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Efes Breweries Shows Improvement in Russia

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Efes Breweries Shows Improvement in Russia

Efes Breweries Shows Improvement in Russia
August 24
11:32 2010

Despite the continued adverse economic climate and the significant excise tax increase in Russia, one of its key markets, Efes Breweries International, which operates in the Commonwealth of Independent States (CIS), Eastern Europe and the Balkans, has reported higher volumes, revenues and EBITDA in the first half to June 30th 2010, marked by a major improvement in the second quarter. Volumes increased by 13.2% to 7.6m hectolitres in the first half compared to the corresponding period in 2009, net revenues grew by 13.2% to $472m and EBITDA by 9% to $91.1m, although the margin fell 75bps to 19.3%. However, operating profit declined by 2.2% to $40.2m compared to the first half of 2009.

“In the second quarter of 2010, higher volumes as well as an another price increase by the beginning of April in Russia to reflect higher taxes eased the pressure on margins and EBI’s operating profitability improved significantly compared to the first quarter of the year. In addition, lower input costs and a stronger Ruble versus US Dollar in 2010, largely absorbing the negative effect of excise tax hikes and higher operating expenses, continued to help us to achieve better margins in this quarter,” says Alejandro Jimenez, chief executive and chairman of EBI. The group has revised its outlook for 2010 upwards and is now forecasting to complete the year with high single digit volume growth and flattish gross and EBITDA margins.

In Russia, which accounted for 78% of EBI’s sales volume in the first half, volume increased by 12.2% to 5.9m hectolitres, as EBI once again managed to show positive momentum. EBI expects an 8-10% volume contraction in the Russian beer market in 2010, mainly due to the substantially higher beer prices to reflect the significant excise tax increase in addition to the challenging economic conditions.

Having commenced its operations in 1999 with two breweries in Kazakhstan and Russia, EBI’s current operating territory consists of Russia, Moldova, Kazakhstan and Serbia, where it has ten breweries with a total annual brewing capacity of 24.6m hectoliters and an annual malt production capacity of 139, 000 tonnes. EBI’s operating territories include some of the largest or fastest growing beer markets in Europe and Eurasia, all of which possess significant potential for further growth due to their improving macroeconomic trends and consequently higher purchasing power as well as the low base of per capita beer consumption across these countries.

EBI is a majority-owned subsidiary of Anadolu Efes, the leading beverage company in Turkey listed on the Istanbul Stock Exchange.

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