08 June 2004 17:28
Wimm-Bill-Dann Foods OJSC Announces 3 Months 2004 Financial Results
Wimm-Bill-Dann Foods OJSC Olga Motovilova Yauzsky Boulevard, 16, Moscow Phone: +7 095 733 9726/9727 Fax: +7 095 105
5800 www.wbd.com e-mail: motovilova@wbd.ru or Wimm-Bill-Dann Foods OJSC Marina Kagan Phone: +7 095 733 9726/9727 Mobile:
+ 7 095 762 2387 Fax: +7 095 105 5800 e-mail: kagan@wbd.ru Wimm-Bill-Dann Foods OJSC (NYSE: WBD) today announced its
financial results for the three months ended March 31, 2004.
During the first three months of 2004, Wimm-Bill-Dann's sales increased 24.3% year-on-year to US$278.3 million
from US$223.9 million in the first quarter of 2003. Gross margin declined to 26.0% in the first quarter of 2004 from
29.3% during the same period last year. Adjusted EBITDA increased 19.9% compared to the same period in the prior year
while net income fell 25.4% year-on-year.
Commenting on today's announcement, Sergei Plastinin, CEO of Wimm-Bill-Dann Foods OJSC, said: "The first
quarter showed that our regional expansion strategy has already started to contribute to increasing sales, giving us a
solid foundation for sustainable organic growth in the next two to three years. At the same time, in order to gain a
significant share of regional markets for our new premium segment yogurts and dairy desserts, we are currently selling
these products at introductory prices, making them more attractive both to the supply chain and to the final consumer in
the regions. We are also promoting our new products through extensive marketing and advertising in the regions, aimed at
raising consumer awareness and generating loyalty. Further, following an extensive modernization program both in dairy
and juice, our depreciation is relatively high as is the current cost of raw milk. All of these factors are putting
strong pressures on our operating margins. This is why our profitability dynamics will be lagging behind those of sales
in 2004." Key Operating and Financial Indicators of 3m 2004 -0- *T Q1 2004 Q1 2003 Change ----------- ---------
-------- Sales volumes, thousand tons 391.3 374.1 4.6% US$ 'mln US$ 'mln Sales 278.3 223.9 24.3% Dairy 210.5
159.0 32.4% Juice 67.2 64.9 3.5% Water 0.6 - - Gross Profit 72.4 65.7 10.2% Selling and distribution expenses (40.9)
(32.2) 27.0% General and administrative expenses (21.6) (17.7) 22.0% Operating income 7.6 14.6 (47.9%) Financial income
and expenses, net 1.8 (4.7) - Net income 5.3 7.1 (25.4%) Adjusted EBITDA (1) 25.9 21.6 19.9% CAPEX including
acquisitions 10.8 27.4 (60.6%) *T
(1) Note: See Attachment A for definitions of Adjusted EBITDA and Adjusted EBITDA margin and reconciliations to net
income.
Sales in the Dairy Segment increased 32.4% from US$159.0 million in the first three months of 2003 to US$210.5
million in the first three months of 2004, while the average selling price increased by 19.4% year-on-year from US$0.62
per 1 kg in the first quarter of 2003 to US$0.74 per 1 kg in the first quarter of 2004, driven by ruble appreciation, a
change in product mix favoring higher priced products and ruble price increase. Gross margin in the Dairy Segment
decreased from 26.7% in the first three months of 2003 to 23.5% in the first three months of 2004. This was attributable
to the substantially increased price of raw milk and depreciation of the newly installed production lines per 1 kg of
dairy product.
Sales in Wimm-Bill-Dann's Juice Segment increased 3.5% from US$64.9 million in the first three months of 2003 to
US$67.2 million in the first three months of 2004. The average selling price increased 18.2% year-on-year from US$0.55
per liter in the first three months of 2003 to US$0.65 per liter in the first three months of 2004 primarily due to
ruble appreciation, ruble price increase and the change in product mix in favor of higher priced brands. At the same
time, increased depreciation caused by the installation of the new PET line and the full modernization of Ramensky
Plant, rising personnel expenses resulted in gross margin reduction from 36.0% in the first quarter of 2003 to 33.9% in
the first quarter of 2004.
Selling and distribution expenses increased in the first three months of 2004 by 27.0% due to an increase in
transportation, a substantial growth in advertising and marketing expenses in the regions and personnel costs as a
consequence of rising sales volumes. General and administrative expenses grew by 22.0% as a result of the increase in
personnel expenses and repeal of a privilege in paying property tax in Wimm-Bill-Dann's Dairy segment due to
changes in legislation.
Financial income totaled US$1.8 million compared with financial expense of $4.7 million in the first quarter of 2003.
This change is attributable to a US$7.5 million foreign currency gain resulting primarily from appreciation of the
Russian ruble against the U.S. dollar and Wimm-Bill-Dann's U.S. dollar net monetary liability position.
Net income fell 25.4% and stood at US$5.3 million due to substantially higher raw milk prices, personnel costs and
depreciation of newly installed lines. Adjusted EBITDA in the first three months of 2004 increased 19.9% year-on-year
and amounted to US$25.9 million. Adjusted EBITDA margin was 9.3% compared to 9.6% in the first three months of 2003.
Attachment A *Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to US GAAP Net Income
Adjusted EBITDA is a non-U.S. GAAP financial measure. The following table presents reconciliation of Adjusted EBITDA
to net income (and Adjusted EBITDA margin to net income as a percentage of sales), the most directly comparable U.S.
GAAP financial measure. -0- *T 3 months ended 3 months ended March 31, 2004 March 31, 2003 -------------------
-------------------- US$ 'mln % of sales US$ 'mln % of sales Net income 5.3 1.9% 7.1 3.2% Depreciation and
amortization 11.0 3.9% 6.5 2.9% Interest expense 5.5 2.0% 5.2 2.3% Income tax expense 3.0 1.1% 2.6 1.2% Minority
interest 1.1 0.4% 0.2 0.1% Adjusted EBITDA 25.9 9.3% 21.6 9.6% *T
We present Adjusted EBITDA because we consider it important supplemental measure of our performance and believe it is
frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our
industry. Adjusted EBITDA represents net income before interest expense, income taxes and depreciation and amortization
adjusted for minority interest. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of sales.
We use Adjusted EBITDA for the following purposes: (1) according to our compensation policy, certain executive
incentive compensation payments are based on our Adjusted EBITDA performance against budgets; and (2) certain loan
agreements use Adjusted EBITDA (with additional adjustments) to measure our compliance with covenants.
Adjusted EBITDA has limitations as analytical tool, and you should not consider it in isolation, or as substitute for
analysis of our results as reported under U.S. GAAP. Other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative measure. WIMM-BILL-DANN FOODS Consolidated Statements
of Operations and Comprehensive Income (unaudited) (Amounts in thousands of US dollars, except share and per share data)
-0- *T Three months ended March 31, 2004 2003 ----------- ----------- Sales $278,271 $223,866 Cost of sales (205,827)
(158,177) ----------- ----------- Gross profit 72,444 65,689 Selling and distribution expenses (40,927) (32,248) General
and administrative expenses (21,622) (17,706) Other operating expenses (2,259) (1,147) ----------- ----------- Operating
income 7,636 14,588 Financial income and expenses, net 1,797 (4,727) ----------- ----------- Income before provision for
income taxes and minority interest 9,433 9,861 Provision for income taxes (2,999) (2,589) Minority interest (1,143)
(215) ----------- ----------- Net income $5,291 $7,057 =========== =========== Other comprehensive income, net of tax
Currency translation adjustment 11,139 828 ----------- ----------- Comprehensive income $16,430 $7,885 ===========
=========== Net income per share - basic and diluted: $0.12 $0.16 Weighted average number of shares outstanding
44,000,000 44,000,000 *T WIMM-BILL-DANN FOODS Consolidated Balance Sheets (Amounts in thousands of US dollars) -0- *T
March 31, December 31, 2004 2003 ------------- --------------- (unaudited) (audited) ASSETS Current assets: Cash and
cash equivalents $53,749 $40,264 Trade receivables, net 58,110 57,424 Inventory, net 81,834 88,243 Taxes receivable
95,502 92,624 Advances paid 23,862 19,690 Net investment in direct financing leases 1,556 1,551 Deferred tax asset 6,750
5,210 Other current assets 4,464 3,648 ------------- --------------- Total current assets 325,827 308,654 Non-current
assets: Property, plant and equipment, net 405,799 393,769 Intangible assets 3,018 3,005 Goodwill 25,535 24,695 Net
investment in direct financing leases - long-term portion 4,072 4,391 Long-term investments 3,058 2,931 Deferred tax
asset - long-term portion 2,262 1,893 Other long-term assets 4,345 4,547 ------------- --------------- Total non-current
assets 448,089 435,231 ------------- --------------- Total assets $773,916 $743,885 ============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $54,615 $51,487 Advances received
2,212 2,586 Short-term loans 3,911 493 Long-term loans - current portion 1,714 1,769 Notes payable 6,052 6,032 Taxes
payable 13,734 9,272 Accrued liabilities 16,612 10,983 Government grants - current portion 2,269 2,194 Other payables
33,442 36,033 ------------- --------------- Total current liabilities 134,561 120,849 Long-term liabilities: Long-term
loans 7,335 7,882 Long-term notes 202,659 200,926 Other long-term payables 46,291 49,020 Government grants - long-term
portion 6,724 7,052 Deferred taxes - long-term portion 12,272 12,370 ------------- --------------- Total long-term
liabilities 275,281 277,250 ------------- --------------- Total liabilities 409,842 398,099 -------------
--------------- Minority interest 23,026 21,168 Shareholders' equity: Common stock: 44,000,000 shares authorized,
issued and outstanding with a par value of 20 Rubles at March 31, 2004 and December 31, 2003 29,908 29,908 Share premium
account 164,132 164,132 Accumulated other comprehensive income: Currency translation adjustment 31,720 20,581 Retained
earnings 115,288 109,997 ------------- --------------- Total shareholders' equity $341,048 $324,618 -------------
--------------- Total liabilities and shareholders' equity $773,916 $743,885 ============= =============== *T
WIMM-BILL-DANN FOODS Consolidated Statements of Cash Flows (unaudited) (Amounts in thousands of US dollars) -0- *T Three
months ended March 31, 2004 2003 ----------- ----------- Cash flows from operating activities: Net income $5,291 $7,057
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortisation 10,957
6,537 Bad debt and inventory provisions 2,721 1,572 Foreign currency exchange gain (8,062) (473) Minority interest 1,143
215 Other adjustments 485 (658) Changes in operating assets and liabilities: Decrease in inventories 8,381 4,780
Increase in trade accounts receivable (1,318) (3,903) Increase in advances paid (3,480) (12,822) Decrease (increase) in
taxes receivable 10,409 (8,301) (Increase) decrease in other current assets (616) 595 Increase in trade accounts payable
1,367 10,328 (Decrease) increase in advances received (459) 176 (Decrease) increase in taxes payable (6,016) 3,488
Increase in accrued liabilities 5,223 152 Increase in other current payables 2,870 1,156 Decrease in other long-term
payables (7) (96) ----------- ----------- Total cash provided by operating activities 28,889 9,803 -----------
----------- Cash flows from investing activities: Cash paid for acquisition of subsidiaries, net of cash acquired 0
(492) Cash paid for property, plant and equipment (15,095) (16,497) Cash paid for acquisition of short-term investments
(341) - Proceeds from disposal of investments and property, plant and equipment 431 697 Cash paid for net investments in
direct financing leases - (48) ----------- ----------- Total cash used in investing activities (15,005) (16,340)
----------- ----------- Cash flows from financing activities: Repayment of short-term loans and notes payable (185)
(574) Proceeds from short-term loans 3,381 - Repayment of long-term loans and long-term payables (5,018) (3,906)
----------- ----------- Total cash provided by financing activities (1,822) (4,480) ----------- ----------- Net increase
(decrease) in cash and cash equivalents 12,062 (11,017) Impact of exchange rate differences on cash and cash equivalents
1,428 280 Cash and cash equivalents, at beginning of period 40,264 29,340 ----------- ----------- Cash and cash
equivalents, at the end of period $53,754 $18,603 =========== =========== *T
Some of the information contained in this press release may contain projections or other forward-looking statements
regarding future events or the future financial performance of Wimm-Bill-Dann Foods OJSC, as defined in the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements
are only predictions and that actual events or results may differ materially. We do not intend to update these
statements to conform them to actual results. We refer you to the documents Wimm-Bill-Dann Foods OJSC files from time to
time with the U.S. Securities and Exchange Commission, specifically, the Company's most recent Form 20-F. These
documents contain and identify important factors, including those contained in the section captioned "Risk
Factors" in our Form 20-F, that could cause the actual results to differ materially from those contained in our
projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, and
risks associated with our competitive environment, acquisition strategy, ability to develop new products or maintain
market share, brand and company image, operating in Russia, volatility of stock price, financial risk management, and
future growth.
NOTES TO EDITORS
Wimm-Bill-Dann Foods OJSC is a leading manufacturer of dairy and juice products in Russia. The company was founded in
1992.
The Company currently owns 25 manufacturing facilities in 21 locations in Russia and the Commonwealth of Independent
States (CIS), in cluding Ukraine, Kyrgyzstan and Uzbekistan, as well as trade affiliates in 26 cities in Russia and the
CIS.
Wimm-Bill-Dann has a strong and diversified branded portfolio with over 1,100 types of dairy products and over 150
types of juice, nectars and still drinks. The company currently employs over 18,000 people.
In April 2004, Wimm-Bill-Dann was assigned the best in Russia rating of corporate governance by
Standard&Poor's at the level 7.6 (maximum 10). Wimm-Bill-Dann was rated first best in transperency in the
S&P survey of 45 top Russian companies, carried out in September 2003.
Wimm-Bill-Dann was awarded best European Equity Deal of 2002 for its initial public offering by Euroweek and
Institutional Investor magazines. In addition, the company received the Grand Prix for Best Overall Investor Relations
among small and mid-cap companies at the First Annual IR Magazine Russia Awards held in 2004 and organized by IR
Magazine and the Association of Investor Relations Professionals.
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