Research Notes

Last year turned out to be a successful one for Wimm-Bill-Dann, as it managed to take the cost side under control and boost profit margins. In the year to come the dairy major plans to further improve its operating efficiency and also intends to bolster its position on the juice market.

• As expected, last year Wimm-Bill-Dann's sales in monetary terms grew at a slower pace: sales jumped 18% against 27% in 2004. Meanwhile, the dairy giant managed to boost its profit margins by effective cost management efforts. Wimm-Bill-Dann management intends to take measures to slash costs and improve profit margins.

• The company continued to strengthen its positions on the dairy product and baby food markets. In physical terms the company's dairy product sales jumped 9.3% against over 15% for baby food. Wimm-Bill-Dann plans to further roll out the high-yield baby food segment, in particular, by broadening its product mix.

• Wimm-Bill-Dann saw its positions weakening on the juice market in 2005. As a result, in physical terms sales in the beverages segment dropped 6.5%, although there was a slight improvement in monetary terms due to a spike in product selling prices. The company plans to take measures to improve its positions on the juice market. This in particular could be achieved thanks to the recent appointment as CEO of Tony Maher who has huge experience in the soft drinks production business.

• We revised our valuation model for Wimm-Bill-Dann stocks given the revised forecast for its operating and financial performance and downgraded our target price for the company's shares.

  Olga Samarets

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  Sector: Consumer, Food
  Company: Wimm-Bill-Dann
  
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