Wimm-Bill-Dann goes east as Russia approves PepsiCo deal

By Guy Montague-Jones

- Last updated on GMT

Related tags: Russia, Milk, Supply chain management, Pepsico

Wimm-Bill-Dann goes east as Russia approves PepsiCo deal
Wimm-Bill-Dann has acquired a dairy plant in eastern Russia as the government gives its approval for PepsiCo to acquire the company.

In a bid to expand the business eastwards, Wimm-Bill-Dann has bought the Kungur Dairy Plant in the southeastern corner of the Perm region. The Russian dairy firm said the facility is one of the most technologically advanced in the country and offers good access to raw materials.

Go east

Sylvie Popovich, head of the WBD Foods business unit, added that the dairy plant would strengthen its presence in a key market. Popovich said: “This acquisition in the Perm region is in line with our strategy of expanding eastward and increasing our leading positions in the fast-growing Urals.”

The transaction is subject to preliminary approval by the Russian Federal Antimonopoly Service.

News of the acquisition comes shortly after the Russian government gave its approval for PepsiCo to acquire 66 per cent of Wimm-Bill-Dann Foods for $3.8bn. This is the first step on the way to PepsiCo gaining full ownership of the company for a total price of €5.4bn.

Approval came just after Christmas from a government commission on foreign investment, which is headed by the Prime Minister Vladimir Putin.

Financial performance

Over the holiday period, Wimm-Bill-Dann also published its financial results for the third quarter ending September 30. Compared to the same period last year, it reported a 22.3 per cent increase in quarterly group revenue to $640.9m. This positive sales result was achieved thanks to strong volume growth across all business segments.

Despite the success on the top line, margins came under severe pressure as they have done in previous quarters this year and net income actually declined for the first nine months of the year to $92.7m compared to $109.4m in the same period in 2009.

Unusual weather over the summer had a key role to play in this drop in profits.

Wimm-Bill-Dann CEO Tony Maher said: “The unusually hot summer led to an unprecedented spike in raw milk prices which has affected all players.”

Maher claimed the company had been able to manage the situation better than rivals thanks to its long term suppler relationships and a focus on cost and supply chain management.

Related topics: Manufacturers, Emerging Markets

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