SAKU ÕLLETEHASE AS

ANNOUNCEMENT

24.08.99

 

COMMENTARY TO THE FINANCIAL RESULTS 06/99

 

Sales results

 

In H1 of this year, the volume of Saku beers sold increased by 

approximately 40%, amounting to 22.7 million liters. The respective 

figure in 1998 was 16.3 million liters.

 

The company’s main production article is continuously Saku 

Originaal. 

The company sold during the above period 8.5 million liters of Saku 

Originaal, i.e. 19.7% more than during H1 1998 (1998: 7.1 million 

liters). Sales of Saku on Ice (introduced to the market in March) 

are 

boosting, as the company has sold 1.5 million liters of Saku on Ice 

as 

of the end of June.

 

The sales results of mineral water Vichy Classique also improved. 

In H1 

1999 the company sold 1.9 million liters of Vichy Classique, i.e. 

about 

27% more than during the same period last year. 

 

The estimated size of total Estonian beer market in Q1 1999 was 

41.8 

million liters *), which is 23% larger than during the same period 

last 

year. The share of imported beer was 12% (1997: 14%).

 

The market share of AS Saku Õlletehas in H1 amounted to 51%, which 

is 

8% higher than during the same period last year. The market share 

of 

Saku Õlletehas has increased mainly due to well-planned marketing 

and 

sales activities. The company conducted a consumer campaign Saku 

Originaal lasting from the end of April until July, which turned 

out to 

be highly popular and helped to increase brand selling. 

In April and May the company introduced a new brand name Saku on 

Ice. 

The company’s activities in HoReCa sector has helped to boost the 

sales 

of unbottled beer.

 

In general beer consumption increased also due to warm spring and 

summer and advertising campaigns conducted by several beer 

producers.

 

 

 

Financial results

 

The following legal acts have had a significant impact on the 

activities of Saku Õlletehas group as of Q2 1999:

 

- Amendments to the Law on Alcohol Excise Tax, effective as of 

April 1, 

which abolished the connection between excise taxes and annual 

output, 

made the cooperation for production of beer between Saku Õlletehas 

and 

its subsidiaries economically unreasonable. Due to the above, the 

company liquidated its subsidiaries Saku Õlu OÜ and Saku Purgiõlle 

OÜ;

- Law on Alcohol, effective as of April 15, regulates and tightens 

the 

conditions for sale of alcohol, and arrangement and supervision of 

sale 

on national level.

 

When analyzing the company’s net sales, expenses and profitability, 

it 

is important to consider the impact of packages in circulation on 

these 

figures. Sale or purchasing of packages in circulation does not 

affect 

the company’s profit/loss figures significantly, whereas the use of 

new 

and more expensive packages as of April 1998 has increased the 

share of 

expenditures on and sale of packages by approximately 9%. 

Therefore, in 

addition to evaluating the general profitability figures, we also 

need 

to evaluate the profitability figures without considering 

expenditures 

on packages. Increase in expenditures on raw materials is related 

to 

addition of specially designed packages to sales portfolio. Volume 

of 

other expenses was influenced also by volatility of foreign 

exchange 

rates (i.e. USD); however, the company has hedged majority of 

risks. 

 

The consolidated net sales of Saku Õlletehas group in H1 1999 

totaled 

345.1 million EEK, increasing by 109.5 million EEK or 46.5% from 

the 

same period last year. The group’s expense account totaled 309.1 

million EEK (increase of 48.5%). Increased expenses are mainly due 

to 

higher marketing expenses made in order to improve and secure the 

company’s market position.

 

The company’s operating profit amounted to 39.1 million EEK (23.4% 

y-o-y increase).

 

The company earned in H1 net profit of 29.8 million EEK (5.9 

million 

EEK or 24.7% y-o-y increase).

 

____________________________________________

*) Expert evaluation of Saku Õlletehas.

 

 

 

Cardo Remmel

Chairman of the Management Board

 

Announcement composed by:

Ruth Roht

Tel: +372 65 08 303