Synergy posts 1H 2011 net income of 976 million roubles, as spirits rise

Leading Russian distilling group, Synergy, has posted a 1H 2011 net income of 976 million roubles under IFRS.

The net profit is up 22% year on year from the1H 2010 net income of 796 million roubles, with 1H EBITDA falling 14% year on year to 1.344 billion roubles, with 1H consolidated revenues rising 15% year on year to 10.219 billion roubles as distribution expenses and cost of sales increased 35% and 14% respectively year on year.The company says revenue growth was driven by an increase in sales volume of spirits in 1H2011 coupled with growing distribution and sales costs. Synergy reported 11% sales growth in alcohol segment and 19% growth in food segment.Synergy Board Chairman, Alexander Mechetin, highlighted the company’s significant market position and said this underpinned future growth. “In the first half of 2011 we used unique momentum to strengthen our positions on the market and capture additional market share. Due to our infrastructural capabilities, experienced management and professional staff we have successfully overcome the challenging period of re-licensing and used the opportunities that arose on the back of a changing competitive landscape. As a result, our market share increased from 9% in 1H2010 to 14% in 1H 2011. However, this has required investments into marketing and distribution.”  Mechetin said key developments in the spirits sector will also allow the company to leverage a broader product range moving forward.“We continue to see significant sales volume growth of Belenkaya, positioned in the middle price segment that was recognized as one of top 10 largest vodkas in the world according to Drinks International magazine. In addition, indirectly we have acquired a 49% ownership in the Veda, a premium vodka brand well known nationwide, that will provide Synergy with an exposure to the premium price segment. By signing an exclusive 5 year distribution agreement with William Grant & Sons, one of the leading whiskey producers in the world, we will not only leverage our distribution portfolio of brands with the world famous whiskey brands but also get access to one of the biggest spirits categories in Russia.”