BALTIKA

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, 6M 2001



AS Baltika 6m 2001 consolidated and unaudited net sales amounted to 

EEK 184.1 mln, providing EEK 31.6 mln (21%) annual growth. Sales of 

manufactured output amounted to EEK 138.2 mln (EEK 26.6 mln or 24% 

more than in 6m 2000) and turnover of subcontracting works EEK 44.7 

mln (EEK 4.8 mln or 12% more than in 6m 2000). Manufactured output 

accounted for 75% of net sales. Exports accounted for 69% (EEK 127.3 mln) 

of net sales, providing EEK 29.0 mln annual growth.



AS Baltika 6m 2001 consolidated and unaudited net profit before minority

interest was EEK 9.2 mln (EEK 6.1 mln in 6m 2000, respectively). Group's 

profit amounted to EEK 8.8 mln (EEK 5.2 mln in 6m 2000, respectively).

AS Baltika group's 6m 2001 consolidated net profit grew by 70,5%, providing

EEK 3.6 mln annual growth. In Q2 2001, AS Baltika net profit was EEK 2.2 mln 

(EEK 0.8 mln in Q2 2000).



Sales by markets (EEK Mio):

		    

               	      Q2 2001        Q2 2000         6m 2001         6m 2000

Estonia             	27.5    	26.7      	55.7      	53.1

Latvia, Lithuania       12.8    	11.5      	34.3      	32.9

Scandinavia      	13.5    	13.3      	40.8      	39.3

Eastern Europe       	14.5     	 3.2      	37.7      	11.1

Western Europe      	 5.5     	 6.9      	12.7      	14.9

USA                  	   0       	   0       	 1.7               0



Development of retail sales of Baltika Group continues. As of 30.06.2001,

Baltika has the control of 43 retail stores in 6 states, incl. 11 

"shop-in-shop" type of stores or franchises. In 6m 2001, the company opened 

7 of its own stores (2 in Lithuania, 3 in Lithuania, 2 in Estonia).

Additionally, 7 franchise and 4 “shop in shop” type of contracts were 

signed. In 6m 2001, investments made into development of retail sales

(opening of new stores and renovation of old stores) amounted to EEK 6.1 mln.

In May, AS Baltika signed a contract with USA consulting agency Retail 

Planning Associates for development of new retail strategy.



Baltika Group is developing production plants to ensure growth in manufactured 

output sales as well as development of retail sales. In 6m 2001, investments

to production amounted to EEK 5.4 mln. In August, construction of a new 

factory for production of overcoats will be launched in Ahtme, Lääne-Viru 

(West-Viru)  county to replace the depreciated factory. During the first years,

production capacity will grow by approx. 10-15%, whereas the number of

employees (250) will remain unchanged. The cost of the new factory, to

be launched in April 2002, is approx. EEK 15.0 mln.



Consolidated total assets amounted to EEK 238.1 mln, having increased 

in six months by EEK 4.9 mln. Supply of raw materials and goods 

inventories that the company acquired to support the sales of manufactured 

output, and investments made into opening of new sales premises, decreased 

the cash account by EEK 10.6 mln. As of 30.06.2001, inventories stood at 

EEK 113.6 mln, having increased in six months by EEK 12.7 mln on the account 

of work-in-progress, goods on the new sales premises, and goods inventories 

acquired for autumn sales opening. Inventories decreased by EEK 5.3 mln 

on the account of raw materials.



AS Baltika financial ratios as of 30.06.2001:



                                             30.06.2001 30.06.2000

                                   

- gross margin (gross profit/net sales)          6.24 %     4.15 %

- profit margin (net profit/net sales)           4.79 %     3.97 %

- ROE (net profit/owners equity)                 6.63 %     4.35 %

- ROA (net profit/average cost of assets)        3.74 %     2.8 %

- Quick ratio           			 0.71       0.79

((current assets - inventories)/current liabilities)





Ülle Järv

Management Board member

+372 63 02 741