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. Last Updated: 07/27/2016

Baltika Lifts Brewer's Q3 Sales by 10%

VedomostiBaltic Beverages, which owns a majority in Baltika, says it is outpacing rivals in Russia's fast-growing beer market.
LONDON -- Strong beer sales in Russia lifted Baltic Beverages Holding's third-quarter volumes 10 percent, but the brewer's earnings growth slowed, putting pressure on the shares of its owners.

BBH, whose key asset is a majority shareholding in Russia's top brewer, Baltika, said Tuesday that it outpaced Russian competitors in one of the world's fastest-growing beer markets and continued to increase its leading market share.

Shares in BBH's joint owners, Britain's Scottish & Newcastle and Denmark's Carlsberg, slid as analysts pointed to an earnings slowdown in the third quarter.

The East European brewer's third-quarter sales rose 21 percent to 555 million euros ($656 million), and earnings before interest, tax, depreciation and amortization increased 15 percent to 168 million euros in the July to September quarter, compared to a 26 percent earnings rise the first half of 2005.

Analysts said strong third-quarter sales growth was countered by pressures from input and distribution costs, with earnings unable to keep pace with sales.

The Russian market, which provides more than three-quarters of BBH's profits, is a key source of growth for both Scottish & Newcastle and Carlsberg, which are largely dependent on sluggish West European beer markets.

"The Russian beer market is growing stronger than anticipated. The encouraging sign is that the Russian economy is doing very well and not just the oil economy, so we are very confident about Russia," said BBH chairman John Nicolson.