Bala Cynwyd, Pa., Nov. 5 - Central European Distribution Corporation today announced its results for the third quarter of 2008. Net sales for the three months ended September 30, 2008 increased by 51% to $452.4 million from the $299.6 million reported for the same period in 2007. Operating income increased by 86% to $52.8 million from $28.4 million for the same period in 2007.
On a comparable basis, CEDC announced net income of $41.7 million, or $0.89 per fully diluted share, for the third quarter of 2008, as compared to $18.3 million, or $0.45 per fully diluted share, for the same period in 2007. Net income, on a U.S. GAAP basis (as hereinafter defined) for the third quarter was $0.66 million or $0.01 per fully diluted share, as compared to a net income of $17.0 million or $0.42 per fully diluted share, for the same period in 2007. Generally, the major difference between the U.S. GAAP net income and comparable non- GAAP net income reflects unrealized foreign exchange movements relating to our foreign currency financing. For a reconciliation of comparable net income to net income reported under United States Generally Accepted Accounting Principles ("U.S. GAAP"), please see the section "Unaudited Reconciliation of Non-GAAP Measures". The weighted average number of shares used for calculating diluted earnings per share for the third quarter of 2008 was 47.0 million.
Some of the Company's key financial highlights for the third quarter of 2008 as compared to the third quarter of 2007 include the following:
-- Net Sales up 51%
-- Gross margin up to 25.6% from 20.6%
-- Operating income up 86%
-- Comparable net income up 128%
William Carey, President and CEO commented, "We are seeing continued margin accretion in the business driven by the strong performance of our core vodka brands and exclusive imports. We continued to see strong organic growth in the third quarter in Russia of over 25% as well as approximately 7% in Poland. As we move into our most profitable quarter, the fourth quarter, we look to see gross margins continue to expand to 28% - 30% in the quarter and operating profit to grow by 450-550 basis points as compared to the third quarter 2008."
Mr. Carey continued, "Due to strong organic growth in Russia, we are seeing our leading market share, based on value, increase, from approximately 12% in the beginning of 2008 to an estimated 14% at present. We are seeing faster consolidation whereby stronger companies with access to short term liquidity in addition to a well balanced brand portfolio should be very well positioned for acceleration of growth opportunities leading into 2009. As we move into 2009, we believe we have a solid business model and balance sheet to support our growth opportunities within our core markets."
Due to the expansion of our gross and operating margins as highlighted above, the Company is revising upwards its full year 2008 comparable fully diluted earnings per share guidance from $2.75-$2.95 to $2.85-$3.05 and reconfirming full year 2008 net sales guidance of $1.65-$1.80 billion. The Company also reconfirms its full year 2009 net sales guidance of $1.93 - $2.03 billion and its full year comparable fully diluted earnings per share guidance of $3.75-$4.00.