OREANDA-NEWS. On 27 March 2008 Wimm-Bill-Dann Foods announced its financial results for full year and the fourth quarter ended December 31, 2007.

Highlights of full year 2007:

•Group sales saw strong 38.4% growth to US\\$2,438.3 million
•Gross profit increased 37.9% to US\\$783.4 million
•Underlying * operating income rose 24.5% to US\\$214.0 million
•Underlying net income increased 29.0% to US\\$140.0 million
•Underlying EBITDA [1] increased 28.3% to US\\$300.5 million
•Earnings per share grew to US\\$3.18 from US\\$2.17

Commenting on the results, Tony Maher, Wimm-Bill-Dann’s chief executive officer said, “We are very pleased with the solid results we achieved in 2007, particularly given the continued challenging environment we faced in the latter half of the year in raw material costs. We delivered overall sales growth of 38.4% in 2007, driven by strong performance in each of our businesses.”

“Our beverage business achieved 27.8% growth in sales and an improvement in gross margin to 39.8% from 35.3% in 2006. Our dairy business delivered 40.2% growth in 2007 and experienced only a relatively slight decline in gross margin to 29.2% from 30.5% in 2006 despite an increase in the price of raw milk of 35.7%. Our baby food business continued its impressive growth with sales increasing 46.6% in 2007 and outpacing market growth. Gross margin in Baby Food increased to 45.1% in 2007 from 43.1% in the prior year.”

“Gross profit for the full year increased 37.9% in 2007 driven by the higher sales levels and an improved mix of higher value, higher margin products. EBITDA on an underlying basis also improved on a year-over-year basis, increasing 28.3% in 2007. Our EBITDA margin declined to 12.3% on an underlying basis in 2007 from 13.3% in 2006 due to higher raw material costs exiting the year. On a reported basis, EBITDA increased 37.9% over 2006 and EBITDA margin was essentially flat year-over-year.”

“In conclusion, our performance was strong for the full year of 2007 despite the raw material cost environment that we faced in the latter half of the year and Wimm-Bill-Dann is very well positioned as we look forward. We continue to focus on building on our market leadership, increasing our efficiency as a company, and delivering significant value for our customers and shareholders.”

Sales in the Dairy Segment increased 40.2% to US\\$1,852.5 million for the full year of 2007 from US\\$1,320.9 million in 2006. Sales growth was driven mainly by a solid balance of volume and pricing. Acquisitions made in late 2006 contributed US\\$160.9 million to overall 2007 sales in the Segment. The average dollar selling price rose 21.8% to US\\$1.13 per kg in 2007 from US\\$0.93 per kg in 2006. This increase was driven primarily by average ruble price growth. Our raw milk purchase price increased 64.8% year-on-year in ruble terms (77.5% in US dollar terms) in the fourth quarter and 27.7% year-on-year in ruble terms (35.7% in US dollar terms) for the full year 2007. The gross margin in the Dairy Segment decreased relatively slightly to 29.2% in 2007 from 30.5% in 2006 despite the sharp rise in the price of raw milk.

Beverages

Sales in the Beverage Segment increased 27.8% to US\\$414.1 million for the full year of 2007 from US\\$324.1 million in 2006, driven mainly by volume growth and selling price increases. The average selling price increased 15.9% to US\\$0.84 per liter in 2007 from US\\$0.73 per liter in 2006. The gross margin in the Beverage Segment increased to 39.8% in 2007 from 35.3% in 2006 despite raw materials cost pressure, driven by continued efficiency improvements, better pricing and discount management in all regions.

Baby Food

Sales in the Baby Food Segment increased 46.6% to US\\$171.8 million for the full year of 2007 from US\\$117.2 million in 2006. This increase was driven primarily by volume growth, selling price increases and mix. The average selling price rose 9.8% to US\\$1.94 per kg in 2007 from US\\$1.76 per kg in 2006. The gross margin in the Baby Food Segment increased to 45.1% from 43.1%, driven by the launch of our own production facility in Kursk and a decreased share of co-packing in the overall sales.

Key Cost Elements

Selling and distribution expenses increased to 15.9% of sales for the full year of 2007 compared to 14.0% of sales in 2006. General and administrative expenses fell to 7.4% of sales for the full year of 2007 from 7.6% of sales in 2006.

Financial expenses increased 8.9% for the full year of 2007 to US\\$16.9 million. Our effective tax rate decreased to 27.6% for the full year of 2007 from 29.7% in 2006.

Net Income

Underlying net income increased 29.0% to US\\$140.0 million for the full year of 2007 from US\\$108.5 million in 2006.

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.
  

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.