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Central European Distribution (CEDC)
Q3 2010 Earnings Call
November 5, 2010 8:30 a.m. ET
Christopher Biedermann - Chief Financial Officer, Principal Accounting Officer and Vice President
James Archbold - Vice President, Director of Investor Relations and Secretary
William Carey - Chairman, Chief Executive Officer and President
Douglas Lane - Jefferies & Company
Brady Martin - Citibank
Natasha Zagvozdina - Renaissance Capital
Daniel Wakerly - Morgan Stanley
Victor Dima - Bank of America/Merrill Lynch
Andrzej Knigawka - ING Groep N.V.
Edward Mundy from Nomura
Matthew Webb from JP Morgan
Previous Statements by CEDC
» Central European Distribution Q1 2010 Earnings Call Transcript
» Central European Distribution Corporation Q4 2009 Earnings Call Transcript
» Central European Distribution Corp. Q3 2009 Earnings Call Transcript
» Central European Distribution Q2 2009 Earnings Transcript
Thank you. I'd like to welcome everyone today to CEDC's third quarter 2010 earnings conference call. Joining me this morning are William Carey, our President, CEO and Chairman; and Chris Biedermann, our Chief Financial Officer.
Please note that the content of this call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 5, 2010. The online replay will be available shortly after the conclusion of the call. You may also view a copy of today’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 forecasts, 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 risks to differ materially from those forward-looking statements are contained in the press release issued earlier today 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 want to welcome everyone to our quarter three conference call. To start off, I would just like to reiterate, as from the press release, that we are extremely disappointed on the results in Q3, and to be honest, we're a bit disappointed with the results for the three quarters. Hopefully, today we can put some color on the Q3 and also get into Q4, where we believe moving into next year that certainly the opportunity in front of us much more bright than what we've seen in the past three quarters.
To start off with, we'll just touch base on the macro look on our key markets. Generally speaking, the macro look is fairly positive out of Poland, Russia, projecting 3% to 4% growth through next year. Unemployment, currencies, interest rates remain fairly stable. Both markets are showing increased consumer sentiment pickup. I think generally speaking, with the recent dollar weakness and higher oil price, certainly currencies have strengthened accordingly in [inaudible] market currencies over the last two or three weeks, which again should bode well moving into our biggest quarter, the fourth quarter.
To start off with, looking at the business, we've late tailored our organic number, stripping out currency, looking at local currency. To start off with, Hungary. Hungary we are down around 8% for the quarter in terms of top line number. And that's coming from a 30% drop in the first two quarters. Quarter four we're anticipating a growth of about 3% to 4% in Q4. So the Hungarian market is improving quarter by quarter.
I think as we move into Q4 and into next year definitely Hungary has turned around and I think the numbers put out by Zwack, which is another publically listed company there, are not far off our numbers. But I think the turnaround we did in Q3, the improvement in Q3, and what we're looking at in Q4 is probably a little bit better, certainly than the market is doing. So we're quite pleased by the turnaround story that came out of Hungary.
If you look in Poland, the Poland market we're down 16% organically for the quarter. This is broken out into the various components of a market blend drop of 5% to 7%. This is mainly coming from the fact that from the drop of the market in Q2, Q3 did not really improve much. It was a little bit worse in July and August with the heat wave. It improved a bit in September, coming to around the 5% to 7% drop for the overall vodka market.
We also had a 12% loss versus a year ago in terms of market share loss, offset by a 10% gain in our import and export business, which still showed quite positive results in the third quarter. And for those three things that translated into a 16% drop in our organic number.
Now moving to Q4, we're anticipating certainly no more one-off events. We're anticipating a flat vodka market for Q4. We're still anticipating a new product launch next week. It is our biggest product launch ever we've made as a company in terms of our Żubrówka Clear.