According to company data, released on Thursday, Baltika's sales in kind grew to 8.7 mln dal in Q107, up 41.6% y-o-y. Dynamic growth of beer consumption in Q107 and the synergetic effect of the merger enabled Baltika to ramp up topline by over 46% y-o-y to ˆ408.6 mln.
Òable 1. Baltika's Q107 headline indicators, ˆ mln
| Q106 | Q107 | Chng |
| Revenue |
279.60 |
408.60 |
46.1% |
| COGS |
142.80 |
209.80 |
46.9% |
| Gross profit |
136.80 |
198.80 |
45.3% |
| Gross profit margin |
48.9% |
48.7% |
|
| Selling expenses |
37.80 |
41.60 |
10.1% |
| Administrative expenses |
17.30 |
21.00 |
21.4% |
| Operating profit |
47.20 |
82.50 |
74.8% |
| Operating profit margin |
16.9% |
20.2% |
|
| EBITDA |
75.00 |
113.00 |
50.7% |
| EBITDA margin |
26.8% |
27.7% |
|
| Net profit |
37.30 |
57.40 |
53.9% |
| Net profit margin |
13.3% |
14.0% |
|
Source: Company data, Finam estimates
Higher costs in Q107 were attributable to increased raw material costs, in particular malt and packaging which somewhat depressed gross profit margin to 48.7%. However, weak opex growth due to reduced logistic expenses and payrolls enabled the company to offset a rise in COGS and increase operating profit margin by 3% to 20.2%. EBITDA margin amounted to 27.7% in Q107.
Thus, the company's robust topline growth and also efficient cost-containment measures enabled Baltika to scale up net profit by nearly 54% to ˆ57.4 mln and net margin to 14%.
We are upbeat on the company's upbeat Q107 results which enabled Baltika to strengthen its leadership status on the beer market and ramp up its market share to 37.5%. In addition, the company's investment strategy which provides for ˆ67 mln investments in development of production facilities is an additional growth driver for the company's sales in the future and also cost reduction. In 2007, Baltika invested ˆ28 mln in construction of a new malthouse in Yaroslavl with annual capacity of over 50,000 tons and began construction of a new plant in Novosibirsk with annual capacity of 4.5 mln gl and continued implementation of the project to expand production capacity of the Samara-based brewery to 6.5 mln hl. This project is to be completed by June 2007.
At present, we have no formal recommendation on Baltika shares. However, we expect stronger speculative demand for the company's shares due to upbeat financial results. An additional growth driver for Baltika's stock valuations could be a scheduled rise in FY06 dividend payouts by over 62% to Rub 39.5 ($1.53) per common and preferred share.
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