Dairy continues to drive Wimm-Bill-Dann profits

By Neil Merrett

- Last updated on GMT

Related tags Revenue

Half-year revenues were up by 40 per cent to $1.14bn (€838m) for
leading Russian dairy and beverage group Wimm-Bill-Dann as the
company continued to profit from its expansion into Eastern
European markets.

In a conference call today with the press group chief executive officer Tony Maher said the company was considering further expansion into the region, naming Belarus and Kazakhstan as possible targets.

Wimm-Bill-Dann has already expanded its operations this year in both Russia and Siberia.

The comments were made after the group posted a 44 per cent increase in operating profit to $108.4m (€79.7m)for the six-month period ending 30 June.

Operating margins rose by 0.3 percentage points to 9.4 per cent on the back of a company-wide strategy of price increases and improved sales volumes of its brands.

Wimm-Bill-Dann's selling and distribution expenses were up 2.5 percentage points to 16.2 per cent of the company's sales on the back of the groups expansion into new regional markets and the creation of new sales channels.

However, despite these rising costs, Maher said that strong sales throughout Wimm-Bill-Dann's core brands and gross margin improvements had ensured that the company had maintained its growth ambitions for the period.

"We are 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," he stated.

"This is a significant achievement."

The half-year growth was driven mainly by the group's dairy segment, which achieved a 43.4 per cent hike in sales to $858.4m (€631m) for the period.

The company said that improved sales for the division were the result of higher volume sales and an increased pricing strategy.

The effects of raw milk costs on their operations were offset as a result with gross margins increasing by 0.5 percentage points to 29.9 per cent.

Through its beverage operations, Wimm-Bill-Dann posted 29.6 per cent revenue growth to $212m again helped by a strategy of pricing and volume growth, the company said.

The strategy also helped to alleviate concerns over rising materials costs for the segment as gross margins rose seven percentage points to 40.8 per cent. Revenues for Wimm-Bill-Dann's baby food segment were also up for the period to $77.3m, a 40.7 per cent increase over the same period last year.

Growth for the period was attributed to an increase in sales volumes and a 7.1 per cent rise in the average selling price of its products.

The results highlight Wimm-Bill-Dann's increasingly importance in dairy production, due to its dominance in emerging Eastern European markets like Russia.

This potential has not gone unnoticed by the world's leading dairy groups, with Danone increasing its stake in the group to 18.6 per cent to end.

Related topics Manufacturers

Related news