juice plant in the Novosibirsk region, the company plans to expand its production base in the Lipetsk region and St. Petersburg. Lebedyansky also plans to build an automated warehousing complex in the Lipetsk region and increase the Enter Logistika warehousing complex 3-fold. Thus, as a result of the improved distribution system, the company will be able to bolster control over sales and boost its market presence.
We reiterate our Buy recommendation to Lebedyansky with a target price of $93.20 per share.
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