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www.wbd.com
Wimm-Bill-Dann Foods OJSC[NYSE: WBD]
Investor Presentation9M 2006
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Forward Looking Statements
This presentation contains forward-looking statements that reflect Wimm-Bill-Dann’s current views and estimates, which are based on many factors and assumptions.
Changes in such factors or assumptions could produce significantly different results.
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Who Is Wimm-Bill-Dann?
Headquarters: Moscow
Founded: 1992
Manufacturing: 33 production sites in Russia and the Commonwealth of Independent States (CIS)
Products: A full range of diversified branded dairy products, juice, nectars, water and fast growing baby food
Listing: WBD: NYSE - Level 3 ADR
Market Cap: US $2.1 Billion
Employees: 18,500
Market Position: Russian dairy market leader
Revenue Structure: Dairy ~74%; Beverages ~19%; Baby Food ~7%
Corporate Governance: WBD assigned highest corporate governance score in Russia by Standard & Poor's Governance Services
Russia’s Largest Food Company with Growing CIS Business
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N.Novgorod
KazanUfa
Volgograd
Samara
Ekaterinburg Omsk
Tuimazy
Timashevsk
Krasnodar
Rostov-na-Donu
Voronezh
BelgorodTula
St.Peterburg
Ramenskoe
Kiev
Sumi
Kharkov
Bishkek
Almaty
Tashkent
Obninsk
Kursk
Essentuki
Pervouralsk
Growing National & CIS Platform
Dairy production sitesBeverages production sites
Large distribution centers
Baby Food production sitesFarms
33 Production facilities in Russia & CIS
Surgut
Novosibirsk
Rubtsovsk
Krasnoyarsk
Irkutsk
Vladivostok
Khabarovsk
Dairy production sites with beverages lines
Moscow
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Our Mission
Wimm-Bill-Dann helps the entire family live healthier by enjoying our nutritious and delicious food and beverage products everyday throughout their lives
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Wimm-Bill-Dann’s Strengths and Opportunities…
GrowthGrowth
Growing consumer incomes,
convenience
Improving macroeconomic fundamentals
Strong balance sheet, solid financial
base
Clear strategic vision
Track-record of market leadership and competitive
advantage
Commitment to corporate governance
and transparencyExperienced
management team and committed shareholders
Sustainable
Profitable
…for Sustainable and Profitable Growth
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Wimm-Bill-Dann’s Strategic Imperatives
Returns to our
Shareholders
Strong differentiated brands
Superior route to market
Capability to sustain leadership
Performance Management
Routines
Cost base optimization
Sustainable
Superior
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Strategic ImperativesStrong Differentiated Brands
• Strong, differentiated brands backed by marketing programs => =>consistent image of Health & Wellness across all businesses
• Appointments:• Group Head of Marketing and Innovation• Group Head of Quality Control
• Innovations - newer, higher-margin products to win market share
• Morand truffles
• Spoonable yogurt w/ natural fruits on the bottom
• Curd dessert with caramel filling
• National SKU Management – reviewing, unification, and reducing
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Strong Differentiated Brands
Innovations - higher-margin products
• Increase in volume +29%, in value +44% year-over-year in 9M 2006
• Portfolio expanding into 3 new taste launches:
•Prunes-nuts for Neo 2 Bio drinkable yogurts and curd desserts
•Dried apricots-nuts for Neo 2 Bio drinkable yogurts and curd desserts
•Cereals for Neo Imunele
Neo Imunele
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Strong Differentiated Brands
Our market leaders in Dairy, Baby Food, Beverages
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Strategic ImperativesSuperior Route to Market
• Investing in own Sales Force
• Focus on trade marketing and POS marketing
• More control over distribution network
• Centralized Key Account Management for all businesses => economies of skill and scale in dealing with large customers
• Implementing new merchandising standards to focus on impulse high margin products
• Continued focus on regional markets & production
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Strategic Imperatives Capability to Sustain Market Leadership
• Grow leaders
• Building human capabilities, e.g. Account Management, Sales and Marketing
• Focus on recruitment of the best available talents
• Expanding our training programs – such as Corporate University
• Investing in internal and external training
• Promoting Health & Wellness lifestyle
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Strategic Imperatives Performance Management Routines
• Understandable and achievable KPIs
• KPI system implementation across all business units
• Semi-annual performance review and individual development plans for top 300 employees
• Sales personnel remuneration scheme enhancement
• Introduction of stock option program for top managers
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Strategic ImperativesCost Base Optimization
• Centralization of functions• Procurement• Production Planning in Dairy
• Legal entities consolidation
• Shared services for back-office – Legal, IT
• Manning reduction by July 2007 y-o-y (-3000)
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9M 2006 Operational Highlights
• Profitable growth accelerates in 9M 2006• Senior Appointments:
• Tony Maher appointed, new CEO (April)• Grant Winterton, Group Head of Marketing and Innovation (November)• Beverages BU Head, Head of Marketing, and Commercial Director, (3Q’06)
• Regional dairy plants acquired:• Surgut (3Q’06)• Ochakovo Dairy Plant - the 4th largest dairy producer in Russia and one of the largest dairy enterprises in Moscow (November)• Manros Dairy Company - the largest independent dairy manufacturer in Siberia and the Far East (October)
• Successful completion of secondary offering of 10% of common stock on RTS by founders (November)
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9M 2006 Financial Highlights (GAAP reported)
9M 2006 9M 2005 Change, %
US$mln US$ mln
Sales 1 252.6 1 025.9 22.1%
Dairy 928.5 735.1 26.3%
Beverages 241.5 227.1 6.3%
Baby Food 82.6 63.7 29.8%
Gross Profit 403.4 288.0 40.0%
Gross Profit Margin, % 31.2% 28.1% 410 bp
Net profit margin, % 5.3% 2.1% 320 bp
EBITDA margin, % 12.7% 9.8% 290 bp
Selling and distribution expenses (164.8) (141.8) 16.3%
General and administrative expenses (100.1) (78.4) 27.6%
Operating income 113.0 61.4 84.1%
Net income 66.2 21.7 204.4%
EBITDA* 159.1 100.5 58.4%
CAPEX excluding acquisitions 74.9 52.4 43%
Profitable growth across all segments
* Non-GAAP indicator: for reconciliation of EBITDA to US GAAP Net Income see www.wbd.com/f_reports/
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8 3 8 0
9 7
1 4 1
1 0 0
1 5 9
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
1 6 0
1 8 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 9 M2 0 0 5
9 M2 0 0 6
9M 2006 Financials
EBITDA, mln USD
58%
-4%
21%
45%
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3 0
7 2
1 1 6
5 9
1 0 0
-7-2 0
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 9 M 2 0 0 5 9 M 2 0 0 6
Operating Cash flow, mln USD
9M 2006 Financials
69%
61%
140%
329%
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Dairy – Market Overview
WBD remains clear market leader with room to grow
0 20 40 60 80 100 120
Spain
Germany
France
GB
Italy
Poland
Russia
Dairy consumption, kg/person Structure of Russian Dairy Market (9M 2006)
Source: Datamonitor, Reuters Business Insight, GKS Source: ACNielsen Retail Audit; value terms
• Russian dairy consumption trails CEE & WE peers
• Market remains fragmented with many small producers
• Sustainable growth outlook in higher margin yogurts & desserts
• Continued growth in traditional segment in the regions
• WBD increases market share in 9M 2006 (29.4% + 3.3% vs. 9M 2005)
WBD29,4%
Unimilk9,8%
Ochakovsky2,7%
Danone14,0%
Others37,6%
Ehrmann2,0%
Campina2,0%
Voronezhsky2,5%
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0
100
200
300
400
500
600
2002200320042005e2006e2007e2008e2009e
mln USD
Baby Food – A ‘Young’ Market
0 500 1000 1500 2000 2500 3000 3500
France
UK
Germany
Portugal
Poland
Hungary
Russia
Baby Food – Estimated Mkt Value 2002-2009 Baby Food– Annual Per Capita Consumption (kg)
Source: Euromonitor Source: Euromonitor
More than 11% CAGR projected for Russian mkt up to 2009
• Russian baby food consumption still trails CEE & WEE peers
• Additional disposable income drives market growth
• Our sales up 30% & margins up 41% year-over-year in 9M 2006
• Fragmented market - leadership by sub-segment (WBD in dairy)
• New niches & regional markets entry expected to continue in 2006-2007
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0%
10%
20%
30%
40%
50%
60%
70%
2001 2002 2003 2004 2005 2006 0 50 100 150 200
Italy
France
Belgium
Germany
Greece
Portugal
Hungary
Poland
UK
Russia
Bottled Water per capita (liters, 2005)
Source: ACNielsen Retail Audit; value terms
Beverages – Market Overview
Challenging juice environment, opportunities in water
• WBD No. 3 in juice market in 3Q 2006 (19.4%)
• 4 domestic players control 85% of the market
• Regional growth driving market – dominated by lower-middle segment
• Bottled water market fragmented & few true mineral waters
Juice Market Y-o-Y growth, volume %
Source: WBD
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$0$1 000
$2 000$3 000
$4 000$5 000
$6 000$7 000
$8 000$9 000
$10 000$11 000
$12 000
2001
2002
2003
2004
2005
2006e
2007e
2008e
2009e
2010e
GDP per capita, US$ PPP GDP/capita, US$
0
50
100
150
200
250
300
350
400
450
Central Northwest Southern Volga Urals Siberia Far East
2000 2001 2002 2003 2004 2005GDP per capita Trends to 2010 (US$) Avg. Monthly Nominal Wages by Region (US$)
Source: GKS, RenCap
WBD – Russian Opportunities
Rising incomes across Russia driving demand for WBD products
• Current macro outlook for Russia remains strong
• Russian consumer income rising through all regions
• WBD loyalty in regions = consumers switch to higher margin products
• WBD’s first-mover advantage persists as markets grow
• Stable operating environment aids long-term planning
Source: GKS
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500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005
Uzbekistan Kyrgyzstan Ukraine Kazakhstan
WBD – CIS Opportunities
-2.0
.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2000 2001 2002 2003 2004 2005
Kyrgyzstan Ukraine Uzbekistan Kazakhstan
Selected CIS Markets GDP Change Y-o-Y
Source: Business Monitor Int’l
• CIS economies are growing & aiming to diversify
• WBD has production presence in Ukraine, Kyrgyzstan & Uzbekistan
• WBD has strengthening sales presence in Kazakhstan
• Considerable unmet demand for modern dairy & beverage products
• CIS (excl. Russia) accounts for 9% of all Dairy Segment sales (2005) but 42% of population
Selected CIS Markets GDP per capita (US$)
Source: Business Monitor Int’l
WBD Can Build on Production & Trade Presence in CIS
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WBD – ADR Performance
Closing price of ADR on NYSE (US$)
ADR price on 3 January 2006: $25.33
ADR price on 1 December 2006: $50.22
10
15
20
25
30
35
40
45
50
55
01.0
1.20
0601
.02.
2006
01.0
3.20
0601
.04.
2006
01.0
5.20
0601
.06.
2006
01.0
7.20
0601
.08.
2006
01.0
9.20
0601
.10.
2006
01.1
1.20
0601
.12.
2006
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WBD – Shareholder Structure
As of 9 M 2006
Based on Company’s List of affiliates from 30.09.2006 with later amendments
Founders of the company48,4%
Other holders of ordinary shares
15,9%Danone (Ordinary
Shares)3,0%
Other ADR holders22,8%
Danone9,9%
ADRs32,7%
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Debt Levels & Ratings
S&P Moody's Corporate credit rating
Global Scale B+ B1 National Scale ruA+ Outlook Positive
Debt rating
USD Eurobond B+ B2 RUR Domestic ruA+
Corporate governance 7+ (of 10) (Highest in Russia)
Credit Ratings at Top of National ScaleTotal Debt to EBITDA Ratio
Reduced Debt Ratios
3,5
3,02,7
1,7
2003 2004 2005 9M 2006
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IR Contacts
Also see our re-launched IR site: www.wbd.com
Marina Kagan, Head of Public AffairsPhone: +7 495 105 5805Fax: +7 495 105 5800e-mail: [email protected]
Natalya Belyavskaya, Senior Investor Relations ManagerPhone: +7 495 105 5805, ext. 1611Fax: +7 495 105 5800e-mail: [email protected]
Wimm-Bill-Dann Foods OJSC13, Solyanka st., Bld. 2, Moscow, 109028, Russiahttp://www.wbd.com