Central European Distribution Corporation (CEDC)
Q1 2009 Earnings Call
May 6, 2009 8:00 am ET
James Archibold - Director of IR
William Carey - Chairman, President and CEO
Chris Biedermann - CFO
Doug Lane - Jeffries & Company
Sebastian Greece - WestLB Mellon
Natasha Zagvozdina - Renaissance Capital
Previous Statements by CEDC
» Central European Distribution Corp. Q3 2009 Earnings Call Transcript
» Central European Distribution Q2 2009 Earnings Transcript
» Central European Distribution Corporation Q4 2008 Earnings Call Transcript
Thank you. I'd like to welcome everyone today to CEDC's first quarter 2009 earnings conference call. Joining me this morning are William Carey, our President, CEO and Chairman of CEDC and Chris Biedermann, our Chief Financial Officer.
Please note that the contents of this call contain time sensitive information that is accurate only as of the date of the live broadcast May 6, 2009. The online replay will be available shortly after the conclusion of the call. You may also view a copy of yesterday's press release on our website.
Please also note that statements made during this conference call other than those related to historical information constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.
Without limiting the foregoing discussions, the forecast estimates, targets, schedules, plans, beliefs, expectations and the like are intended to identify forward-looking statements. These forward-looking statements, which are based on management's current beliefs and assumptions and current information known to management involve known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by forward-looking statements.
Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements are contained in the press release issued yesterday and the Form 10-Q to be filed with the Securities and Exchange Commission. CEDC is under no duty and undertakes no obligation to update any forward-looking statements made in this call.
With that, I'll turn the call over to William Carey, our President and Chief Executive Officer. Bill?
Thank you, Jim. I'd like to welcome everyone to our first quarter earnings call. I'll just give you a little bit itinerary, what we're going to discuss today. As usual go over a little bit about the economic data in Poland and Russia, go over a bit about the market trends, what's happening in the marketplace in Poland and Russia.
I will take you through the P&L, down to operating profit; turn it over to Chris Biedermann, CFO, who will take you through the cash flow, balance sheet and the interest expense and financial lines. Then I will take it over and talk a little bit about the Russian Alcohol Group, the impact that we announced last week, little bit more of the numbers behind that transaction and then give you a general outlook, kind of what we see moving out for the rest of the year.
So first off, of course most of you probably know a lot of this data but just give a quick rundown of kind of where the economic data sits today within the countries we operate. We first look at Poland.
Looking at Poland with about a 1% GDP growth expected for 2009. Inflation is running around 3% targeted for 2009. 2010 is looking to reduce to about 1% its current projections. Unemployment has moved up from 9% at year end to about 11% today. It's been sort of stagnant the last two months. Interest rates have come down accordingly. Interest rates since December '08 have moved down from 5% to 3.75%, which is certainly helping our interest expense locally.
Also as you know January and February saw a quite large including December a currency devaluation. Where we saw the zloty lose 32% from a year ago. It stabilized since the beginning of March and has actually appreciated since that time and is currently today running around 3.3 and as you know, our guidance is built off 3.3 to 3.5 guidance on the currency so we're currently running at the low end of the guidance, which certainly is good.
If we look a little bit at Russia. Currently there's different estimate out in the marketplace, but GDP is looking around minus 4% to minus 6% depending on what analysts you read. Next year is projected at around 4% growth, 3.5% to 4% growth, but again depends on which projections you read.
Inflation has been coming down a bit. It's around 11% to 13%. It's projected next year to reduce to about 10%. Unemployment is currently at 10.1%, projected for the end of '09 around 11%.
The interest rates that the government started to reduce interest rates recently, they've gone down from 13% to 12.5% and they're expecting probably another 100 more basis points here in the next two or three months, because interest rates are too high in Russia, the government is starting to reduce the interest rates.
The currency as our previous projections, we have 34 to 36 ruble-dollar exchange rate in our currency projections. Currently we're trading around 32.85 today, which again is at the low end, even below our range of currency, which will be quite conservative and leaving our guidance intact. And kind of seeing where that currency moves over the next three, four, five months.