Wimm-Bill-Dann Foods OJSC [NYSE: WBD] today announced its
financial results for the full year and the fourth quarter ended
December 31, 2009.
Highlights for the full year and
the fourth quarter of 2009
- Group gross margin improved 110
basis points year-on-year to 33.4% in the full year of 2009
- Group gross margin decreased to
30.1% in the fourth quarter of 2009 from 32.7% in the fourth
quarter 2008, driven by acute shortage and sharp increase in raw
milk costs at the end of 2009
- EBITDA margin increased to 14.1%
in the full year of 2009 compared to 12.8% in 2008
- On a constant currency basis (in
rubles), EBITDA increased by 8.5% year-on-year in the full year of
2009
- Group revenue in US dollars
decreased 22.8% year-on-year to US$2,181.1 million in the full year
of 2009, driven by ruble devaluation, and partially offset by
improved sales mix in Dairy and stronger volumes in Beverages and
Baby Food
- Operating profit margin improved
to 9.2% in the full year of 2009 from 8.7% in 2008
- Net income in US dollars
increased 14.6% year-on-year to US$116.5 million in the full year
of 2009
- On a constant currency basis (in
rubles), net income increased by 46.4% year-on-year in the full
year of 2009
- As of the end of the full year
of 2009, our net debt decreased by 30.5% year-on-year to US$275.3
million
- Our free cash flow grew to
US$187.0 million in the full year of 2009 from US$139.8 million in
the same period of 2008
“Wimm-Bill-Dann achieved solid growth in profitability and
significantly improved its balance sheet in 2009 despite continuing
macroeconomic pressure and a temporary shortage of raw milk late in
the year, which impacted dairy sales and margins in the fourth
quarter,” said Tony Maher, Wimm-Bill-Dann’s Chief Executive
Officer. “While we were forced to restrict the production of some
of our dairy products in the fourth quarter, on the whole, we
succeeded in further strengthening our market position. We
increased our market share and maintained our leading market
position in baby food. We accelerated share gains in beverages,
enhancing our market position. Furthermore, and most importantly,
we are confident in the fundamentals of all of our markets and
remain fully committed to our strategy of profitable growth coupled
with sound financial discipline.”
“Group revenue in US dollars decreased 22.8% year-on-year to
US$2,181.1 million in the full year of 2009, and by 7% year-on-year
to US$585.5 million in the fourth quarter of 2009, driven by ruble
devaluation, and partially offset by improved sales mix in dairy
and stronger volumes in beverages and baby food. Group revenue in
rubles stood flat year-on-year in the fourth quarter of 2009.”
“For the full year of 2009, group gross margins
increased 110 basis points year-over-year to 33.4%, reflecting
improved gross margins in all business segments. In 2009, gross
margin in beverages increased 60 basis points to 39.7%, dairy
improved 30 basis points to 29.4%, and baby food continued its
extraordinary performance, reaching 48.0%, up 110 basis points.
Additionally, our EBITDA margin increased 130 basis points
year-over-year to 14.1% in 2009, evidence of our efforts to drive
efficiency gains and cost savings throughout the business.”
“Despite the new challenges we faced in 2009, we remain
optimistic about the coming year. We made significant progress in
the last year strengthening our operations, investing in our
brands, expanding our market share, and strengthening our balance
sheet,” Tony Maher added.
Key Financial Indicators for
Full Year and 4Q 2009 vs. 2008
FY 2009
FY 2008 Change 4Q 2009
4Q 2008 Change US$ ‘mln
US$ ‘mln
US$ ‘mln
US$ ‘mln
Sales 2,181.1 2,823.6 (22.8%)
585.5 629.4 (7.0%) Dairy 1,530.2 2,095.9
(27.0%) 414.8 465.9 (11.0%) Beverages 406.6 473.2 (14.1%) 103.2
100.7 2.5% Baby Food 244.2 254.5 (4.0%) 67.4 62.8 7.4%
Gross
profit 728.3 913.0 (20.2%) 176.4
206.0 (14.4%) Gross margin, % 33.4%
32.3% 110 bp 30.1% 32.7% (260
bp) Selling and distribution expenses (379.7) (488.1) (22.2%)
(107.4) (122.4) (12.3%) General and administrative expenses (137.4)
(171.4) (19.8%) (40.3) (34.9) 15.4%
Operating income
201.7 245.1 (17.7%) 24.6 51.5
(52.3%) Operating margin, % 9.2% 8.7%
50 bp 4.2% 8.2% (400 bp) Financial
expenses, net (43.2) (101.5) (57.4%) (11.5) (65.0) (82.3%)
Net
income (loss) 116.5 101.7 14.6% 7.1
(7.9) 190.6% EBITDA 306.6 361.0
(15.1%) 60.0 78.2 (23.3%) EBITDA
margin, % 14.1% 12.8% 130
bp 10.2% 12.4% (220
bp) CAPEX excluding acquisitions 121.8 195.3
(37.6%) 45.0 36.4 23.6%
Dairy
Sales in US dollars in the Dairy Segment decreased 27.0% to
US$1,530.2 million in the full year of 2009 from US$2,095.9 million
in the same period of 2008. This was driven mainly by the negative
exchange rate. The average dollar selling price declined 21.8% to
US$1.11 per 1 kg in the full year of 2009 from US$1.42 per 1 kg in
the same period last year. The gross margin in the Dairy Segment
increased to 29.4% in the full year of 2009 from 29.1% in 2008,
driven by improved sales mix. Due to a sharp increase in raw milk
costs in late 2009, caused by an acute dry and raw milk shortage,
the gross margin in the Dairy Segment fell to 24.9% in the fourth
quarter of 2009 from 28.9% in the fourth quarter of 2008.
Beverages
Sales in US dollars decreased 14.1% to US$406.6 million in the
full year of 2009 compared to US$473.2 million in the same period
of 2008. This was driven by the negative exchange rate and
partially offset by strong volume growth and pricing. The average
dollar selling price decreased 17.5% to US$0.76 per liter in the
full year of 2009 from US$0.93 per liter in the same period of
2008. The gross margin in the Beverage Segment increased to 39.7%
in the full year of 2009 from 39.1% in 2008, due to improved
efficiency and lower concentrate costs.
Baby Food
Sales in US dollars in the Baby Food Segment decreased 4.0% to
US$244.2 million in the full year of 2009 from US$254.5 million in
the same period of 2008, due to the negative exchange rate and
partially offset by strong volume growth. The average dollar
selling price decreased 20.6% to US$1.82 per kg in the full year of
2009 from US$2.29 per kg in 2008. The gross margin in the Baby Food
Segment increased to 48.0% in the full year of 2009 from 46.9% in
2008.
Key Cost Elements
In the full year of 2009, selling and distribution expenses
decreased 22.2% year-on-year to US$379.7 million. Sales and
distribution expenses as a percentage of sales increased slightly
by 10 basis points year-on-year to 17.4% in the full year of 2009,
driven by advertising and marketing expenses, which increased, as a
percentage of sales, to 6.4% in 2009 from 5.0% in 2008. General and
administrative expenses decreased 19.8% year-on-year to US$137.4
million in the full year of 2009. General and administrative
expenses, as a percentage of sales, increased by 20 basis points
year-on-year to 6.3%.
Operating profit in US dollars decreased 17.7% year-on-year to
US$201.7 million in the full year of 2009. Operating profit margin
improved to 9.2% in the full year of 2009 from 8.7% in 2008.
EBITDA in US dollars declined 15.1% year-on-year to US$306.6
million. EBITDA margin improved to 14.1% in the full year of 2009
compared to 12.8% in 2008. On a constant currency basis (in
rubles), EBITDA increased 8.5% year-on-year in the full year of
2009.
In the full year of 2009, financial expenses declined 57.4% to
US$43.2 million compared to US$101.5 million in the same period of
2008. This was mainly due to a decrease in currency remeasurement
loss. In the full year of 2009, currency remeasurement loss
amounted to US$11.6 million compared to the loss of US$61.4 million
in 2008. Currency remeasurement loss is a non cash item.
Our effective tax rate decreased to 25.7% in the full year of
2009 from 27.8% in 2008.
Net Income
Net income in US dollars increased 14.6% to US$116.5 million in
the full year of 2009 from US$101.7 million in the full year of
2008. In the fourth quarter of 2009, net income in US dollars
amounted to US$7.1 million compared to the net loss of US$7.9
million in the fourth quarter of 2008.
On a constant currency basis (in rubles), net income increased
by 46.4% year-on-year in the full year of 2009, and grew almost
300% in the fourth quarter of 2009 year-on-year.
Debt and Cash Flows
As of the end of the full year of 2009, our net debt decreased
by 30.5% year-on-year to US$275.3 million, and our net
debt-to-EBITDA ratio declined to 0.9 as of the end of 2009 from 1.1
in 2008.
Operating cash flow for the full year of 2009 totaled $312.3
million compared to $321.2 million in 2008. Our free cash flow grew
to US$187.0 million in the full year of 2009 from US$139.8 million
in the same period of 2008.
Attachment A
Reconciliation of EBITDA and
EBITDA margin to US GAAP Net Income
EBITDA is a non-U.S. GAAP
financial measure. The following table presents reconciliation of
EBITDA to net income (and EBITDA margin to net income as a
percentage of sales), the most directly comparable U.S. GAAP
financial measure.
12
months ended
12
months ended
December 31, 2009
December 31, 2008
US$ ‘mln
% of sales
US$ ‘mln
% of sales
Net income 116.5 5.3% 101.7 3.6% Add: Depreciation and
amortization 104.9 4.8% 115.8 4.1% Add: Income tax expense 40.7
2.0% 39.9 1.4% Add: Interest expense 33.5 1.5% 44.5 1.6% Less:
Interest income (4.6) (0.2%) (6.6) (0.2%) Less: Currency
remeasurement (gains)/losses, net 11.6 0.5% 61.4 2.2% Add: Bank
charges 2.7 0.1% 2.9 0.1% Add: Noncontrolling interests 1.2 0.1%
2.0 0.1% Add: Other (gains)/losses 0.1 0.01% (0.6) (0.02%)
EBITDA 306.6 14.1% 361.0 12.8%
EBITDA represents net income
before interest, income taxes and depreciation and amortization,
adjusted for interest income, currency remeasurement gains, bank
charges and other financial expenses and noncontrolling interest.
EBITDA margin is EBITDA expressed as a percentage of sales.
We present EBITDA because we
consider it an important supplemental measure of our operating
performance. In particular, we believe EBITDA provides useful
information to securities analysts, investors and other interested
parties because it is used in the “debt to EBITDA” debt incurrence
financial measurement in certain of our financing arrangements.
EBITDA has limitations as an
analytical tool, and you should not consider it in isolation, or as
substitute for analysis of our operating results as reported under
U.S. GAAP. Moreover, other companies in our industry may calculate
EBITDA differently or may use it for different purposes than we do,
limiting its usefulness as a comparative measure.
EBITDA also should not be
considered as an alternative to cash flow from operating activities
or as a measure of our liquidity. In particular, EBITDA should not
be considered as a measure of discretionary cash available to us to
invest in the growth of our business.
Consolidated Statements of
Financial Position
(Amounts in thousands of U.S.
dollars)
December 31,
2009(unaudited)
2008(audited)
Assets Current assets: Cash and cash equivalents
$
248,521
$ 277,252 Trade receivables, net 112,083 125,453 Inventory 191,334
223,768 Taxes receivable 32,304 64,916 Advances paid 22,678 14,834
Deferred tax asset 15,159 11,828 Other current assets 19,381
15,699
Total current assets
641,460 733,750 Non-current assets:
Property, plant and equipment, net 699,996 693,468 Intangible
assets, net 38,688 34,999 Goodwill 105,643 108,748 Other
non-current assets 3,017 6,000
Total non-current assets 847,344
843,215 Total assets $
1,488,804 $ 1,576,965
Consolidated Statements of
Financial Position
(Amounts in thousands of U.S.
dollars)
(continued)
December 31,
2009(unaudited)
2008(audited)
Liabilities and equity Current liabilities: Trade
accounts payable $
135,825
$ 133,886 Advances received 10,762 8,342 Short-term loans 4,521
66,278 Long-term loans, current portion 22,308 8,632 Long-term
notes payable, current portion 185,835 159,153 Taxes payable 13,667
18,984 Accrued liabilities 54,969 33,864 Other payables
28,249 43,073
Total current
liabilities 456,136 472,212 Long-term
liabilities: Long-term loans 285,998 327,157 Long-term notes
payable - 88,494 Other long-term payables 21,215 10,048 Deferred
taxes – long-term portion 22,179 22,754
Total long-term liabilities 329,392
448,453 Total liabilities
785,528 920,665
Equity
Shareholders’ equity: Common stock: 44,000,000 shares
authorized and issued with a par value of 20 Russian rubles;
41,846,022 shares outstanding as of December 31, 2009 and
43,725,535 shares outstanding as of December 31, 2008 29,908 29,908
Share premium account 163,781 164,132 Treasury stock, at cost
(54,802 ) (3,014 ) Accumulated other comprehensive income (loss):
Currency translation adjustment (32,167 ) (17,214 ) Retained
earnings 587,160 470,625
Equity attributable to shareholders 693,880
644,437 Equity
attributable to noncontrolling interests
9,396
11,863 Total equity
703,276 656,300
Total liabilities and equity $
1,488,804 $ 1,576,965
Consolidated Statements of
Income
(Amounts in thousands of U.S.
dollars, except share and per share data)
Year ended December 31,
2009(unaudited)
2008(audited)
2007(audited)
Sales $ 2,181,062 $
2,823,564 $ 2,438,328 Cost of
sales (1,452,737 )
(1,910,528 ) (1,654,879 )
Gross profit 728,325 913,036
783,449 Selling and distribution expenses (379,659 )
(488,110 ) (387,853 ) General and administrative expenses (137,440
) (171,400 ) (180,922 ) Other operating expenses, net (9,552
) (8,383 ) (704 ) Operating
income
201,674 245,143 213,970
Financial income and expenses, net (43,224 )
(101,504 ) (16,851 )
Income before
provision for income taxes 158,450 143,639
197,119 Provision for income taxes (40,678 ) (39,898
) (54,302 )
Consolidated net income $ 117,772
$ 103,741 $
142,817
Net income attributable to
noncontrolling interests
(1,237 ) (2,029 ) (2,769 )
Net income attributable to WBD
Foods shareholders
$ 116,535 $ 101,712
$ 140,048
Net income per common share
attributable to WBD Foods shareholders - basic and diluted
$ 2.73 $ 2.31
$ 3.18 Weighted average
number of shares outstanding, basic and diluted 42,763,668
43,993,827 44,000,000
Condensed Consolidated Statements
of Cash Flows
(Amounts in thousands of U.S.
dollars)
Year ended December 31,
2009(unaudited)
2008(audited)
2007(audited)
Cash flows from operating activities:
Consolidated net income $ 117,772 $
103,741 $ 142,817 Adjustments to
reconcile net income to net cash provided by operating activities
117,955 183,941 71,720 Changes in operating assets and liabilities
76,569 33,508
(117,733 )
Total cash provided by operating
activities $ 312,296 $
321,190 $ 96,804
Cash flows from investing activities: Cash paid for
property, plant and equipment (128,846 ) (189,003 ) (189,049 )
Proceeds from disposal of property, plant and equipment 2,683 6,454
3,668 Cash returned from short-term bank deposits and other current
assets – – 6,800 Other investing activities 901
1,195 390
Net cash
used in investing activities (125,262 )
(181,354 )
(178,191 ) Cash flows from financing
activities: Proceeds from long-term notes payable, net of debt
issuance costs 95,814 207,473 147,909 Short-term loans and notes,
net (56,312 ) (30,454 ) (33,946 ) Repayment of long-term loans and
notes (160,724 ) (308,917 ) (5,081 ) Proceeds from long-term loans
7,233 315,579 6,778 Repayment of long-term payables (11,891 )
(14,445 ) (18,811 ) Cash paid for treasury stock acquisition
(58,632 ) (3,014 ) – Dividends paid to noncontrolling interests
(544 ) – (5,420 ) Cash paid for acquisition of subsidiaries, net of
cash acquired (2,280 ) (4,050 )
(24,850 )
Total cash provided by (used in) financing
activities (187,336 )
162,172 66,579
Impact of exchange rate differences on cash and cash equivalents
(28,429 ) (58,208 ) 7,950
Net increase (decrease) in cash and cash equivalents
(28,731 ) 243,800 (6,858 )
Cash and cash equivalents,
at beginning of the year
277,252 33,452
40,310 Cash and cash equivalents, at
the end of the year $ 248,521
$ 277,252 $ 33,452
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 was founded in 1992 and is the largest
manufacturer of dairy products and a leading producer of juices and
beverages in Russia and the CIS. The company produces dairy
products (main brands include: Domik v Derevne, Chudo, Imunele, Bio
Max and more), juices (J7, Lubimy Sad, 100% Gold), Essentuki
mineral water and Rodniki Rossii natural water, Zdraivery kids’
brand and Agusha baby food.
The company has 37 manufacturing facilities in Russia, Ukraine,
Kyrgyzstan, Uzbekistan and Georgia with over 16,000 employees. In
2005, Wimm-Bill-Dann became the first Russian dairy producer to
receive approval from the European Commission to export its
products into the European Union.
In 2009, Standard & Poor's Governance Services confirmed
WBD’s governance, accountability, management, metrics, and analysis
(GAMMA) score “GAMMA- 7+”. The score reflects the effective work of
the Board of Directors and, in particular, the real influence of
independent directors in the decision-making process and the
adherence of the controlling shareholders to the highest standards
of corporate governance.
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