Wimm-Bill-Dann on Friday posted its 1Q 2008 financials results, which slightly outpaced our expectations. According to the press release, revenue shot up 35% to USD 731.9 mn in dollar terms, with growth attributed to expansion of baby food and beverage sales and an increase in the company's average selling prices, including those on milk. However, the higher procurement prices on raw milk (which surged by more than 76.2% y-o-y in dollar terms) impaired the company's gross margin.
Table. Wimm-Bill-Dann: Basic 1Q 2008 financials, mn USD
| Indicator | 1Q2007 | 1Q2008A | 1Q2008A/1Q2007 | Finam forecast 1Q2008F | Deviation from forecasts for 1Q2008A/1Q2008F |
|---|
| Revenue | 542.8 | 731.9 | 35% | 727.1 | 1% |
| including: | | | | | |
| Dairy products | 414.2 | 555.4 | 34% | | |
| Beverages | 92.9 | 116.8 | 26% | | |
| Baby food | 35.7 | 59.7 | 67% | | |
| Gross profit | 173.9 | 219.5 | 26% | | |
| Gross margin | 32.0% | 30.0% | | | |
| Operating proift | 51.4 | 63.4 | 23% | 59.7 | 6% |
| Operating margin | 9.50% | 8.70% | -0.8% | 8.2% | +0.5% |
| EBITDA | 70.4 | 90.7 | 29% | 86.3 | 5% |
| EBITDA marin | 13.0% | 12.4% | - 0.6% | 11.9% | +0.5%. |
| Net profit | 32.6 | 41.9 | 29% | 38.6 | 9% |
| Net margin | 6.0% | 5.7% | - 0.3% | 5.3% | +0.4% |
Source: company data, Finam estimates
We are generally upbeat on the reported financials, which outpaced our expectations on operating profit, EBITDA and net profit. Preservation of the commercial expenses/revenue ratio at 15%, the same as in 1Q 2007, and effective control over expenses, as a result of which a ratio of general and administrative expenses to revenue went down from 7.7% to 5.8%, allowed the company to widen its profit margins over 4Q 2007. We believe that stabilization of procurement prices on raw milk, which dropped by an average of 12% in 4M 2008 according to management, could enable the company to further increase its margins in 2Q 2008.
According to our estimates, the fair value of the company should be USD 113.3 per share. Given that the stock has a significant upside potential, investors are advised to BUY the company's shares.
0.569
0.073
