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Eastern Promise drives Baltic Beverages growth

By Neil Merrett, 02-Aug-2007

Related topics: Financial

Eastern European beer group Baltic Beverages Holding (BBH) increased net sales by 37.1 per cent to €1.3bn during the first half of the current fiscal year, as its continued to expand throughout the region.

The company, which is owned jointly by Carlsberg and Scottish & Newcastle, yesterday said that pre-tax profits were up 37.5 per cent to €375m for the period. Operating margins for the half-year were up 1.7 percentage points to 22.4 per cent.

Market share gains were posted for all the group's operations, as emerging beer markets in Eastern Europe continue to create growth opportunities for brewers.

The company said that the integration of brewer Baltika into its operations continued to accelerate its growth, though this was partially offset by increased production costs for the period.

In its key Russian market, BBH lifted volumes by 22.7 per cent for the half, partially because of unseasonably mild weather during the first quarter.

Rising disposable income contributed to the growth, as did continued disruption to the country's wine and spirits supply during the second half of the previous financial year, the company said.

Through its Baltika Breweries division, market share within the country was up by 1.7 percentage points to 37.6 per cent over the same period last year.

Volumes of licensed brands also doubled over the period, thanks in part to the success of labels such as Tuborg beer.

Outside of Russia, BBH's market share in the Baltics rose by 0.7 percentage points to 44.4 per cent. Beer volumes in the market increased by 6.8 per cent to defy the poor weather conditions experienced towards the end of the second quarter.

Market share in the Ukrainian market was also up by 0.7 percentage points to 18.6 per cent as the company continues its aim to turnaround the division.

In Kazakhstan, volumes were up 55 per cent, as the group extended its dominance within the country with a market share of 42.3 per cent, up 4.1 percentage points over the same period last year.

With the company continuing to expand eastwards, BBH announced that its operations in Uzbekistan were now operational following the first shipments last month from its Tashkent brewery in the country.

Looking ahead, BBH said it expected Russia to continue to lead growth throughout its operations, with continued growth in the country of about 11 per cent to 13 per cent expected for the full year.

BBH operates eight breweries across Eastern Europe.

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