Wimm-Bill-Dann Announces Revenue Growth of 35% in First Quarter 2008

Wimm-Bill-Dann Foods OJSC [NYSE: WBD] today announced its financial results for the quarter ended March 31, 2008.

• Group sales rose 34.8% year-on-year to US$731.9 million
• Gross profit increased 26.2% to US$219.5 million
• Operating income increased 23.2% to US$63.4 million
• EBITDA¹ increased 29.0% to US$90.7 million
• Net income increased 30.6% to US$41.9 million

Commenting on first quarter 2008 results, Tony Maher, Wimm-Bill-Dann’s Chief Executive Officer said: “We are pleased with the very solid performance we achieved this quarter, in particular our sales growth of 34.8% on a year-over-year basis.”

“Our baby food business continued its impressive growth with sales increasing 67.1% year-on-year, outpacing market growth and strengthening our leading market share position. Gross margin for the baby food business strengthened as well, increasing to 47.5% in the first quarter, up from 44.8% for the same period last year. Our beverage business achieved 25.8% growth in sales year-on-year. Finally, our dairy business delivered 34.1% growth in the first quarter in comparison to the same period last year. Despite the challenging raw materials pricing environment that continued well into the first quarter, gross margin was relatively stable at 26.4% in comparison with 26.9% lasting the fourth quarter of 2007.”

“Group gross profit for the first quarter 2008 grew 26.2% over the same period last year driven by a healthier product mix and higher sales. EBITDA increased 29.0% over the same period last year. Our EBITDA margin rebounded from last quarter to 12.4%, an improvement of 193 basis points, despite challenging raw materials pricing environment.”

“In conclusion, I would like to emphasise, that despite the raw material cost environment which continued well into the first months of the year, the first quarter was a very solid start to 2008.”

Dairy

Sales in the Dairy Segment increased 34.1% to US$555.4 million in the first quarter of 2008 from US$414.2 million in the first quarter of 2007 driven mainly by selling price increases. The average dollar selling price rose 34.9% to US$1.36 per 1 kg in the first quarter of 2008 from US$1.01 per 1 kg in the first quarter of 2007 driven mainly by the average ruble price growth. Our raw milk purchasing price grew 62.3% year-on-year in ruble terms (76.2% in US dollar terms) in the first quarter of 2008. The gross margin in the Dairy Segment decreased to 26.4% from 29.2% in the first quarter 2007, but despite such a sharp rise in raw milk prices decreased only slightly from 26.9% in the fourth quarter 2007.

Beverages

Sales in the Beverage Segment grew 25.8% to US$116.8 million in the first quarter of 2008 compared to US$92.9 million in the first quarter of 2007 driven primarily by product mix and selling price increases. The average selling price increased 27.1% to US$1.02 per liter in the first quarter of 2008 from US$0.81 per liter in the first quarter of 2007. The gross margin in the Beverage Segment decreased to 38.0% from 39.9% year-on-year, due to rising raw materials cost pressure, which commenced in the latter part of 2007. Apple concentrate purchasing price almost doubled in the first quarter of 2008 compared to the same period last year. Despite such a sharp rise in raw material costs, gross margin in the first quarter 2008 remained in line with the fourth quarter 2007.

Baby Food

Sales in the Baby Food Segment grew 67.1% to US$59.7 million in the first quarter of 2008 from US$35.7 million in the first quarter of 2007. This increase was driven mainly by improved mix, volume growth and selling price increases. The average selling price rose 31.2% to US$2.42 per 1 kg in the first quarter of 2008 from US$1.84 per 1 kg in the first quarter of 2007. This increase was driven mainly by a healthier mix and the ruble price growth. The gross margin in the Baby Food Segment increased to 47.5% from 44.8% driven by constantly improving sales mix.

Key Cost Elements

In the first quarter of 2008, selling and distribution expenses as a percentage of sales remained almost flat at 15.0% comparing to 15.1% in the first quarter of 2007. General and administrative expenses as a percentage of sales decreased to 5.8% in the first quarter of 2008 from 7.7% in the same period of 2007.

Operating profit increased 23.2% to US$63.4 million in the first quarter of 2008. EBITDA grew 29.0% to US$90.7 million.

Net financial expenses during the first quarter of 2008 decreased 41.2% to US$3.4 million compared to US$5.7 million in the same period of 2007. This was mainly a result of increased foreign currency gain. In the first quarter of 2008 foreign currency gain amounted to US$9.0 million compared to US$3.2 million for the same period of 2007.

Income tax expenses totalled US$17.2 million in the first quarter of 2008 compared to US$13.1 million in the first quarter of 2007. The effective tax rate remained 28.7%.

Net Income

Net income increased 30.6% to US$41.9 million in the first quarter of 2008 from US$32.1 million in the first quarter of 2007.

EBITDA represents net income before interest, income taxes and depreciation and amortization, adjusted for interest income, currency remeasurement gains, bank charges and other financial expenses and minority interest. EBITDA margin is EBITDA expressed as a percentage of sales.

We present EBITDA because we consider it an important supplemental measure of our operating performance. In particular, we believe EBITDA provides useful information to securities analysts, investors and other interested parties because it is used in the “debt to EBITDA” debt incurrence financial measurement in certain of our financing arrangements.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as substitute for analysis of our operating results as reported under U.S. GAAP. Moreover, other companies in our industry may calculate EBITDA differently or may use it for different purposes than we do, limiting its usefulness as a comparative measure.

EBITDA also should not be considered as an alternative to cash flow from operating activities or as a measure of our liquidity. In particular, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.