OREANDA-NEWS. On 14 May 2009 Baltika Breweries, the leader on the Russian beer market, announced its financial results for the first quarter of 2009.

1. BALTIKA HAS DELIVERED GROWTH IN PROFIT AND MARGINS IN SPITE OF THE DIFFICULT ECONOMIC SITUATION

Under unfavourable economic and consumer market conditions, Baltika has again demonstrated its ability to increase business efficiency. A decrease in demand caused some decline in sales volume (- 5%), but sales revenue kept still grew +5.3% and EBIT in Q1 2009 rose +39.6%. Meanwhile, the indicators of the Company’s profitability and free cash flow improved significantly.

These financial results became possible via implementation of programmes targeting efficiency (optimal distribution of production facilities around the country, further improvement of logistics, the own agricultural project, measures for raising operating effectiveness etc) as well as due to a number of additional measures taken after the onset of the economic decline. Some of these measures will have an effect in future, and this enables the Company to face the future with confidence.

1. THE INDUSTRY HAS SHOWN ITSELF TO BE RESILIENT IN THE FACE OF THE CRISIS

The Russian beer market has appeared to be one of the most resilient markets than other industries even in conditions of general economic decline. The current economic crisis undoubtedly was reflected in the trend of purchasing power of the population and in production and consumption volumes, which were lower in Q1 2009 than in the same period of 2008. The Company estimates that beer market volume in Russia decreased in Q1 2009 by almost 7% compared to Q1 2008, which is noticeably better than the trend line of the main macroeconomic indicators and production volumes in other industries.

Moreover, the business of Baltika Breweries, the market leader with the strongest brand portfolio, was more resistant to the influence of unfavourable external conditions and to the decline in consumer demand. In Q1 2009, the Company’s beer volume decreased by 5% and amounted to 8.5 mln hl. As a result, the Company’s market position in Q1 2009 strengthened and its market share grew. During the reporting period, the Company’s market share rose 1.5% compared to the same period of 2008 and reached 39.9%*.

2. the company keeps its marketing strategy focused on the long-term DEVELOPMENT

In Q1 2009, Baltika brand market share increased and amounted to 15.7%*, while the market share of Baltika №3 in the mainstream segment grew as well and reached 21.6%* in March.

According to Millward Brown Optimor (MBO) Global brands ranking for 2008, Baltika ranked among the top 20 leading worldwide beer brands with the highest score in terms of brand momentum.

In the reporting period, Baltika strengthened its position in the premium and licensed beer segments. In Q1 2009, in the licensed segment for the first time market share reached 30.0%*. The Company’s share in the premium segment also continued to grow and reached 44.2%* in March. As before, in the long-term development Baltika is maintaining its strategy focused on premiumisation of the brand portfolio. In Q1 2009 the Company continued investing in innovations and launched two new varieties which enable it to grow the business in the licensed beer segment: Tuborg Lemon and Tuborg Black.

In Q1 2009, Baltika announced the start of production of kvass — Khlebny Krai — a new soft drinks category in the Company brand portfolio. This launch, which took place in the end of April, will allow the Company to cover a new audience and to hold a good position in the steadily growing kvass market.

Baltika is continuing to develop its business abroad. The modernisation of the Baltika-Baku brewery acquired in 2008 is underway. In Q1 2009, export volume of Baltika Breweries in Azerbaijan grew by 90% and revenue doubled.