OREANDA-NEWS. On 21 March 2008 JSC Lebedyansky, the leading juice producer and one of the main players in the baby food market in Russia, announced its unaudited financial and operating results for the 12 months ended 31 December 2007.

 Key Operating and Financial Highlights for the 12 months ending 31 December 2007

Total sales volumes (including Troya-Ultra’s 87m litres[1]) reached 1,137m litres, up 22% compared to last year.  Total sales volumes excluding Troya-Ultra reached 1,050m litres, up 14% compared to last year

-         Juice volumes increased by 18% to 984m litres including Troya-Ultra (and by 9% to 897m litres excluding Troya-Ultra)

-         Baby Food volumes increased by 21% to 71m litres

-         Mineral Water volumes increased by 102% to 82m litres
Net revenues increased by 33% to US\\$944.8m, including Troya-Ultra. Excluding Troya-Ultra, net revenues increased by 27% to US\\$892.5m

-         Juice net revenues increased by 30% to US\\$803.0m including Troya-Ultra (and by 23% to US\\$750.7m excluding Troya-Ultra)

-         Baby Food net revenues increased by 42% to US\\$123.8m

-         Mineral Water net revenues increased by 147% to US\\$18.0m
Group EBITDA increased by 12% year-on-year to US\\$155.6m

-         Juice EBITDA increased by 9% to US\\$118.3m

-         Baby Food and Mineral Water EBITDA increased by 23% to US\\$37.4m
Net income before minority interest was down by 10% amounting to US\\$79.2m
Capital expenditure for 2007 was US\\$103m for Juice and US\\$28m for Baby Food and Mineral Water

As per Nielsen Company Retail Audit, Lebedyansky maintained its leading position in the juice market with a 30.8%[2] volume share (including Troya-Ultra’s 2.6%) and 31.7% value share (including Troya-Ultra’s 1.9%).

 Commentary on the results

 Lebedyansky's consolidated net revenues reached US\\$944.8m in 12m 2007 compared to US\\$709.7m in 2006, representing an increase of 33%.  This increase was primarily driven by regional expansion of our distribution system, development of direct delivery and efficient pricing and marketing policies.  The Company derived 85% of its net revenues from Juice, 13% from Baby Food and 2% from Mineral Water.  The "Ya" and "Tonus" brands showed growth of 21%, "Fruktovy Sad" 19%, "Privet" 49% and "FrutoNyanya" 43%.  Net revenues of private label products increased by 33% compared to 2006.

 Group gross margin increased by 0.2% to 42.0% in 2007 due to increase in selling prices (up by 11%  for Juice, 17% for Baby Food, 23% for Mineral Water and 9% for Group in US Dollar terms), which more than offset increase in cost of sales of 9%, mainly driven by raw material and packaging price inflation of 7%. Lebedyansky improved gross margin across all segments; Juice remained stable at 40.2%, Baby Food was up 0.1% and Mineral Water was up 7.4% in 2007.

 Selling, general and administrative expenses for 12m 2007 reached 28.8% of total net revenues, up from 24.5% in 2006 mainly due to increase in freight/delivery (up by 2% of total net revenues versus 2006), warehousing costs (up by 1% of total net revenues versus 2006) and wages (up by 0.5% of total net revenues versus 2006).

 Freight and delivery costs increased by 45% per litre mainly due to 34% increase in transport rates and Rouble appreciation of 6%.  Warehousing costs increased by 53% per litre mainly due to seasonal increase in leased warehouse capacity of 7%, abnormal obsolete finished goods write-offs of 12% caused by a deficit of storage capacity at the Lebedyansky plant, warehousing services rates inflation of 24% and Rouble appreciation of 6% against the US Dollar.

 Group EBITDA for the 12m 2007 increased by 12% year-on-year to US\\$155.6m. 12m 2007 EBITDA margin was 16.5% compared to 19.6% in 12m 2006. Juice EBITDA increased by 9% to US\\$118.3m with EBITDA margin down by 2.9% to 14.7%.  Baby Food and Mineral Water EBITDA increased by 23% to US\\$37.4m with EBITDA margin down by 5.8%.

[1] The Group consolidates Troya-Ultra results since November 2006

[2] Nielsen Company retail audit for 2007