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Financial Results of BELUGA GROUP for 2021

march 28 /2022

BELUGA GROUP (MOEX: BELU), the leading alcohol company in Russia, announces the IFRS consolidated financial results for 2021: revenue increased by 18%, reaching 74.9 billion rubles, EBITDA rose by 14%, amounting to 10.5 billion rubles, and net income grew by 57%, approaching 4 billion rubles.

Financial highlights and main corporate events:

   2021

Sales in volume terms (million 9L cases)

17.5 (+0.6%)

Revenue (bln rubles)

74.9 (+18%)

Gross profit (bln rubles)

26.8 (+18%)

Cash flow from operating activities (bln rubles)

10.8 (+2,2%)

Free cash flow (bln rubles)

7.3 (+1,4%)

EBITDA (bln rubles)

10.5 (+14%)

Net income (bln rubles)

3.9 (+57%)

Earnings per share (rubles)

294.13 (+49%)

The group showed sustained development, surpassing last year’s record figures. A diversified brand portfolio, large-scale distribution, exports, and an in-house specialized retail chain allowed the company to successfully adapt its tactics to external changes and held key positions in all areas of the industry. The focus on process digitalization and operational efficiency were another two important success factors.

During the reporting period, BELUGA GROUP witnessed the steady growth of high-margin in-house and partner brands. The brands that contributed the most are Beluga (+51.4%) and Arkhangelskaya (+14%), with the latter selling more than 3.3 million 9L cases and becoming the absolute market leader in Russia. The group is also developing non-vodka categories such as Bastion, which has doubled in sales volume; Treasure of Tiflis, which showed double-digit growth; Fox & Dogs whiskey (+26%); Green Baboon gin that demonstrated a twofold increase in sales volume; as well as Russian wines including Golubitskoe Estate still wines and Tête de Cheval sparkling wines. BELUGA GROUP continues to be an exclusive distributor of its partner brands, maintaining its position as a leading independent importer of spirits and wine in Russia in 2021. By the end of the year, the sales of partner brands reached 2.9 million 9L cases. To strengthen its position in the mass mid-priced segment, the company acquired Staraya Moskva and Zimnyaya Doroga, the well-known brands in Moscow and Central Russia, their production will be launched in the 1st half of 2022.

In 2021, Beluga vodka, the company’s flagship brand, spearheaded the export program, consolidating its global positions and doubling its sales in 2021, despite the ongoing pandemic and the affected Duty Free channel. It was the first year that Beluga’s overseas sales exceeded domestic ones, showing an increase of +104.5% and reaching the highest figures in the brand’s history.

WineLab, the company’s in-house retail chain, saw solid growth too. Through this chain, BELUGA GROUP directly interacts with its consumers and effectively sells its products, including those sold via the click & collect system of e-commerce. By the end of December, the number of stores grew by 56% and their sales increased by 31%, reaching 40 billion rubles.

Alexander Mechetin, CEO of BELUGA GROUP, commented, “Last year, the company demonstrated fantastic results. I would like to thank the team for their efforts and to say that I am extremely proud of our collective achievements in following through with the company’s development strategy. Thanks to the vertically-integrated model that allowed us to control all business stages — from production to sales — and our diversified operations across numerous brands and sales channels, we were able to achieve double-digit growth in all key financial indicators. As a result, the company’s revenue increased by 18%, EBITDA by 14%, and net income by 57%.

WineLab, our in-house specialized retail chain, contributed greatly to the company’s success in 2021 and demonstrated positive dynamics — the number of outlets exceeded 1,000 by the end of December, sales increased by 31% (including like-for-like sales, which demonstrated a +14.8% growth), and the share of the segment in BELUGA GROUP’s revenue reached 37%. An in-house retail chain allows the company to directly interact with its consumers, quickly identifying their preferences, testing new products, and developing the click & collect system for e-commerce. We will continue developing this area in 2022.

Taking into account the interests of both the group itself and its shareholders, the Board of Directors focused on the investment attractiveness of the company. Following the dividend policy, the company paid annual dividends for 2020 and interim dividends for H1 2021. A secondary public share offering took place in the summer, during which 2 million securities, accounting for 12.7% of the group’s share capital, were purchased by international and Russian investors, including both major global funds and private entities. Moreover, by the end of December, the Board of Directors of BELUGA GROUP was expanded from seven to nine members and from two independent directors to three. This fact improved the efficiency and quality of corporate governance, helped create additional committees, and promoted well-informed decision-making that ensured the company’s sustainable development.

Now, a few words on the current situation. Recently, we have faced an unpredictable crisis. The situation and the sanctions that followed have created a new reality for both business and society in general. We are to operate in this new reality. The 2021 results and the prudent treasury policy of the previous years have allowed us to safeguard the high financial sustainability of BELUGA GROUP. Currently, the company has a fairly strong liquidity position, partly thanks to the 5.6 billion rubles raised during the SPO in 2021 and several long-term bonds offered earlier.

Nevertheless, we will still need to make a number of urgent changes. The strategy we have chosen for our business is proving to be highly adaptive and efficient in answering these new challenges. We have already taken a series of anti-crisis measures that should allow us to overcome the challenges of 2022, improve the efficiency of our operations, and retain our team of 12,000 people.

The company’s product portfolio comprises over 150 brands — both in-house and imported ones — in all categories and segments of the alcohol market. Now, I would like to say a few words to our partners and assure them that, just as previously, BELUGA GROUP is staying true to its commitments and is going to continue delivering high-quality services, taking into account the new realities. We remain a reliable supplier, and our main priority now is to ensure supply chain continuity.

Our country is facing major changes, and we have a lot of new challenges ahead of us. However, the coronavirus pandemic, as well as the financial crises of 2008-2009 and 2014, have shown that our industry is recession-resistant. The company’s financial position remains stable and our team of professionals is capable of overcoming any difficulties.”

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