Western Milk Group to Increase Sales 33% in 2007

Western Milk Group, Ukraine’s second largest dairy player in terms of processed raw milk with a share of 5% in 2006, announced plans to boost sales by 33%, to USD 158 mln in 2007. The Group plans to capture 7% of the functional dairy products market (value added low fat low cholesterol products) by year end and lift its share to 32% by 2008. In addition, it plans to increase its share in domestic hard cheese production to 10% by 2008. The Group estimates its share in this market in 2006 at 6%. Kovel Milk Plant (KMOL: N/R) is the group’s main production asset, accounting for 33% of its output. Anna Dudchenko: We think the implementation of Western Milk Group’s plans will positively affect Kovel Milk Plant’s margins as it is the only plant in the group with production facilities for functional dairy products sold under the trade mark Optimal. The Group’s plans for increasing its market share are unlikely to materially affect other players in the market due to its untapped growth potential based on low per capita consumption in comparison with both Eastern and Western Europe.