TOTAL
ORDER
Annual Report
2014
MAJOR BUSINESS DIVISIONS

In 2014 we strengthened our presence within the Russian market by enhancing milk processing capacity by 7%.

As a part of government target of import substitution we increased raw material base and kept on carry out investment program. We invested over 300 million rubles in division elaboration, like milk processing and packing treatments advanced technology adoption. Launching of production line for sour crème of improved storageability and cheese packing of fixed weight, installation of unit-dose TBA Edge pack filling line will allow extending considerably the geographic reach and greatening the assortment of homeland milk products in Russian stores.

We accomplished manufacturing areas specialization, which allows us to be more flexible within the situation of changing requirements, redistribute rapidly raw materials for marketable products. In 2014 we 100% loaded Ecolean and PET bottle filling lines, increased production of cottage cheese with saved grain-structure by 30% and became up and running at full whey powder capacity. High-tech complex of whey advanced refining at manufacturing area of “Glazov-moloko” makes it possible to produce demineralized whey of ultra-high quality and to cooperate with those companies that deal on the basis of international standards such as Provimi, Campina, Essen Production AG (TM Makheev) .

European cheese embargo gave great impulse for Russian manufacturers. At year-end cheese-production capacity at the Division grew by 7%. We maximally loaded the soft-ripened cheese production line by means of increasing Mozzarella production for trade networks and HoReCa segment from 9tons to 53tons per month.

We started lean manufacturing strategy developing and implementation at “Sarapul-moloko” to continue successful collaboration and business effectivization in cooperation with TetraPak experts. We are planning to convey the experience to other manufacturing areas of the Division.

In 2014 “Milk processing” Division carried out the investment project – an experimental novelties producing line OMVE was launched

BRANDS SALES PATTERN

38,3%
61,7%
MILKOM
PL (Private Label)

Concurrently with production scale-up we pay attention at marketing, brands developing and partnership growth with retailers. We boosted The Company’s brands and Private Lable sales share in federal trading network by 21%. At year end Brand “Selo Zelenoe’s” production turnover went up 80%. Keeping up with the demand of trading networks, we raised cheese of fixed weight delivery: the share of such kind of cheese in total turnover grew in 4 times. In order to reduce new product market launch costs we established long-term development department and set experiment line OMVE (Netherlands) at manufacturing area “Izhmoloko”.

In 2015 we will continue developing logistic system and will complete building of logistic complex in Izhevsk. All our efforts will be aimed at further increase of production in innovative packing and effectivization.

KEY PERFORMANCE INDICATORS

Indicator 200920102011201220132014
Sales revenue, million rubles 3 9065 0836 3409 11411 19210 784
Net profit, million rubles 219271295456380748
Net assets, million rubles 1 0721 3431 6222 0711 6532 410
EBITDA, million rubles 3935086889739571 373
EBITDA, % 101010,910,78,512,7

PRODUCTION DYNAMICS

Milk processed, tonnes
251 497
270 301
272 621
303 507
301 424
326 064
337 130
2009
2010
2011
2012
2013
2014
2015
(forecast)