Baby food boosts Nutritek's earnings

By Maria Ermakova  |   2008-6-28  |     NEWSPAPER EDITION

NUTRITEK Group, Russia's largest baby food producer, said profit rose 17 percent last year after the company sold its dairy unit to focus on infant nutrition.

Profit increased to US$26 million in the 12 months ending on March 31 from US$22.2 million a year earlier, the Moscow-based company said yesterday in a statement. That missed the US$44.4-million average estimate of seven analysts compiled by Bloomberg News. Sales rose 4.7 percent to US$396.9 million, slowed by the dairy unit's disposal.

Nutritek, the maker of Nutrilak and Vinni infant products, sold its milk unit to cut debt and focus on more profitable business. Russia's baby food market may increase more than 20 percent a year to US$1.8 billion by 2011, according to investment bank Renaissance Capital. The company is expanding in Southeast Asia to ensure sales growth should the Russian market slow.

Profitability rose "due to increased revenues in baby food sales," which climbed 38 percent, Chief Executive Officer Oleg Ochinskiy said in the statement. By starting production at a plant in New Zealand, we "laid a strong foundation for turning to scheduled international expansion of the group."

Earnings before interest, taxes, depreciation and amortization increased 11 percent to US$75.8 million. Profitability on that basis rose 1 percentage point to 19 percent of sales.

Baby food profitability rose by 1.4 percentage points to 31.7 percent of gross profit.