BALTIKA

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS 06/2000



The H1 2000 consolidated reports reflect the results of the following 

subsidiaries and associated companies: 

		              	30.06.2000 	      30.06.1999

  	                        holding %    	      holding %

AS Baltika (parent)

AS Virulane (Estonia)		 55.15%                 55.15%

AS Baltman (Estonia)		   100%                   100%

SIA Baltman (Latvia)		   100%                   100%

Baltmano Prekiba (Lithuania)	   100%                    90%

Baltika Sweden (Sweden)		   100%                   100%

AS Elina STC (Estonia)		  37.5%                  37.5%

Baltika Poland (Poland)		   100%                     -

Baltinia OY (Finland)		   100%                     -



AS Elina STC is treated as subsidiary since AS Baltika controls the 

financial activities of AS Elina STC. On 01.03.2000 AS Baltika bought 

an additional 10% holding in Baltmano Prekiba, thus increasing its 

holding to 100%.



AS Baltika H1 2000 consolidated and unaudited net sales amounted to 

EEK 152.5 mln, providing EEK 12.6 mln (9%) annual growth. Sales of 

manufactured output amounted to EEK 111.5 mln (EEK 13.3 mln or 14% 

more than in H1 1999) and turnover of subcontracting works EEK 39.9 

mln (EEK 1.7 mln or 4% more than in H1 1999).



Exports accounted for 64% (EEK 98.3 mln) of net sales; manufactured 

output accounted for 73% of net sales. 

Sales by markets:



In EEK million



                     Q2 2000 Q2 1999            H1 2000  H1 1999

Estonia            	27.4   21.4		   53.1     45.1

Latvia, Lithuania	11.4   11.4		   32.9     32.8

Finland, Sweden, Norway	13.3   16.9		   39.3     43.8

Russia, Ukraine		 2.6    1.9		    9.3      4.1

England, Germany	 8.1    6.4		   15.0     10.6

Poland	                 0.5     0		    1.8        0



AS Baltika H1 2000 consolidated and unaudited net profit was EEK 

6,054 thousand (EEK 5,940 thousand y-o-y growth), incl. group's 

profit EEK 5,178 thousand (EEK 4,581 thousand y-o-y growth).



In H1 2000 volume of inventories increased by EEK 9.5 mln, mainly 

due to EEK 13 mln increase in inventories in Q2.  

Increased inventories as well as higher raw materials costs were due 

to the following:

- increased share of manufactured output (H1 1999: 70.1%; H1 2000: 

73.1%);

- forecasted increase in sales of manufactured output in autumn 

season (ca 35% y-o-y)

- preparations for autumn season (purchase of raw materials, 

production processes launched)



In H1 2000 AS Baltika operating expenses grew EEK 8.4 mln or 41% 

y-o-y, mainly due to development of sales and management activities 

in the first half year.

In H1 AS Baltika financial expenses dropped by EEK 1.7 mln y-o-y, 

incl. EEK 1 mln decrease in interest expenses. The latter was due to 

lower debt liabilities volume (EEK 3 mln decrease in loans from banks 

during the reporting period).

AS Baltika financial ratios as of 30.06.2000:

                                      H1 2000      	H1 1999

-gross margin (gross profit/net sales)  4.15%		 2.35%

-profit margin (net profit/net sales)   3.97%		 0.08%

-ROE (net profit/owners equity)         4.35%		  0.5%

-ROA(net profit/average cost of assets)  2.8%		  0.0%

-Quick ratio	   			0.79		  0.94

((current assets - inventories)/current liabilities)





Ülle Järv

Management Board member

+372 63 02 741