The key 2010 event for Milkiland Group (\u201cMilkiland\u201d, the\u00a0\u201cGroup\u201d) was fulfilling of its strategic goal to become a public company. The IPO of the Group\u2019s holding company Milkiland\u00a0N.V. (the\u00a0\u201cCompany\u201d) at\u00a0Warsaw Stock Exchange was accomplished on December 6, 2010, resulting in 22.4% of the\u00a0Company\u2019sshares being placed among Polish and European investors, and\u00a0providing net proceeds of EUR 49.4 million*to the Group.<\/p>\n
Milkiland strongly intends to continue implementation of best practice corporate governance principles, ensuring long term vision, stringent risk management and transparency for investors. Following this imperative, two independent non-executive Directors were invited to the Board in\u00a02010, both\u00a0with\u00a0extensive executive experience in global food companies such as\u00a0Nestle and Unilever.<\/p>\n
From the market perspective, 2010 proved to be a challenging year for CIS dairy companies, as\u00a0abnormal summer heat drove raw milk prices up and thus restrained consumption of dairy products both in Russia and Ukraine. This led to an increased competition and inflow of imports. Despite such unfavorable developments, the Group managed to advance in\u00a0strategic areas and recorded positive financial results for 2010.<\/p>\n
Milkiland\u2019s consolidated revenue rose in 2010 by almost 30%, from EUR 200 million to\u00a0EUR\u00a0 259\u00a0 million* mainly due to improved product mix and higher prices. This growth was\u00a0followed by an increase in\u00a0EBITDA by 37%, from EUR 32.5 million to EUR 44.6 million*. EBITDA\u00a0margin advanced from 16.2% in 2009 to 17.2% in 2010.<\/p>\n
The Group\u2019s debt position also improved in 2010, as EUR 26 million of the most expensive loans was repaid. As of December 31, 2010, Milkiland\u2019s debt portfolio stood at EUR 79.8 million*, net\u00a0debt\/EBITDA ratio was 0.9. The Group has enough room for leverage in case acquisition financing is needed.<\/p>\n
In 2010 Milkiland continued its focus on product mix optimization towards higher value added products and discontinued about 20% of the least profitable SKUs. Also, the Group became No\u00a01 Ukrainian cheese exporter due to advantageous product offering and aggressive distribution approach.<\/p>\n
In line with its intentions, in 2010 Milkiland completed the acquisition of 17.8% stake in\u00a0its\u00a0Russian entity \u2013 OJSC \u201cOstankino Dairy Combine\u201d (\u201cOstankino\u201d), and increased its share in\u00a0Ostankino to\u00a0almost 94%.<\/p>\n
Year 2011 sets new challenges before the Ukrainian dairy sector, as recently adopted Tax Code implies a number of uncertainties for farmers in respect to government subsidies, and therefore can impact raw milk supply both in terms of quantity and prices. This, coupled with fragile post-crisis demand in the CIS region, poses margin threats for Ukrainian dairy producers.\u00a0 However,\u00a0the\u00a0management believes that Milkiland is well-positioned to get advantage of such challenges, as additional market share could be gained, and new acquisition opportunities may arise.<\/p>\n
The Group\u2019s 2011 business plan envisages a significant increase in milk processing volumes and product sales, allowing for greater market power and economy of scale. Milkiland\u2019s priority is to build a complete dairy supply chain in\u00a0line\u00a0with its \u201cFrom\u00a0Farm to Fork\u201d paradigm, ensuring\u00a0delivery of high quality products at affordable price.<\/p>\n
For this purpose, the Group will pursue its modernization program of upgrading Okhtyrsky Cheese Plant and implementing state-of-the-art\u00a0fresh dairy production technologies at\u00a0Ostankino. Also, the Group follows its vertical integration strategy and intends to accomplish two new modern milk farms of 6,000 cow capacity in total in 2011.<\/p>\n
Milkiland closely watches acquisition opportunities in Ukraine and Russia, as such can accelerate the growth of the Group\u2019s business and strengthen its market position in the CIS.<\/p>\n
Comment by Anatoliy Yurkevich, Chairman of the Board of Directors, Milkiland N.V.<\/i><\/p>\n
\u201cThe year 2010 proved to be a time of further steady development of the Group\u2019s business and strengthening of\u00a0its\u00a0financial standing in a tough market environment. Our successful IPO provided us with additional opportunities for expansion, both organic and through M&A.<\/i><\/p>\n
We have built a solid ground to bring our company to the next levels in respect of consumer service, geography, profitability, and corporate governance. We\u2019ll\u00a0use our strengths and\u00a0resources effectively this year in order to create additional\u00a0value for\u00a0the existing and prospective shareholders of Milkiland N.V.\u201d\u00a0<\/i><\/p>\n
*The financial figures for the year 2010 stated above are preliminary and unaudited<\/p>\n
About Milkiland N.V.<\/b><\/p>\n
Milkiland is a TOP-5 CIS diversified dairy producer operating in Russia and Ukraine, offering a\u00a0wide range of dairy products such as fresh dairy, cheese and butter, to satisfy consumers in\u00a0their everyday needs for healthy and tasty foods.<\/p>\n
In Russia, the company produces fresh dairy products at Moscow-based OJSC \u201cOstankino Dairy Combine\u201d and sells under Ostankinskaya brand. Also, Dobryana Ukrainian cheese is sold in the most Russian regions. In Ukraine, the company operates 10 plants and offers a wide range of\u00a0fresh dairy, cheese and butter under Dobryana and Kolyada brands. Milkiland exports dairy products from Ukraine to over 30 countries.<\/p>\n
Shares of Milkiland N.V. has been listed on the Warsaw Stock Exchange since December,6, 2010.<\/p>\n
For additional information please contact:<\/i><\/p>\n