FINANCIAL PERFORMANCE IN THE THIRD QUARTER

Sales, marketing and distribution costs for the third quarter were ?39.3m versus ?34.2m in the same quarter last year (15 % increase), with volumes up 20.2%.

The average distribution cost per hl in the quarter was ?4.0, ?0.3 higher than in the same period last year.

Marketing costs were almost ?1m higher compared with the same quarter last year.

Total sales and marketing costs for the quarter represent 11.3% of Net Turnover, compared to 13.4% in the third quarter of 2002.

General and administration costs for the quarter were ?0.6m lower than in the same quarter last year, mainly driven by payroll and consultancy savings.

RUSSIA

In total the volume of SUN Interbrew beer sold in Russia in the third quarter was 3.3m hl versus 2.5m hl in the same period last year, representing an increase of 30%. At the same time the total market volume in Russia increased by just under 7%. This growth was driven by the right distribution strategy with a full portfolio of brands and packaging.

Stella Artois^®was further expanded nationally and grew 119 % versus the third quarter of 2002.

Sales volumes for Staropramen^® grew 43% versus the second quarter of 2003 when it was successfully launched.

SibirskayaKorona^® exceeded last year’s sales by 70%, driven by a new proprietary glass bottle and the successful launch of the new variety, Beloye.

Klinskoye^®sales recovered further with volume growing by 18% versus the third quarter of 2002. This growth was driven by the success of PIVOPACK^® and the launch of its new variety Samurai.

Tolstiak^®sales volumes grew by 19% versus the same period last year.

Sales volumes, m Hl

Market Share Growth

12.5%

14.9%

3Q 2002

3Q 2003

 

UKRAINE

The volume of beer sales for SUN Interbrew in Ukraine grew by 10.3% to 1.6m hl in the reported quarter, well ahead of the total market growth of 4% for the quarter.

Sales volumes, m Hl

Market Share Growth

31.7%

33.5%

3Q 2002

3Q 2003

 

This growth in market share and total volumes was achieved by the timely expansion of production capacities in our three Ukrainian breweries as well as a number of sales, marketing and packaging initiatives on the Ukrainian and international brands.

Chernigivske^®grew 40% in volume in the quarter versus the third quarter of 2002, based on the success of Chernigivske^® Bile. Stella Artois^® continued to grow strongly at 37% in the reported quarter versus the same period last year.

SIL Ukraine introduced Stella Artois^®, Taller^® Ice, Chernigivske^® Premium, Chernigivske^® Bile in 0.5 L cans, plus a 1L PET bottle for Rogan^® Svitle.

SUMMARY AND OUTLOOK

The strong performances in both Russia and Ukraine in the first half of this year were exceeded in the third quarter, leading to record, quarterly bottom line results for the Company. SUN Interbrew continued its strategy of expanding its diversified portfolio of brands and packaging, enabling it to take up strong positions in each segment of the market. This was complemented by thoughtful and sizeable investments in marketing and commercial activities along with the right distribution structure, resulting in the continued growth of market share in Russia and in Ukraine.

Based on our achievements in innovation and a more complete brand portfolio, along with our route to market we are well positioned to finish the year with growth far exceeding the market. Whilst a further strengthening of the Euro is expected to affect the headline results, we expect this strong performance to enhance our bottom line results.

ENDS

For further information please contact:   

SUN Interbrew Limited

Joseph W.Strella, Chief Executive Officer                        +7 (501) 960-2360

Luc Vanheel, Chief Financial Officer

Financial Dynamics

Ben Foster                                                                       +44 (20) 7269 7247

Caroline Ledosquet                                                           +44 (20) 7269 7233

Notes to Editors:

SUN Interbrew Limited is the second largest brewer in Russia and the largest brewer in Ukraine. The company is a strategic partnership between Interbrew, one of the largest brewers in the world, and the SUN Group, operating in the region since 1958, and in the beer sector of Russia and CIS since the beginning of 1990s.

The company’s main brands are Stella Artois^®, Staropramen^®, Klinskoye^®, Sibirskaya Korona^®, and Tolstiak^® in Russia, and Stella Artois^®, Chernigivske^®, Rogan^®, Taller^® and Yantar^® in Ukraine.

SUN Interbrew is a public company registered in Jersey, whose shares are listed and traded on the Luxembourg, Frankfurt and Berlin exchanges.

SUN Interbrew Limited and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2003 and 2002
(Euros in thousands, except per share amounts)

(Unaudited)

See Notes to Condensed Consolidated Financial Statements.

SUN Interbrew Limited and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 2003 and December 31, 2002
(Euros in thousands)

See Notes to Condensed Consolidated Financial Statements.

SUN Interbrew Limited and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30, 2003 and 2002
(Euros in thousands)

(Unaudited)

See Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2003 and 2002

The accompanying consolidated financial statements of SUN Interbrew Limited and Subsidiaries (the “Company”) have been prepared in conformity with the accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. It is suggested that these condensed, consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2002 audited financial statements. The results of operations for the three and nine months ended September 30, 2003 and 2002 are not necessarily indicative of the operating results to be expected for the full year.

The majority-owned subsidiaries incorporated under the laws of the Russian Federation and Ukraine (the “Russian subsidiaries” and “Ukrainian subsidiaries”) maintain accounting records and prepare their financial statements in Russian rubles and Ukrainian Hryvnas in accordance with the requirements of Russian and Ukrainian accounting and tax legislation. The accompanying financial statements differ from the financial statements prepared for statutory purposes in Russia and Ukraine in that they reflect certain adjustments, not recorded in the accounting books of the Russian or Ukrainian subsidiaries, which are appropriate to present the financial position, results of operations and cash flows in accordance with US GAAP.

Significant Transactions

During the period ending September 30, 2003, the Company entered into the following significant transactions:

In August 2003, the Company signed an agreement on acquisition of the 100% share of OOO «Kombinat Napitkov» - a company owning brewing production capacities in Novocheboksarsk, Republic of Chuvashia. The leading equipment installed at the acquired brewery allows annual production of up to 1 million hl of beer of the highest quality. The acquisition provides some of the necessary additional capacity for future growth requirements. The Company is planning to use the newly acquired capacities to produce premium brands.

In July 2003, the Company acquired the 41% share of the Yantar Brewery in Nikolaev, Ukraine, from INVESCO Asset Management, one of the world's largest investment management funds. Thus, the Company now owns 97.5% shares of the brewery. The increase of the Company's stake in the brewery evidences that the company's management believes in Ukraine's further stable economic development and evaluates positively prospects for the beer market growth.

In September 2003, the Company issued its first Russian Ruble bonds in an amount of 2.5 billion rubles with the three-year maturityand 11 month Put Option. Interest will be paid in semi-annual coupons. The first two coupon rates are equal and fixed at the level of 13.75%. Proceeds from the ruble bond will be used to refinance existing short-term debt in order to further strengthen the group’s balance sheet.

In October 2003, the Company announced the beginning of construction works of a new malt-house in Saransk, the Republic of Mordovia. The production capacity of the malt-house will be approximately 85 thousand tons of malt per year. Simultaneously with the construction of a new malt-house, modernization and capacity increase of the existing malt-house will take place at Saransk affiliate, JSC “United Breweries”.