Moscow, July 29 - Russian baby food firm Nutritek expects revenue to rise to $550 million in the 2009 financial year, helped by expansion in Southeast Asia, general director Oleg Ochinsky told Reuters in an interview.
Sales at Nutritek, part of Nutrinvestholding, were $396.9 million in the year ended March 31, 2008, and the company expects to generate revenue of about $412 million in the 2008 financial year, Ochinsky said.
Of the total, revenue from operations in Southeast Asia will reach $142 million this year and $225 million next year.
"Southeast Asia and China are enormous markets and have high birth rates," Ochinsky said.
"Today it is the largest and the fastest-growing market in the world and the entry threshold is not yet that high. This is why we have entered this market."
In 2007, the company sold its Russian dairy business for $350 million with the aim of investing in Southeast Asia and elsewhere.
This year it acquired control of New Zealand Dairies Limited, becoming the first foreign investor to get control of one of the country's milk processing businesses.
Ochinsky said Nutritek planned to invest $50 million in the construction of a second line at the plant to double capacity by the end of 2009. The investment is expected to pay back within three to five years.
The plant will also produce organic milk products. "In Europe, the organic food segment is growing by 30 percent annually. In Russia it has just started to take shape," Ochinsky said.
"This is an interesting area and we will be developing it in the near future. Retail margin can amount to up to 70 percent in this segment. This is a real premium niche."
MALAYSIA, CHINA
The company also plans to open its own production facilities in Malaysia and China in 2009.
"In Malaysia, the site has already been chosen. Investments into the construction and equipment purchases will initially amount to $10 million," Ochinsky said.
"In China, we intend to launch production before the end of 2009. We are interested in acquisitions or joint ventures with a local brand producer with a moderate market share."
This year, Nutritek plans to start supplies of half-finished milk products to China, Indonesia and Vietnam from New Zealand Dairies. In July, it started supplies to Malaysia.
"The size of the baby food market in China, Malaysia, Vietnam and Indonesia where we want to operate is worth $4.7 billion, according to Euromonitor, with potential to grow by up to 18 percent within the next five years," he said.
Apart from Asia, Nutritek is looking to expand in Africa and the Middle East, Ochinsky said. "We are looking very seriously at the Middle East and Africa, especially at its northern part. These markets are attractive for us."
The company also does not rule out acquisitions in Russia and the Commonwealth of Independent States (CIS), where it may spend around $100 million on buys and modernisation.
Nutritek, founded in 1990, has a 15.4 percent share of the Russian baby food market. It had a net profit of $26 million and earnings before interest, taxation, depreciation and amortisation of $75.8 million in the year ended March 31, 2008.
The company is 53.3 percent controlled by Marshall Milk Investments, beneficially owned by Konstantin Malofeev and Georgiy Sazhinov. The remaining shares are freely floated.