According to company data, the merged Baltika's sales in kind amounted to 37.2 mln hectoliters in 2006, up 10.3% y-o-y. In addition, the company slightly increased its market share, which reached nearly 36.4% on the market, which allows the brewer to maintain its leadership status.
The company's topline growth was 20.8% y-o-y to ˆ1.74 bln due to a 10.3% rise in sales volumes and a 5.9% increase in the average selling price.
Table 1. FY06 headline indicators, ˆ mln
| | 2005 | 2006 | Chng |
| Revenue |
1,440.37 |
1,739.48 |
20.8% |
| COGS |
717.84 |
807.67 |
12.5% |
| Gross profit |
722.53 |
931.81 |
29.0% |
| Gross profit margin |
50.2% |
53.6% |
|
| Logistics expenses |
184.3 |
214.6 |
16.4% |
| Promotion expenses (marketing, sales, etc.) |
174.8 |
227.6 |
30.2% |
| Administrative expenses |
57.7 |
62.4 |
8.1% |
| EBITDA |
404.6 |
555.9 |
37.4% |
| EBITDA margin |
28.1% |
32.0% |
|
| Operating profit |
303.20 |
427.10 |
40.9% |
| Operating profit margin |
21.1% |
24.6% |
|
| Net profit |
232.40 |
330.90 |
42.4% |
| Net profit margin |
16.1% |
19.0% |
|
Source: Company data, Finam estimates
Robust topline growth ensured a rise in gross profit margin to 53.6%. Strong growth of promotion expenses were offset by the company's synergetic effect and efficient control over opex. This enabled Baltika to ramp up EBITDA by 37.4% y-o-y to ˆ555.9 mln.
The company's net profit surged 42.4% to ˆ330.0 mln in 2006 and net profit margin of the merged Baltika amounted to 19%, up nearly 3% on 2005.
We are upbeat on the synergetic effect from the companies' merger, which could reach $100 mln in 2007. In addition, we would like to point to efficient cost-containment measures. Given that prices for main raw material spiked nearly 20%, the company has been attempting to reduce COGS growth by implementing projects to grow malt barley.
At present, we have no formal recommendation on Baltika shares.
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