#1L ТО, ЧТО ТЫ ХОЧЕШЬ Wimm. Bill Donn Wimm-Bill-Dann Foods OJSC [NYSE: WBD] Investor Presentation 1H 2006 www.wbd.com#2ПО ЧТО ТЫ ХОЧЕ BUMM SHAA Донн 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. 2#3ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Данн Who is Wimm-Bill-Dann? Russia's Largest Food Company with Growing CIS Business Headquarters: Founded: Manufacturing: Independent Products: Listing: Market Cap: Employees: Market Position: Revenue Structure: Corporate Governance: Moscow 1992 31 production sites in Russia and the Commonwealth of States (CIS) A full range of diversified branded dairy products, over 150 types of juice, nectars, water and fast growing baby food WBD: NYSE - Level 3 ADR US $2.0 Billion 18,500 Russian dairy market leader Dairy ~75%; Beverages -20%; Baby Food -5% WBD assigned highest corporate governance score in Russia by Standard & Poor's Governance Services 3#4ПО ЧТО ТЫ ХОЧЕ Вимм SHAAL OHH Growing National & CIS Platform 31 Production facilities in Russia & CIS St.Peterburg Surgut Pervouralsk Ekaterinburg Novosibirsk Omsk Krasnoyarsk Moscow Obninsk N.Novgorod Kursk Ramenskoe Kazan Tula Ufa Tuimazy Belgorod Samara Kiev Sumi Voronezh Volgograd Kharkov Rostov-na-Donu Timashevsk Almaty Bishkek Krasnodar Tashkent Essentuki Q Irkutsk Vladivostok Rubtsovsk Khabarovsk Dairy production sites Beverages production sites Dairy production sites with beverages lines Baby Food production sites Farms Large distribution centers 4#51H 2006 Operational Highlights ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн • • Profitable growth continues in 1H 2006 • New CEO Tony Maher appointed Beverage segment turnaround plan in place • Optimization of the corporate structure • Baby food segment continues rapid growth • Dividend payments approved for 2002-2004, 1Q'06, future policy determined • New regional dairy plants - Pervouralsk & Surgut (3Q'06) acquired • New Head, new Head of Marketing, and new Commercial Director appointed in Beverages segment (3Q'06) • New Group Head of Marketing and Innovation appointed LO 5#6ПО ЧТО ТЫ ХОЧЕ Вимм. SHAAD DOHH 1H 2006 Financial Highlights Profitable growth across all segments 1H 2006 1H 2005 Change, % US$mln US$ mln Sales 813.6 681.7 19.4% Dairy 595.0 479.5 24.1% Beverages 163.7 159.5 2.6% Baby Food 55.0 42.6 28.9% Gross Profit 253.8 187.8 35.2% Selling and distribution expenses 112.0 98.3 13.9% General and administrative expenses 62.9 53.5 17.6% Operating income 75.1 30.8 143.5% Net income 46.7 8.3 465.2% Adjusted EBITDA* 104.9 56.6 85.3% CAPEX including acquisitions 50.4 38.9 30.1% * Non-GAAP indicator: for reconciliation of Adjusted EBITDA to US GAAP Net Income see www.wbd.com/f_reports/ 6#7ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн New Team - New Horizons Working to ensure sustainable market leadership and profitable growth Tony Maher - CEO: 30-year veteran of Coca-Cola system, former Regional Director for CIS & a number of WE markets for CCHBC, served as COB of Multon. Appointed April 2006. Visited all WBD facilities, launched wide-range review of beverages business & cost structures in all businesses. Silviu Popovici - Head of Beverages: veteran of global companies BMS & Coca-Cola in EE, Russia & Ukraine. Most recently head of CCHBC in Ukraine, fastest growing Coca- Cola market in the world. Appointed August 2006. Grant Winterton - Group Head of Marketing & Innovation: extensive experience in marketing and sales with Wella Haircare, Australian National Dairies, Campbell Soup Co and Coca-Cola in Australia, Russia, Ukraine, Belarus and China. 7#8Dairy - Market Overview WBD remains clear market leader with room to grow Dairy consumption, kg/person Structure of Russian Dairy Market (2005) ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD DOHH Russia Poland Italy GB France Germany Spain 0 20 40 60 80 100 120 Source: Datamonitor, Reuters Business Insight, GKS Others 36% WBD 34% Campina 2% Unimilk 7% Ehrmann 2% Danone 14% Ochakovsky 5% 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 maintains market share in 2005 (34.0% vs 33.8% in 2004) 8#9По что ты хоч BUMM Данн 20 25 Dairy - Raw Milk Challenge WBD is working to ensure predictable supply, smoothing out seasonality SHAA Milk producer ruble prices change y-o-y WBD Raw Milk Purchase Price (rubles/liter) RUR 8,0 7,5 7,0 15 6,5 10 6,0 5,5 50 5,0 4,5 о 4,0 Jan Feb Mar Apr May Jun Jul Aug Sep Octv Nov Dec -5 2000 2001 2002 2003 2004 2005 2003-2004 -2005 Source: GKS Source: WBD • Move toward long-term supply contracts & direct contracts with farmers • Milk Rivers program leases milking & refrigeration equipment to farms • Working with Russian government to develop plan for sector and increase investments • Agro SBU established to gauge vertical integration 9#10ПО ЧТО ТЫ ХОЧЕ BUMM SHAA Донн Dairy - Successful Regional Strategy Regional, CIS markets provide long-term basis for growth Dairy Segment - Regional Sales (2005) Volga North West 7% 8% Ukraine 7% Dairy Segment - Regional Sales (1H 2006) Volga North West 7% 8% Ukraine Central Asia 2% Source: WBD • • • South 11% Urals 8% Siberia & Far East 9% Central 48% Central Asia 8% 2% South 11% Siberia & Far Urals East 9% 10% Source: WBD Central 45% All regions profitable since 2005 Fastest growth in Urals, Ukraine & Siberia - Diversification – Central region now less than half of dairy sales - • Product portfolio optimized – from 340 to 221 SKUs in Central region • Market leadership achieved in Ukraine, South, Urals & Volga in 1H 2006 10#11ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн КАША Dairy - New High Margin Products Continued launch of innovative products to ensure leadership New products under existing umbrella brands • La Frut smoothie launched in 2005 • Ads - new products with enduring values Dairy drink based on Chinese recipe Chudo-lunch with spoon • New ready-to-eat dairy porridges = New products for the Russian market using trusted brands 11#12ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн Dairy - Cheese Brands Strengthened Increased capacity and strong brand in cheese segment Ламбер Lamber hard cheese #1 domestic mid-market brand • New line at Rubtsovsk dairy plant doubles Lamber production Lamber challenging imports on price & quality basis • New brand & packaging for Happy Milkman soft cheeses • Cheese accounted for 4% of dairy in 1H 2006 12#13ПО ЧТО ТЫ ХОЧЕ Вимм. SHAAD DOHH Baby Food - A 'Young' Market More than 11% CAGR projected for Russian mkt up to 2009 Baby Food – Estimated Mkt Value 2002-2009 mln USD 600 Baby Food- Annual Per Capita Consumption (kg) 500 400 300 200 100 Source: Euromonitor 2002 2003 2004 2005e 2006 e 2007 e 2008 e 2009e Russia Hungary Poland Portugal Germany UK France 0 500 1000 1500 2000 2500 3000 3500 Source: Euromonitor • Russian baby food consumption still trails CEE & WEE peers • Companies establishing leadership by sub-segments (WBD in dairy) New niches & regional markets entry expected to continue in 2006-2007 • Regional market potential largely untapped · CIS markets also have strong long-term potential (i.e. Ukraine) 13#14ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн Baby Food - New Segment Delivers Strong margins & leadership in dairy baby food sub-segment Детское питание AYWA Молоко детское при отсутствии Детское питание AYWA 2 Фруктовый питьевой Могурт для питания детей раннего возрасты Arua 83 месяцев АГУША COK яблока BOBATE АГУША • С клубник 44 4 бананом ASTUP твори? АГУША МА IIIOPE C фруктовое «Яблоко» без сахара «Агуша» это уникальные продукты, адаптированные к особенностям детского пищеварения. Мы стараемся разнообразить рацион Вашего ненаглядного крохи, с любовью создавая новые сов современные и необыкновенно вкусные продукты. Всегда рядом с малышом! Agusha - Symbol of Quality & Trust for Parents Sales up 29% & margins up 42% y-on-y in 1H 2006 • Portfolio expanding into juice, vegetable & meat products • 56% market share in dairy baby foods • Kursk baby food plant re-launch anticipated in 4Q'06 · Agusha brand platform for new baby food product launches 14 14#15Beverages - Market Overview Challenging juice environment, opportunities in water ПО ЧТО ТЫ ХОЧЕ Вимм. SHAA Донн 70% Juice Market Y-o-Y growth, volume % Bottled Water per capita (liters, 2005) Russia UK Poland 60% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005e Source: WBD Hungary Portugal Greece Germany Belgium France Italy 0 50 100 150 200 Source: ACNielsen Retail Audit; value terms • WBD No.3 in juice market in 2005 (24%) 4 domestic players control 90% of the market • 'Commodification' of juice market in Moscow, St Petersburg · Regional growth driving market - dominated by lower-middle segment • Bottled water market fragmented & few true mineral waters 15#16ПО ЧТО ТЫ ХОЧЕ Вимм SHAAD DOHH Beverages - WBD Restructuring Strong regional presence, re-invigorated brands key Beverages - Sales by Brand (2005) Others Wonder Berry Water 2% 1% 4% Lovely Beverages - Sales by Brand (1H 2006) Others Wonder Berry Water 4% 1% J7 30% J7 4% 37% Garden 42% Source: WBD 100% Gold 14% Lovely Garden 49% 100% Gold 12% Source: WBD • Major promotion campaign to re-invigorate brands • New flavors, PET packaging for Lovely Garden – regional leader - . Essentuki water production upped, Novoessentukskaya brand added 16#17ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD DOHH • • • • Beverages - Turnaround Plan Developing strategy for long-term restructuring of business No.1 focus for CEO No options off the table New team being put in place - new Head & Head of Marketing Continued focus on regional markets & production • R&D team exploring new products • Cost structure under tight scrutiny Historic strength & trust in core brands platform for next stage 17#18ПО ЧТО ТЫ ХОЧЕ Вимм. SHAAD DOHH WBD - Challenges Ahead Growing strength of retailers & cost growth remain issues Russian Retail Landscape - end 2005 Russian Retail Landscape - end 2010 (forecast) Kiosks & Pavilions 15% Discounters 10% Markets 21% Supermarkets 10% Hypermarkets 3% Source: GKS, Renaissance Capital • Traditional Grocery Stores 41% Markets 15% Kiosks & Pavilions 12% Discounters 21% Source: Renaissance Capital Traditional Grocery Stores 25% Supermarkets 15% Hypermarkets 12% Growth of hypermarkets & supermarkets putting pressure on producers • Retail chains reduce intermediaries but have strong pricing power . Side effects of economic growth: higher wages, higher tariffs • New TV advertising rules reduce airtime, driving up rates • Continued market entry by multinational food co's 18 • Consolidation among Russian players increases competition#19ПО ЧТО ТЫ ХОЧЕ Вимм. SHAAD Донн WBD - Russian Opportunities Rising incomes across Russia driving demand for WBD products GDP per capita Trends to 2010 (US$) $12 000 GDP per capita, US$ PPP GDP/capita, US$ Avg. Monthly Nominal Wages by Region (US$) 2000 2001 2002 2003 2004 ● $11 000 $10 000 $9 000 $8 000 $7 000 $6.000 $5 000 $4.000 $3.000 $2 000 $1 000 2001 Source: GKS, RenCap 2002 2003 2004 2005 2006e 2007 e 2008 e 2009 e 2010e . 400 350 300 250 200 150 100 50 0 ddaadad Central NW South Volga Urals Siberia FE Source: GKS Current macro outlook for Russia remains strong Russian incomes rising across all regions WBD loyalty in regions = consumers switch to higher margin products • WBD's first-mover advantage persists as markets grow • Stable operating environment aids long-term planning 19#20ШО, ЧТО ТЫ ХОЧЕ Вимм. SHAAD Данн WBD - CIS Opportunities WBD Can Build on Production & Trade Presence in CIS Selected CIS Markets GDP Change Y-o-Y 16.0 14.0 Selected CIS Markets GDP per capita (US$) 3500 3000 12.0 10.0 8.0 6.0 4.0 2.0 .0 -2.0 2000 2001 2002 2003 2004 2005 Kyrgyzstan Ukraine Uzbekistan Kazakhstan Source: Business Monitor Int'l 2500 2000 1500 1000 500 2000 2001 2002 2003 Uzbekistan Kyrgyzstan Ukraine Kazakhstan Source: Business Monitor Int'l 2004 2005 • 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 accounts for 9% of all Dairy Segment sales (2005) 20#21ПО ЧТО ТЫ ХОЧЕ Вимм. SHAAD Донн 50 45 40 35 30 312 25 20 15 10 Jan-06 WBD - ADR Performance Closing price of ADR on NYSE (US$) Jan-06 Jan-06 Feb-06 Feb-06 Mar-06 Mar-06 Apr-06 Apr-06 May-06 May-06 Jun-06 Jun-06 90-Inc 90-յոՐ ADR price on 3 January 2006: $25.33 ADR price on 15 September 2006: $46.10 Aug-06 Aug-06 Aug-06 Sep-06 21 24#22ПО ЧТО ТЫ ХОЧЕ WBD - Shareholder Structure As of 1H 2006 Вимм. SHAAD Донн Other holders of ordinary shares 8,9% Danone 9,9% ADRs 32,7% Founders of the company 58,4% Based on Company's List of affiliates from 31.12.2005 with later amendments (http://www.wbd.ru/content/files/aff_list_300605.pdf) Other ADR holders 22,8% 22#23ПО ЧТО ТЫ ХОЧЕ BUMM SHAA Данн mln USD 6m 2006 Financials Sales growth by segment 900 800 682 814 700 595 600 480 500 400 300 24% 19% 200 160 164 100 43 55 3% 29% 0 Dairy Juice Baby food Group 01H 2005 1H 2006 23#24ПО ЧТО ТЫ ХОЧЕ Вимм. SHAA Донн 6m 2006 Financials EBITDA, mln USD 160 141 140 120 97 100 83 80 80 60 40 20 0 2002 2003 2004 2005 57 105 1H 2005 1H 2006 24#25ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн 140 120 100 80 60 40 30 20 6m 2006 Financials Operating Cash flow, mln USD 72 116 0 -7 -20 2002 2003 2004 2005 52 84 1H 2005 1H 2006 25#26ПО ЧТО ТЫ ХОЧЕ Вимм. SHAA DOHN Debt Levels & Ratings Reduced Debt Ratios Total Debt to EBITDA Ratio Credit Ratings at Top of National Scale 3,5 S&P 3,0 Moody's 2,7 Corporate credit rating Global Scale B+ B1 National Scale ruA+ 1,5 2003 2004 2005 1H 2006 Debt rating USD Eurobond RUR Domestic Corporate governance B+ ruA+ B3 7+ (of 10) 26#27ПО ЧТО ТЫ ХОЧЕ BUMM SHAAD Донн IR Contacts Also see our re-launched IR site: www.wbd.com Marina Kagan, Head of Corporate Affairs Phone: +7 495 105 5805, ext. 1154 Fax: +7 495 105 5800 e-mail: [email protected] Natalya Belyavskaya, Senior Investor Relations Manager Phone: +7 495 105 5805, ext. 1611 Fax: +7 495 105 5800 e-mail: [email protected] Wimm-Bill-Dann Foods OJSC 13, Solyanka st., Bld. 2, Moscow, 109028, Russia http://www.wbd.com 27