Earnings Report /
Russia

Beluga Group: 1Q22 operating results

  • BELUGA GROUP reported its 1Q22 operating results

  • Total shipments grew 25.1% y/y to 4.83mn 9L cases in 1Q22

  • Own production sales dynamics on the domestic market accelerated 21.6% y/y to 3.8mn 9L cases

Evgeniy Kipnis
Evgeniy Kipnis

Senior Banking/Consumer Analyst

Olesya Vorobyeva
Olesya Vorobyeva

Analyst, TMT, Agro and Retail

Alfa
7 April 2022
Published by

BELUGA GROUP (BELU RX: U/R) reported its 1Q22 operating results. Overall volume growth accelerated to 25% y/y, driven by consumers stocking-up during March, with both own brands and imported production exhibiting solid growth. Looking ahead, we see the company’s business as relatively secure. Firstly, the company does not expect a dramatic drop in exports (contributing ~ 5-6% of revenues and ~ 10% of EBITDA in 2021, we estimate), seeing an opportunity to generate 80-90% of 2021 shipments 2022 (amid difficulties in shipments to EU and US). Secondly, imported product distribution (~25% of revenues, >15% of EBITDA in 2021, we estimate) is secured by 1) long-standing relations with suppliers, who strive to continue working with BELUGA and 2) BELUGA’s own inventories. And finally, we might expect increasing demand for domestic brands (BELUGA’s own production) as pricing is likely to stay more favorable for consumers vs imported brands (though likely to increase as well). Moreover, the demand for BELUGA’s production in the coming quarters likely to be supported by potentially limited outbound tourism during 2022. At the same time, the only 4% excise tax growth was stated for 2022 along with growing prices and a potentially more favorable sales mix is supportive for profitability, in our view.

· Total shipments grew 25.1% y/y to 4.83mn 9L cases in 1Q22.

· Own production sales dynamics on the domestic market accelerated 21.6% y/y to 3.8mn 9L cases (vs. 5% y/y in 2021). Premium brands continued to demonstrate strong dynamics. Key contributors remained vodkas – Beluga, Snow Owl and Arkhangelskaya; Golden Reserve and Treasure of Tiflis brandies; Beluga Hunting bitters; Green Baboon gin; and Golubitskoye Estate wine and sparkling Tête de Cheval.

· Export sales grew 17.2% y/y in Q1. The company expects exports to decelerate in 2022 amid a decline in sales in some European markets (given the temporary refusal by certain retail outlets to continue cooperation), and the embargo imposed by the US. As a result, the company expects exports to amount to 80–90% of the 2021 shipments with support coming from new export destinations.

· Imported brand sales grew 45.9% y/y in Q1. Key drivers were whiskeys – Grant's, Monkey Shoulder and Tullamore D.E.W., rum Barceló, Torres brandy, and Noy Armenian brandy and imported wines.

· WineLab volume sales grew 52% y/y in Q1 (with 35% y/y traffic growth and 13% y/y avg. ticket growth). As of 1Q22, the number of outlets amounted to 1,124.

Figure 1: BELUGA 1Q22 operating highlights

Source: company data, Alfa-Bank