Analysis of the operational results of Beluga Group for 2021 year

Разбор операционных результатов «Белуга групп» за 2021 год

«Beluga Group» (MOEX: SPECKLE) — the largest alcohol company in Russia, leader in the production of vodka and alcoholic beverages in this market, as well as one of the main importers of strong alcohol in the country.

In mid-January, Beluga Group presented operating results for 2021, after the publication of which the shares rose by 2,5%. Key indicators for the period:

  • total shipments in 2021 increased by 0,6%, surpassing last year's record, to 15 722 thousands of decaliters;
  • sales of the company's own brands decreased by 2,6% to 13 129 thousands of decaliters;
  • sales of partner imported brands increased by 20,7% to 2593 thousands of decaliters;
  • shipments for export increased by 77%, reaching the value 569 thousands of decaliters;
  • total sales of the flagship brand Beluga increased by 51%, while companies abroad for the first time managed to sell more, than in Russia.

Sales structure of the company

Beluga Group's business can be conditionally divided into three segments:

  1. Alcohol - 56%.
  2. Retail - 38%.
  3. Food - 6%.

The main activity of Beluga Group is the production and sale of alcoholic beverages.: Vodka, guilt, Cognac, whiskey and other spirits. Own brands of the company: Beluga, «Arkhangelskaya», "The King", Fox & Dogs, Golubitskoe Estate and many others. Their group manufactures at six of its facilities, located in the largest Russian federal districts: Central, Far Eastern, Northwestern, Volga, Siberian and Southern.

Over the past ten years, this segment has changed a lot - Beluga Group has transformed from an ordinary vodka producer, which accounted for in 2011 84% total income, into a diversified spirits company thanks to the strong development of the non-vodka category, as well as cooperation with global brands.

The leader of the Russian market distributes not only its own brands, but also imported brands. The company exclusively represents and sells products of world famous brands: Bacardi, William Grant & Sons, William Lawson’s, a line of Armenian cognacs "Noy", Familia Torres and many more.

Division by sales structure:

  1. Sales of private labels 84%.
  2. Sales of partner import brands — 16%.

In addition to importing foreign brands, Beluga Group is engaged in the export of its own brands abroad. So, for example, sales of the flagship Beluga brand outside of Russia more than doubled in 2021, reaching the highest levels in the history of the brand and exceeding the volume, which is implemented in the Russian Federation.

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Division by sales geography:

  1. RF - 96%.
  2. Abroad - 4%.

Moving on to 2021 operating results, it is worth noting, that the company managed to show positive dynamics, breaking last year's record, which was delivered due to increased demand amid the pandemic.

Total shipments in 2021 increased by 0,6% to 15 722 thousands of decaliters due to strong sales of the following brands: Beluga (+51,4% year to year), "White Owl" (+8%), «Arkhangelskaya» (+14%), Bastion (x2), Fox & Dogs (+26%), Green Baboon Gin (x2), as well as wines - quiet Golubitskoe Estate and sparkling Tête de Cheval (+27% collectively).

Sales structure of the company, thousands of decaliters

Sales of own brands Sales of imported brands General Sales
1к2019 2154 267 2421
2к2019 2946 299 3245
3к2019 3350 371 3721
4к2019 4205 575 4780
1к2020 2520 361 2881
2к2020 3135 440 3575
3к2020 3445 499 3944
4к2020 4405 821 5226
1к2021 2569 473 3042
2к2021 3003 495 3498
3к2021 3308 662 3970
4к2021 4249 963 5212

In addition to alcohol production, "Beluga Group" also has its own retail chain of stores "Vinlab". It is the company's most interesting asset for two reasons.. The first one is profitability.: the retailer's EBITDA margin is a record high compared to other industry players on the Russian market and is equal to 32%, second place at Fix Price - 19%. The second reason is that Vinlab is growing faster than its competitors.: in 2020, the chain was awarded the Retail Week Awards 2020 in the nomination "The fastest growing food chain".

In 2021, the management decided to accelerate its own pace of opening new Vinlab stores with the help of the Beluga Group SPO. In early June, the company placed 2 million ordinary shares on the stock exchange, which corresponds 12,7% authorized capital, by price 2800 R, during the transaction, 5.6 billion rubles were received. Besides, the secondary placement of the group's securities led to an increase in the number of shares in free float and getting into the index of medium and small capitalization of the Moscow Exchange and the MVIS Russia Small-Cap index.

At the end of December, the retailer opened the thousandth store of its network - its scale increased by more than 50% for the year, new outlets were opened mainly in Moscow, Moscow region and St. Petersburg. The rapid growth of the network allowed Winlab to show the following results in 2021: total year-on-year sales increased by 31,9% to about 40 billion rubles, like-for-like-sales 14,8%, the direction of e-commerce has grown in 2,3 times compared to 2020.

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Growth of the Winlab network, number of stores

2п2016 136
1п2017 165
2п2017 252
1п2018 348
2п2018 468
1п2019 545
2п2019 604
1п2020 622
2п2020 645
1п2021 700
2п2021 1000


Long-term goals

In May 2021, the management of Beluga Group presented its own development strategy until 2024, within which the company disclosed its main financial objectives. For example, management announced, that by 2024 the Russian producer of spirits will double the performance of its business.

If you look at these goals in the context of current results, then the dynamics of the group’s development achieved in 2021 allows the management to talk about the outpacing pace of implementation of the strategy of doubling the business by 2024. The main reason for this phenomenon is the strong performance of Vinlab, which is one of the key growth drivers for Beluga Group.

Long-term goals for operational indicators

2020 2024
Number of Vinlab stores 645 2500
Winlab share in total revenue 34% 45%
Share of e-commerce in Winlab's revenue 3% 10—15%
Share of non-vodka products 34% 45%
Export share 9% 13%

Long-term goals for financial indicators

2020 2024
Revenue 63 billion rubles 130 billion rubles
EBITDA margin 14,5% 16,5—17,5%
net debt / EBITDA 1,7× 1,0×
ROIC 15% 25%
Dividends Payout not less than 25% from net profit Payout not less than 25% from net profit

Comparison with competitors

Direct competitors, that would produce alcoholic products and be traded on the Moscow Exchange, Beluga Group does not have, therefore, it was decided to compare the company with three Russian retailers and three foreign producers of strong drinks.

Company multipliers

EV / EBITDA P / E net debt / EBITDA
Beluga Group 5,25 12,69 1,07
Fix Price 11,34 18,21 0,68
X5 Group 4,61 11,79 1,50
Magnet 6,15 10,80 1,92
Anheuser-Busch InBev 9,98 22,18 4,30
Diageo 22,05 31,44 2,65
Constellation Brands 19,54 −747 3,93

What's the bottom line?

Beluga Group reported good operating results for 2021. As before, the main driver of the company's growth was the retail department, namely the retailer "Winlab", which even with the high base of 2020 has grown by more than 30%.

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Besides, it is also impossible to ignore the strong export performance: year-on-year, the results of foreign deliveries increased by 77%, but, Unfortunately, their share in total product shipments is still small - about 4%.

Ev valuation looks promising / EBITDA = 4,5, which roughly corresponds to the levels of the company's last SPO — 2800 P and below. Over the past three years, in each reporting period, investors had the opportunity to buy securities of the Russian leader in the alcohol market at this estimate.

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