Saku Õlletehas                FINANCIAL RESULTS                 02/11/2003



AUDITED ECONOMICAL RESULTS OF 2002



Major accomplishments in 2002



Retention of leading position in the Estonian  beer

market  (47 percent market share) and reinforcement  of

leader’s  position  in the premium  beers  segment  (70

percent   market  share)  in  a  fiercely   competitive

environment.

Brand development of beers: development of the core

brand  Saku Originaal and corresponding renewal of  the

entire  Saku blue line and supplementation of the  Saku

blue  line  with a stronger premium beer  Saku  Strong.

Development of the packaging of mainstream beers  Sorts

and Presidendi Pilsner, beginning of the development of

the  packaging of mainstream beers Saku Hele  and  Saku

Tume.

Launching of the internationally recognised

Carlsberg beer in a 0.5-litre returnable bottle.

Brand development of other beverages: Renewal of the

packaging of premium mineral water Vichy Classique  and

supplementation with passion-apricot flavoured product.

Expansion of share in the mineral water market with the

mainstream Montavit line, penetration of the long drink

market  with  0.5-litre canned  Saku  Gin  Long  Drink,

extension  of  the  soft drink line Zingo  with  lemon-

flavoured Zingo in 0.5 and 1.5-litre packaging

Investment in increasing capacities, ensuring

production efficiency and maintaining quality:

acquisition of new bottle-filling equipment, supplements

to the can filling line and multipack equipment, and

electronically controlled packaging and stacking

equipment for the multipacks.

Establishment of a joint taskforce with other

leading Baltic breweries that belong to Baltic Beverages

Holding group - Aldaris AO and Svyturys-Utenos Alus AB

with a view to identifying the synergies of co-operation.



Market and consumption



Beer

According to the Estonian Breweries Association, in  2002

per-capita beer consumption in Estonia grew from 67 to 70

litres.  The  market grew by 4.5 percent to 95.8  million

litres. Imports accounted for 4.4 million litres  or  4.6

percent  of  the  total, an increase  of  0.5  percentage

points.



According  to  the  Estonian Breweries  Association,  the

largest  Estonian beer producer is Saku Brewery. In  2002

we  maintained  the  leading position  with  a  solid  47

percent  of  the market. The main competitors were  Tartu

Õlletehas  (37  percent), Viru  Õlu  (6  percent),  Pärnu

Õlletehas  (3  percent),  Nigula  Õlu  (2  percent)   and

Saaremaa Õlletehas (0.5 percent). Karme brewery went  out

of business.



Saku Brewery has been a stable market leader in domestic 

beer market: 1996-50%; 1997-47%; 1998-48%; 1999-50%;

2000-48%; 2001-49%; 2002-47%.



Based  on  Brand  Track 2002, a survey conducted  by  the

marketing research and consulting company EMOR,  in  2002

the   best-favoured  beer  brand  in  Estonia  was   Saku

Originaal. According to the results of the survey,  which

was  performed  in  March, June and September  2002,  the

share   of  people  who  consider  Saku  Originaal  their

favourite  beer brand has increased to 21 percent.  Rock,

the  leading brand of our other basic line, rose  to  the

third position (9 percent).



The domestic beer market is still rather price sensitive.

2002  was a year of active special price campaigns, which

also  extended  to the premium segment.   The  number  of

campaigns where a free product could be won increased  as

well.  The  costs of give-away products and  accompanying

taxes raised the average cost of a sales campaign.



Since Estonia regained its independence, Saku Brewery has

led the market in product development, providing Estonian

consumers with contemporary and innovative domestic  beer

products.  In  2002 we renewed our core brand  

Saku Originaal and subsequently our entire blue line. The

improvements  increased our share  in  the  premium  beer

market   to   70   percent.  In  addition  to   packaging

development  we  optimised  the  product  portfolio   and

supplemented  the  blue  line with  a  new  and  slightly

stronger premium product Saku Strong.



In   June  we  launched  the  internationally  recognised

premium   brand  Carlsberg  in  a  0.5-litre  bottle,   a

packaging favoured by the local consumer. By the year-end

the share of Carlsberg in the local imported beers market

had risen to a 20 percent.



At  the  end of the year we completed the renewal of  the

packaging  of  Presidendi Pilsner  and  Sorts  and  began

revamping  the packaging of Saku Hele and Saku Tume.  The

purpose of the project is to consolidate our position  in

the special beers segment.



Other beverages

In  2002  Saku Brewery focused on the mainstream  premium

and mainstream cheap segments. We completely revamped our

premium  class  Vichy Classique line and  penetrated  the

mainstream cheap category with the Montavit line.

The  share of cider line Kiss increased half a percentage

point.   Growth   was   strongly   facilitated   by   the

implementation of 0.5-litre cans, which were launched  in

the  summer  and  helped to seize 22-24  percent  of  the

market during the summer season.

In  August  we penetrated the market with a renewed  Saku

Gin  Long  drink  that was launched in a  0.5-litre  can.

Within  four  months  it had seized  10  percent  of  the

market.

In 2002 our soft drink sales improved by 8 percent, total

share in the Estonian soft drinks market exceeds 4

percent.



Performance and results

Saku  Brewery’s net sales for 2002 amounted to EEK  768.4

million (EUR 49.1 million), an increase of 3 percent (EEK

22.5  million,  i.e.  EUR 1.4 million)  on  a  year  ago.

Approximately 75 percent of the improvement resulted from

domestic  sales and 25 percent from exports. In terms  of

product  groups,  the main contributors  were  beers  and

other alcoholic beverages such as cider and long drink.



Beverage sales totalled 56.4 million litres, a 2  percent

increase on 2001. With annual beer sales of 49.4  million

litres and a 47 percent market share Saku Brewery is  the

largest  Estonian beer producer and leader of  the  local

beer  market. The biggest rise (over 13 percent) occurred

in  the  sales of the renewed core brand Saku  Originaal.

Another  strong performer was the Rock line  whose  sales

continued  to climb steadily. Sales of canned beers  grew

by 19 2percent.



Exports  accounted  for 9 percent of quantitative  sales.

The  main export markets were other Baltic countries  and

Finland.   Exports  to  the  USA  and  Japan  were   less

significant. The main export articles were the core brand

Saku  Originaal,  Saku Tume, pPorter, mineral  water  and

cider.



Operating  profit amounted to EEK 40.2 million  (EUR  2.6

million), a 28.3 percent (EEK 15.8 million, i.e. EUR  1.0

million)  decrease on 2001. Net profit totalled EEK  38.8

million (EUR 2.5 million), a decline of 29.5 percent (EEK

16.2  million, i.e. EUR 1.0 million). Earning  per  share

amounted to EEK 4.85 (EUR 0.31).



Expenses  proved 5.6 percent (EEK 38.6 million, i.e.  EUR

2.5   million)   larger  than  a  year  ago.   Materials,

consumables  and supplies accounted for  EEK  42  percent

(EEK 16.3 million, i.e. EUR 1.0 million), other operating

expenses for 43 percent (EEK 16.8 million, i.e.  EUR  1.1

million)  and personnel expenses for 15 percent (EEK  5.8

million, i.e. EUR 0.4 million) of the rise.

The  growth in other operating expenses resulted  largely

from  more  intensive marketing and long turn investments

in brand and packaging development.



To  ensure  a  balance between growth and  profitability,

Saku   Brewery   changed   the  budgeting   process   and

responsibility  for budget management. The  changes  were

supported  by  a  systematic application of  value-driven

assessment principles and performance management.



The period’s average number of employees was 259.



Investment

In 2002 we continued investing in quality, high operating

efficiency   and  availability  of  required  capacities.

Tangible and intangible asset purchases totalled EEK 56.3

million  (EUR  3.6  million),  including  production  and

packaging-related  items of EEK  40.7  million  (EUR  2.6

million) (upgrade of the bottle-filling line, supplements

to   the   can  filling  and  multipack  equipment,   and

electronically   controlled   packaging   and    stacking

equipment   for  multipacks).  Sales-related  investments

totalled   EEK   9.8  million  (EUR  0.6  million),   and

investments  in  computer systems  amounted  to  EEK  1.4

million (EUR 0.1 million).



Future plans

As  the  oldest Estonian beer producer and leader of  the

local  beer market and product development, Saku  Brewery

recognises its responsibility for the general development

of the market.



Our  main objective is to retain the leading position  in

the  local beer market, especially as regards the premium

beers category and its development.



Although our priority is the beer market, we also  intend

to  increase  our share in other beverages  markets.  Our

principal   targets   are  the  self-produced   alcoholic

beverages  and  mineral  water  markets,  especially  the

mainstream premium and mainstream cheap categories.



One  of  our strategic strengths is being part of  Baltic

Beverages Holding AB, one of the largest European  groups

of   breweries.  In  December  2002  the  leading  Baltic

breweries  Saku  Brewery, Aldaris AO and  Svyturys-Utenos

Alus  AB  established  a joint taskforce  to  investigate

opportunities  for  streamlining  through   tighter   co-

operation.  Plans  foresee joint  purchasing  operations,

which  should  ensure more favourable  raw  material  and

service  prices,  and co-ordination of sales  activities,

including conclusion of contracts with the retail  chains

that  operate in the three Baltic markets. We also expect

to  co-operate in the area of production and  co-ordinate

use  of  capacities. The efforts should result in notable

product  development and marketing synergies as  well  as

purchasing benefits.



The  co-operation of the Baltic market leaders  indicates



preparedness  for integration in the European  Union  and

the challenges of a new business environment.



     

BALANCE SHEET                                                 

(In thousands)                     EEK              EUR

                           31.12.02 31.12.01 31.12.02 31.12.01

                                    Adjusted*         Adjusted*

                                                           

ASSETS                                                        

Cash and bank                 3,296   20,180      211    1,290

Shares and other securities            3,907               250

Trade receivables            29,051   29,057    1,857    1,857

Other receivables and         2,645    2,110      169      135

prepayments 

Inventories                  90,917   76,764    5,811    4,906

TOTAL CURRENT ASSETS        125,909  132,018    8,048    8,438

                                                              

Non-current assets                                            

Long-term financial          16,000   17,400    1,023    1,112

investments 

Long-term receivables            98      186        6       12

Tangible assets             260,597  249,142   16,655   15,923

Intangible assets             1,147      747       73       48

TOTAL NON-CURRENT ASSETS    277,842  267,475   17,757   17,095

TOTAL ASSETS                403,751  399,493   25,805   25,533

                                                              

LIABILITIES AND EQUITY                                        

Current liabilities                                           

Debt obligations              7,154    1,714      457      110

Trade payables               22,150   21,642    1,417    1,383

Payables to the parent          282                18         

Tax liabilities              12,376   12,123      791      775

Payables to employees         4,607    3,329      294      213

Other accrued expenses        3,463      365      222       24

Provisions                      676                43         

TOTAL CURRENT LIABILITIES    50,708   39,173    3,242    2,505

                                                              

Non-current liabilities                                       

Non-convertible debt          1,711    3,412      109      218

TOTAL NON-CURRENT             1,711    3,412      109      218

LIABILITIES

                                                              

Equity                                                        

Share capital                80,000   80,000    5,113    5,113

Capital reserve               8,000    8,000      511      511

Other reserves               44,070   44,070    2,817    2,817

Accumulated profits         180,441  169,786   11,532   10,851

Profit for the period        38,821   55,052    2,481    3,518

TOTAL EQUITY                351,332  356,908   22,454   22,810

TOTAL LIABILITIES AND       403,751  399,493   25,805   25,533

EQUITY

  

* - Adjustment results from a change in accounting for kegs.





INCOME STATEMENT                                          

(In thousands)                     EEK              EUR

                               2002    2001     2002     2001

                                    Adjusted*         Adjusted*

                                                              

Revenue                                                       

Net sales                   768,445  745,937   49,113   47,674

Change in work in progress     -964      555      -62       35

and finished goods

inventories

Other revenue                 2,416      646      154       42

Total revenue               769,897  747,138   49,205   47,751

                                                              

Expenses                                             

Materials, consumables and  493,747  477,494   31,556   30,517

supplies

Other operating expenses    132,724  115,906    8,483    7,409

Personnel expenses           53,872   48,097    3,443    3,074

Depreciation                 43,410   42,831    2,774    2,738

Other expenses                5,932    6,761      379      432

Total expenses              729,685  691,089   46,635   44,170

                                                              

OPERATING PROFIT             40,212   56,049    2,570    3,581

                                                              

Financial income                125      433        8       28

Financial expenses            1,516    1,430       97       91

                                                              

PROFIT FOR THE PERIOD        38,821   55,052    2,481    3,518

                                                              

Basic earnings per share       4.85     6.88     0.31     0.44

Diluted earnings per share     4.85     6.88     0.31     0.44



* - Adjustment results from a change in accounting for kegs.





Kristina Seimann

PR Manager

+372 650 83 03