Bala Cynwyd, Penn., Feb. 2 - Central European Distribution Corporation today announced that it is reconfirming full year 2008 net sales guidance of $1.65-$1.80 billion and full year comparable fully diluted earnings per share guidance of $2.85-$3.05.
The Company also today announced that it is revising full year 2009 net sales guidance from $1.93 - $2.03 billion to $1.25 - $1.40 billion which is based upon an approximate 35% weakening of local currencies (zloty and ruble) since the company's last guidance given in November 2008. The comparable fully diluted earnings per share guidance is being revised downward from $3.75-$4.00 to $2.50 - $2.80, due to the above mentioned 35% weakening of local currency. The prior guidance given in November 2008 was based upon exchange rates of Polish Zloty to USD of 2.50 to 2.60 and Russian Ruble to USD of 26.00 to 26.50; the revised guidance is based upon exchange rates assumptions of 3.30 to 3.50 for the Polish Zloty to USD and 35.00 to 37.00 for the Russian Ruble to USD. The fully diluted number of shares used to calculate the above per share guidance is approximately 47.2 million.
William Carey, President and CEO commented, "We are extremely pleased with the strong underlying growth of our business in 2008. Not only have we positioned ourselves as the number one spirit company in Central and Eastern Europe, but we have continued to expand gross and net margins coupled with strong top line growth."
William Carey, President and CEO continued, "Our revised 2009 full year comparable earnings guidance (which has taken into account the 35% weakening of local currency) is only 10% lower than our forecasted 2008 full year comparable earnings guidance. This highlights the strong underlying earnings growth of our business of approximately 25% in local currency. Our number one market position and strong management teams in Russia, Poland and Hungary have enabled us to weather the current international/local financial crisis much better than many of our competitors. We have not experienced any material slow down in our receivables in Russia and Poland to date and continue to see positive cash flows. We look forward to the challenges ahead of us for the year 2009 as our key management objectives continue to focus on growing our margins, improving operating efficiency and lowering our interest cost."
William Carey, President and CEO continued, "Our Russian businesses continue to outperform the market with our vodka market share currently standing at approximately 20% (up from 13% twelve months ago). Our key vodka brands in Russia are still projected to experience double digit volume growth in 2009 (except Parliament where we expect single digit volume growth). Green Mark, the number one vodka brand in Russia and the second largest in the world saw 30% volume growth in the fourth quarter of 2008. Our key vodka brands in Poland are forecasted to show mid single digit volume growth in 2009, including a major re-launch of our largest vodka brand, Absolwent."
William Carey, President and CEO continued, "We have continued to see spirit prices drop in our core markets (Russia dropping by approximately 20% in January 2009 as compared to December 2008) which should have a positive impact on our gross margins. As inflation eases, we see a slow down in our core cost components of labor and energy and have been continuing our ongoing program of headcount reduction in streamlining our operations in Poland and Russia."
Chris Biedermann, CFO commented "We are pleased that we have been able to receive a binding commitment to (terms outlined in our press release from December 10) rollover the majority of our short term debt late last year and have continued to see a reduction in our interest expense as LIBOR, WIBOR and EURIBOR have declined significantly over the last 2 months. In addition we have reduced the cost of our outstanding 245 million EUR Senior Secured Notes by closing a hedge in January 2009 at close to zero, saving approximately 2% on the full value of the notes. We have been reviewing our intangible and goodwill valuations, and as these valuations are done in local currency, we do not anticipate any changes to current valuations."
Full details of the results of the 4th quarter and full year 2008, as well as additional updates of our business activities will be discussed on our upcoming earnings call scheduled for March 2, 2009.