The enterprise was founded in 1900 operating under the current name since 1970. AS “Latvijas balzams” is a leading producer of alcoholic beverages in the Baltic States that produces more than 100different kinds of alcoholic drinks. AS “Latvijas balzams” major shareholder is “SPI Regional Business Unit BV” which owns 89.53% of the company’s equity capital.

 

Year 2011 has been successful for AS “Latvijas balzams”. In spite of the economic recession in Latvia and important export markets, AS “Latvijas balzams” has managed to increase operational effectiveness and deliver sustainable return to its shareholders.

The unaudited turnover of the company in the 2011 was 67.7 million lats, which is by 10% less than in 2010. Turnover in the domestic market has declined by 6% driven by increase of the excise tax rate and growth of illicit alcohol market. The major export destinations for AS “Latvijas balzams” in 2011 have been the Baltics, Russia, Norway, Poland, Ukraine and Turkey. A significant growth of business has been achieved in most of the direct export markets – sales in Estonia have grown by 8%, Russia – by 19%, Ukraine – by 32%, Norway – by 11% and Poland – by 14%. At the same time, pro-active new market penetration strategy was exercised by entering Bulgaria, Spain, Finland, Azerbaijan, Slovenia, Iceland and other markets.

A particular attention was given to development of the core brands and new products in 2011. The leading AS “Latvijas balzams” brands, such as Riga Black balsam, Grand Cavalier brandy and Moka liqueur, were awarded in total 11 prestigious awards at international competitions in Europe and United States. AS “Latvijas balzams” has focused on new product development and expansion into new market segments including non-alcohol market. A successful launch of innovative Non-alcoholic Riga Sparkling drink marked 2011.

The Company has paid a great attention to production cost control and improvement of productivity, as a result reaching 3.8million lats unaudited profit that is close to that of 2010 despite the 10% decrease in turnover. Thus the Company increased its profit margin (net profit to turnover) by 0,5pp in 2011 versus prior year.

AS “Latvijas balzams” is not just the largest producer of alcoholic beverages in Latvia but also one of the largest taxpayers in Latvia. AS “Latvijas balzams” has paid 36.5 millions lats to the state budget in 2011, including excise tax amounting to 26.1 millions lats.

 

AS “Latvijas balzams” immutably keeps focused on executing responsible and sustainable development strategy in 2011.

The Company instantly maintains a high degree of compliance to quality management according to implemented ISO 9001:2008 standards; it has introduced and maintains the food self-control system based on HACCP principles. Caring for the environment, AS “Latvijas balzams” gives priority to environmentally friendly technologies and packaging utilized for production, performs separated waste collection and transfer for processing.

A credit for the contribution to good operational results is given to employees of AS “Latvijas balzams”. AS “Latvijas balzams” is a significant employer in Latvia, and despite challenges, it has managed to maintain the average number of employees throughout in 2011 at the previous level. AS “Latvijas balzams” continuously invest in personnel development – almost 40% of the employees have attended trainings and professional development programmes in 2011. AS “Latvijas balzams” provides internship opportunities for new specialists on a regular base, with quite a few of them joining the Company later.

 

The sustainable strategy of AS “Latvijas balzams” has been appraised by both society and experts in 2011. It is evident in Silver category awarded to AS “Latvijas balzams” at national Sustainability Index as well as outstanding achievement in National Business Reputation Top 2011 - AS “Latvijas balzams” was ranked 12^th among all Latvian enterprises being the only strong spirits producer to enter the top. AS “Latvijas balzams” has shown the second most remarkable increase in quality of the of investor relations across the Baltics according to NASDAQ OMX Baltic Market Awards in 2011.

 

 

Further optimization of production and logistics costs, improvement of production effectiveness, and increase of the competitiveness will be AS “Latvijas balzams” priorities in 2012. A particular attention will be devoted to new product development based on in-depth consumer insights.

 

 

 

 

AS Latvijas balzams

Member of the Board                                                                             Signe Bīdermane

 

Riga, February 24, 2012