OREANDA-NEWS. September 6, 2007. Wimm-Bill-Dann Foods OJSC [NYSE: WBD] today announced its financial results for the second quarter and half-year ended June 30, 2007

Downloard press release (pdf).

Highlights of the first half of 2007:

•Strong sales growth in all segments, with net sales up 40.5% to US$1,147.8 million
•Gross profit increased 48.8% to US$377.8 million
•Operating income rose 44.3% to US$108.4 million
•Net income increased 40.8% to US$65.8 million
•EBITDA[1] increased 40.3% to US$147.2 million
•Earnings per share grew to US$1.50 from US$1.06
•Operating cash flow increased 31.3% to US$110.3 million

“I'm very pleased with the excellent results we achieved during the second quarter and first half of the year as our business segments delivered a healthier sales mix and solid volume growth," commented Tony Maher, chief executive officer of Wimm-Bill-Dann Foods OJSC. "Our group sales for the quarter increased a record 40.8 % over the prior year period to US$605.0 million driven by strong organic growth, which generated 31.7% of total revenue growth while acquisitions contributed 9.1%. We are also pleased with the continuous improvement in our gross margins for the quarter and first half of the year despite an extremely challenging cost environment worldwide for raw materials. This is a significant achievement and a credit to our cost management efforts.”

Mr. Maher continued, “For the first half of the year sales in our Dairy division increased 43.4% to US$858.4 million year on year, significantly exceeding industry growth rates, with gross margins expanding to 30%. We continued to make meaningful progress in our Beverages division turnaround strategy, achieving revenue of US$212.1 million for the first half of the year, an increase of 29.6%, with gross margins expanding significantly to 40.8% as compared to 33.8% in the prior year period. Our Baby Food revenue increased a solid 40.7% for the first half of the year to US$77.3 million with gross margin improving to 45.3%. I am pleased with the continued successful execution of our long-term strategy and am confident in our plans for the full year and our ability to continue to deliver sustainable growth across all business units”.

 [1] Note: See Attachment A for definitions of EBITDA and EBITDA margin and reconciliations to net income.

Dairy

Sales in the Dairy Segment increased 43.4% to US$858.4 million in the first six months of 2007 from US$598.4 million in the same period of 2006. Acquisitions made in late 2006 contributed US$78.6 million to the overall sales growth in the Segment. Top-line growth was driven mainly by volume and pricing effects. Increased volumes came also as a result of our own sales offices being opened in more regions. The average dollar selling price rose 13.7% to US$1.02 per kg in the first six months of 2007 from US$0.90 per kg in the same period of 2006. This increase was driven primarily by average ruble price growth. The gross margin in the Dairy Segment increased to 29.9% from 29.4% despite increasing raw milk costs. The raw milk purchase price accelerated 15.3% year-on-year in dollar terms in the first six months of 2007 due to wider market conditions affecting all producers.

Beverages

Sales in the Beverages Segment increased 29.6 to US$212.1 million in the first six months of 2007 from US$163.7 million in the same period last year, driven mainly by a healthy balance of price and volumes, marking a continued recovery in the Segment. The average selling price increased 18.6% to US$0.82 per liter in the first six months of 2007 from US$0.69 per liter in the first six months of 2006. Despite continued cost pressure from the raw materials, the gross margin in the Beverages Segment increased to 40.8% in the first six months of 2007 from 33.8% in the first six months of 2006, driven by improved efficiency and better pricing and discount management in all regions.

Baby Food

Sales in the Baby Food Segment increased 40.7% to US$77.3 million in the first six months of 2007 from US$55.0 million in the same period last year. This was driven primarily by volume growth. The average selling price rose 7.1% to US$1.84 per kg in the first six months of 2007 from US$1.72 per kg in the first six months of 2006. The gross margin in the Baby Food Segment increased to 45.3% from 41.6%.

Key Cost Elements

General and administrative expenses fell to 7.5% of sales in the first six months of 2007 compared to 7.7% of sales in the first six months of 2006. As an expected consequence of enhancing our route-to-market, entering and increasing our presence in new regional markets and establishing new sales channels, selling and distribution expenses increased to 16.2% of sales in the first six months of 2007 compared to 13.7% in the first six months of 2006. As planned, increased advertising and marketing expenditures led to the rise in selling and distribution expenses in the second quarter of 2007. Marketing and advertising expenditure in the second quarter of 2007 amounted to US$40.0 million or 6.6% of sales, compared to US$17.8 million, or 4.2% of sales in the second quarter of 2006. Although marketing costs will continue to remain significant throughout the year, as a percentage of sales they will be lower than in the second quarter.

Operating margin increased to 9.4% in the first six months of 2007, compared to 9.2% in the first six months of 2006. EBITDA margin held steady at 12.8%.

In the first six months of 2007, financial expenses increased 124.3% y-o-y to US$12.5 million, primarily due to decreased foreign currency gains and higher interest expenses. Our effective tax rate decreased slightly to 29.7% from 30.3% in the first six months of 2006.

Net Income

Net income increased 40.8% to US$65.8 million in the first six months of 2007 from US$46.7 million in the first six months of 2006.

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 minority 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.

For more detailed information look on http://www.wbd.com/page_pid_266_news_145.aspx