Interim financial statements
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| BALANCE SHEET | | | | | | |
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| | | EEK | | | € | |
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| (In thousands) | 30 | 30 | 31 | 30 | 30 | 31 |
| | Septem | Septem | Decembe | Septemb | Septemb | December |
| | ber | ber | r 2006 | er 2007 | er | 2006 |
| | 2007 | 2006 | | | 2006 | |
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| ASSETS | | | | | | |
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| Cash and cash | 1,347 | 86,312 | 118,876 | 86 | 5,516 | 7,597 |
| equivalents (note | | | | | | |
| 2) | | | | | | |
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| Trade receivables | 77,086 | 67,939 | 71,944 | 4,927 | 4,342 | 4,598 |
| (note 3) | | | | | | |
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| Other receivables | 17,559 | 10,538 | 7,883 | 1,122 | 674 | 504 |
| and prepayments | | | | | | |
| (note 4) | | | | | | |
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| Inventories (note | 69,996 | 59,140 | 58,771 | 4,474 | 3,780 | 3,756 |
| 5) | | | | | | |
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| TOTAL CURRENT | 165,98 | 223,92 | 257,474 | 10,609 | 14,312 | 16,455 |
| ASSETS | 8 | 9 | | | | |
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| Non-current | | | | | | |
| assets | | | | | | |
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| Long-term | 6,740 | 8,380 | 7,740 | 431 | 537 | 495 |
| financial | | | | | | |
| investments (note | | | | | | |
| 6) | | | | | | |
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| Property, plant | 289,54 | 286,28 | 277,788 | 18,505 | 18,296 | 17,754 |
| and equipment | 6 | 0 | | | | |
| (note 7) | | | | | | |
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| Intangible assets | 587 | 824 | 990 | 37 | 52 | 63 |
| (note 8) | | | | | | |
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| TOTAL NON-CURRENT | 296,87 | 295,48 | 286,518 | 18,973 | 18,885 | 18,312 |
| ASSETS | 3 | 4 | | | | |
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| TOTAL ASSETS | 462,86 | 519,41 | 543,992 | 29,582 | 33,197 | 34,767 |
| | 1 | 3 | | | | |
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| LIABILITIES AND | | | | | | |
| EQUITY | | | | | | |
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| Current | | | | | | |
| liabilities | | | | | | |
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| Lease liabilities | 27,320 | 131 | 131 | 1,746 | 8 | 8 |
| (note 9) | | | | | | |
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| Trade payables | 28,563 | 21,667 | 27,472 | 1,826 | 1,385 | 1,756 |
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| Other payables | 49,231 | 60,923 | 59,463 | 3,146 | 3,894 | 3,801 |
| (note 10) | | | | | | |
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| Packaging | 32,729 | 23,536 | 23,147 | 2,092 | 1,505 | 1,479 |
| repurchase | | | | | | |
| obligation (note | | | | | | |
| 11) | | | | | | |
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| TOTAL CURRENT | 137,84 | 106,25 | 110,213 | 8,810 | 6,792 | 7,044 |
| LIABILITIES | 3 | 7 | | | | |
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| Non-current | | | | | | |
| liabilities | | | | | | |
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| Finance lease | 257 | 415 | 376 | 16 | 27 | 24 |
| liabilities (note | | | | | | |
| 9) | | | | | | |
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| Equity (note 12) | | | | | | |
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| Share capital | 80,000 | 80,000 | 80,000 | 5,113 | 5,113 | 5,113 |
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| Statutory capital | 8,000 | 8,000 | 8,000 | 511 | 511 | 511 |
| reserve | | | | | | |
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| Other reserves | | | | | | |
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| Retained earnings | 145,40 | 227,09 | 227,099 | 9,293 | 14,514 | 14,514 |
| | 3 | 9 | | | | |
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| Profit for the | 91,358 | 97,642 | 118,304 | 5,839 | 6,240 | 7,561 |
| period | | | | | | |
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| TOTAL EQUITY | 324,76 | 412,74 | 433,403 | 20,756 | 26,378 | 27,699 |
| | 1 | 1 | | | | |
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| TOTAL LIABILITIES | 462,86 | 519,41 | 543,992 | 29,582 | 33,197 | 34,767 |
| AND EQUITY | 1 | 3 | | | | |
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| INCOME STATEMENT | | | | | | |
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| (In thousands) | | EEK | | | € | |
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| | Januar | Januar | | January | January | |
| | y- | y- | | - | - | |
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| | Septem | Septem | | Septemb | Septemb | |
| | ber | ber | | er | er | |
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| | 2007 | 2006 | 2006 | 2007 | 2006 | 2006 |
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| Sales revenue and | | | | | | |
| other income | | | | | | |
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| Sales revenue (note | 720,80 | 595,06 | 770,13 | 46,068 | 38,032 | 49,220 |
| 13) | 1 | 8 | 3 | | | |
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| Other income | 1,915 | 535 | 1,511 | 122 | 34 | 97 |
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| Total sales revenue | 722,71 | 595,60 | 771,64 | 46,190 | 38,066 | 49,317 |
| and other income | 6 | 3 | 4 | | | |
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| Expenses | | | | | | |
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| Changes in work in | | | | | | |
| progress and | | | | | | |
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| finished goods | -4,097 | -3,724 | -1,973 | -262 | -238 | -126 |
| inventories | | | | | | |
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| Cost of materials, | 288,16 | 236,18 | 303,88 | 18,418 | 15,095 | 19,422 |
| consumables and | 6 | 8 | 4 | | | |
| services used (note | | | | | | |
| 15) | | | | | | |
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| Other operating | 175,38 | 133,88 | 182,06 | 11,209 | 8,557 | 11,636 |
| expenses (note 15) | 6 | 6 | 3 | | | |
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| Labour costs (note | 72,554 | 62,513 | 85,354 | 4,637 | 3,996 | 5,455 |
| 15) | | | | | | |
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| Depreciation and | 41,471 | 43,874 | 58,590 | 2,650 | 2,804 | 3,745 |
| amortisation charges | | | | | | |
| (notes 7, 8) | | | | | | |
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| Other expenses (note | 1,535 | 2,871 | 3,904 | 98 | 184 | 249 |
| 15) | | | | | | |
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| Total expenses | 575,01 | 475,60 | 631,82 | 36,750 | 30,398 | 40,381 |
| | 5 | 8 | 2 | | | |
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| OPERATING PROFIT | 147,70 | 119,99 | 139,82 | 9,440 | 7,668 | 8,936 |
| | 1 | 5 | 2 | | | |
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| Net financial items | 67 | 1,543 | 2,378 | 4 | 99 | 152 |
| (note 16) | | | | | | |
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| PROFIT BEFORE TAX | 147,76 | 121,53 | 142,20 | 9,444 | 7,767 | 9,088 |
| | 8 | 8 | 0 | | | |
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| Income tax expense | 56,410 | 23,896 | 23,896 | 3,605 | 1,527 | 1,527 |
| (note 18) | | | | | | |
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| PROFIT FOR THE | 91,358 | 97,642 | 118,30 | 5,839 | 6,240 | 7,561 |
| PERIOD | | | 4 | | | |
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| Basic earnings per | 11.42 | 12.21 | 14.79 | 0.73 | 0.78 | 0.95 |
| share (note 17) | | | | | | |
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| Diluted earnings per | 11.42 | 12.21 | 14.79 | 0.73 | 0.78 | 0.95 |
| share (note 17) | | | | | | |
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| INCOME STATEMENT, Q3 | | | | |
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| (In thousands) | | EEK | | € |
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| | 2007 | 2006 | 2007 | 2006 |
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| Sales revenue and other income | | | | |
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| Sales revenue (note 13) | 256,646 | 245,172 | 16,403 | 15,670 |
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| Other income | 1,823 | 409 | 116 | 26 |
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| Total sales revenue and other | 258,469 | 245,581 | 16,519 | 15,696 |
| income | | | | |
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| Expenses | | | | |
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| Changes in work in progress and | | | | |
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| finished goods inventories | 5,299 | -777 | 338 | -50 |
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| Cost of materials, consumables | 93,742 | 97,526 | 5,992 | 6,233 |
| and services used (note 15) | | | | |
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| Other operating expenses (note | 58,095 | 47,455 | 3,712 | 3,033 |
| 15) | | | | |
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| Labour costs (note 15) | 25,644 | 22,580 | 1,639 | 1,444 |
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| Depreciation and amortisation | 11,632 | 15,796 | 743 | 1,010 |
| charges (notes 7, 8) | | | | |
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| Other expenses (note 15) | 348 | 643 | 22 | 42 |
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| Total expenses | 194,760 | 183,223 | 12,446 | 11,712 |
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| Q3 OPERATING PROFIT | 63,709 | 62,358 | 4,073 | 3,984 |
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| Net financial items (note 16) | -489 | 430 | -32 | 28 |
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| Q3 NET PROFIT | 63,220 | 62,788 | 4,041 | 4,012 |
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| Basic earnings per share (note | 7.90 | 7.85 | 0.51 | 0.50 |
| 17) | | | | |
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| Diluted earnings per share | 7.90 | 7.85 | 0.51 | 0.50 |
| (note 17) | | | | |
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Review of performance and operating results
Saku Õlletehase AS ended the first nine months of 2007 with revenue of EEK 722.7
million (€46.2 million), 21.3% improvement on a year ago, and an operating
profit of EEK 147.7 million (€9.4 million), a strong 23.1% rise year-over-year.
We are pleased to report that Saku Õlletehase AS continues to post the best
result of operations among Estonian beverage producers.
In the third quarter, the development of the beverage industry was affected by
inconsistencies in the alcohol policies applied by the state and local
authorities. Unexpected sales prohibitions and different regional restrictions
in combination with a general cooling of the economic environment triggered a
decline in the Estonian beer market - the consumption of mainstream and premium
brands declined and for the first time in two years economy and stronger brands
gained strength.
Total domestic beer market was amountesd as 100,4 m litres, flat compared to
last year same period, because of 5% decrease in III quarter. Beer sales for the
second and third quarters were notably affected by the emergency sales
prohibition proclaimed in Tallinn in April, the attempt to prohibit sales in
Harju County, and various regional sales restrictions, especially those imposed
in Northern Estonia and Tallinn (the latter since August). Third quarter
developments in the beer market reflect the decline of mainstream and premium
brands and the rise of economy segment and stronger products. In the background,
the rapid rise of cheap liquor products has triggered a visible upswing in the
sales of strong alcohol. By producers data strong alcohol has risen about 25%
during January to August, 2007. Indirectly, the Estonian beer and cider markets
have also been affected by the deterioration in macroeconomic indicators and
high inflation rate. The industry is preparing for an exceptional 30% rise in
excise duty in 2008 which will render the excise duty on Estonian beer one of
the highest in Europe. These trends would give a challenge for cost management
of breweries.
In the first nine months of 2007, Saku Õlletehase AS sold 74.2 million litres of
beverages, 4,6% up on the same period in 2006. Beer sales accounted for 55.9
million litres 55,9 m litres of the total. Domestic beer sales of Saku was
amounted as 46,4 m litres during the period.
Revenue growth in the first half of the year may be attributed to strong sales
of mainstream and premium beers as well as the successful launch and sales of
innovative beverage products, attained through well designed product
development. According to business priorities, Saku is a clear leader in the
mainstream and premium categories of the beer market (with approximately 60%
quality beer market share respectively), adding value to the entire market.
Sales was driven by quality brands as Saku Kuld, Saku on Ice, Saku Dlight, Saku
Originaal regarding product and packaging innovation. The third quarter was
characterised by quality brand stabilisation and increase of economy and strong
beer brands.
According to the market research company AC Nielsen, Saku Õlletehase AS is
continuous leader in Estonian beer market on both, in quantitative and value
terms. (According to value share: Saku Brewery has 51%; closest competitor,
Tartu Brewery 35% from total domestic beer market)
To diversify its revenue base, Saku has developed a number of other beverages.
In the nine-month period, sales of Saku's table water line made a tremendous
growth by 46%, surpassing market growth several times. Vichy Classique line
reached to second position in the bottled water market during a period. (By
ACNielsen respectively from 11% to 16% in litres; from 14% to 22% in value
share)
During the first nine months of 2007, Saku expanded our share in the premium
cocktail market with our Sin line, improved our position in the ice tea market
with Vichy Ice Tea, and supplemented our long drink line with the innovative Zip
Freezer and our Kiss line with straw-berry and peach flavoured cider. In
addition, Saku launched domestic energy drink Traffic and have started producing
international natural cider brand Strongbow Gold.
In the first nine months, exports accounted for 16% of beverages sales in
litres. The main export markets are the other Baltic countries and Finland where
our elite beer brand Saku Kuld is in the product portfolio of the Finnish market
leader Sinebrychoff. In addition, Saku developed export sales among retailers
and HoReCa operators in Canada, the USA, Germany and in a new target country,
Ireland.
The period's most important capital expenditures were allocated to the product
development centre. We made major investments in laboratory equipment and expert
training which should allow us to create new recipes and product lines for the
Estonian, Latvian and Lithuanian markets. The achievements of our product
development centre include Sin cocktails, innovative beer drink Dlight, Vichy
Ice Tea as well as the Viva Fresh line of flavoured water whose sales are
growing in all the Baltic countries.
As market leaders, we have to invest in the development of production facilities
and technologies all the year round. In addition to laboratory equipment,
investments of the period included the construction of a reception centre for
the production of cider wine, and the development of a new generation pull off
cap.
In the III quarter was accomplished investment into shrink equipment, a new
generation multipackaging.
The rise in expenses is related to revenue growth. The largest growth occurred
in the cost of materials, consumables and services used, mainly on account of an
increase in the sales of products distributed in one-way packaging (mainly cans
prices has increased about 10% in global market), and in transport expenses.
Beverages business environment is driven by raw materials price rise on global
market. During a year main raw material prices has risen in global stock market
for all breweries in Europe, regarding beer production amount increase in the
world, mainly because of developing of Asian, mainly China beer market and bad
harvest season, there fore malt and hops production capacity don`t meet
production demand, which has increased price level. Malt prices has almost
doubled and hops prices are higher compared to last year. Sugar syrup prices has
increased about 10%, driven by weat capacity and prices. Approximately 10% has
increased one-way packaging materials, mainly cans.
Net profit for the third quarter amounted to EEK 63.2 million (€ 4,1 million),
growth of 2%. Net profit for the first nine months of 2007 amounted to EEK 91.4
(€5.8 million), 6% down from the same period in 2006 due to larger dividend tax
expenses incurred in the first quarter. Saku distributed its largest ever
dividends for 2006 which increased its income tax expense on dividends by 50%
year-over-year.
Twenty-five percent of the company's share capital is held by small shareholders
(mostly individuals from Estonia).
Additional information:
Kristina Seimann
+372 6 508 400
