"William Carey, President and CEO continued, "Our Russian business continues to be challenged primarily as a result of the re-licensing process that is impacting spirit producers and wholesalers. We have successfully finished all of our re-licensing as a producer/wholesaler, but continue to see problems within our client base of wholesalers, who continue to struggle through this licensing process, which is affecting our route to market. We have signed up a significant number of new wholesalers to offset some of this disruption and would expect that by the end of August that these issues will be behind us."
"William Carey, President and CEO continued, "We are also looking forward to the 2nd half of the year in Russia. We have numerous projects planned including a re-launch of our biggest brand, Green Mark and restyling of Zhuravli, as well closing one of our production plants and opening a new trading house in Siberia. These projects are all scheduled for the 3rd quarter of 2011. As we cycle off of a weak 2nd half of 2010, together with planned price increases in the 3rd quarter of 2011 and our expectation that relicensing issues with our customers will subside in the 3rd quarter of 2011, we expect to see strong comparable growth of top and bottom line during the 2nd half of 2011."
"William Carey, President and CEO commented, "We were pleased to see the continued development of our Polish business delivering strong double digit volume growth of our domestic vodka, import and export volumes. Zubrowka Biala continues to take share and reached 6.4% market share in June 2011. We expect to see improvement in value versus volume growth in the 2nd half of the year and as we cycle through a normalized 4th quarter we believe we will start to see significant improvement in our top to bottom line performance."
DEO has operations in the US and Euro countries. DEO could acquire the company without the need to buyout the debt. A Russian buyer would likely buy the existing bonds and issue new bonds to cover a portion of the debt.
This year's holiday season will be far better. Remember Russian elections are in March 2012. As a result Q4 2011 will be when the Russian economy gets a boost. Revenues should come in or exceed the high end of expectations.
Buyout from Russian billionaire was a rumor before. With present stock price a buyout is even more likely. Debt interest reduction by a cash buyer will easily improve the stock price. Also, currency translation costs would increase earning by 50%. The stock would be valued much higher on the the Russian stock exchange.
Diageo took years to build its business. CEDC will do the same.
People are emotional right now and the market makers are playing to these emotions for the entire market. Every movement (up or down) benefits someone. You just have to ponder and analyze (specific to CEDC) whether you think this stock will be lower in 30 days or higher than where it is now. Unless there is criminal behavior (which I personally do not believe), then we should be close to the bottom.
From this point forward things should only continue to get better for the CEDC, and by 2012, we should be adjusted to the recent Russia political decisions. Also keep in mind that although Russia is a significant part of the portfolio, the USA, Poland and the rest of the world makes up the majority of the portfolio.
IMHO. the damage is done (overdone) and is also acting vulnerably to the rest of the market. I would think that now is a really opportunistic buying time. Recessions are very emotional, but people get desensitized quicker these days, so although there appears to be unpretty investing conditions for many, it shouldn't last long.
The grass still grows just as fast and the fruits growing on trees are unaffected. Find a way to some balance and fill your mind with something nice while this process works itself out. The Market is always nervous and is not something anyone should allow to consistently percolate through their mind, body or soul...