Wimm-Bill-Dann Foods OJSC Announces Significantly Improved Margins and Continued Improvement in Free Cash Flow in Second Quarter of 2009

Wimm-Bill-Dann Foods OJSC [NYSE: WBD] today announced its financial results for the second quarter and half-year ended June 30, 2009.

Highlights for the second quarter and first half of 2009

• Group gross margin improved by 220 basis points to 35.2% in the second quarter of 2009 compared to the second quarter of 2008, and by 240 basis points year-on-year to 33.9% in the first half of 2009
• EBITDA¹ margin improved significantly by 320 basis points to 15.4% in the second quarter of 2009 compared to the second quarter of 2008, and by 250 basis points year-on-year to 14.8% in the first half of 2009
• Operating profit margin increased substantially to 11.1% in the second quarter of 2009 from 8.2% a year ago, and to 10.4% in the first half of 2009 from 8.4% in the first half of 2008
• Group revenue in US dollars decreased 28.2% year-on-year to US$1,071.5 million in the first half of 2009, driven by ruble devaluation, and partially offset by stronger mix
• Net income in US dollars increased 42.6% year-on-year to US$52.3 million in the second quarter of 2009
• On a constant currency basis, (in rubles) net income almost doubled in the second quarter of 2009 compared to the second quarter of 2008, and increased by 12.3% year-on-year in the first half of 2009
• Operating cash flow rose 64.0% year-on-year to US$180.3 million in the first half of 2009

"The second quarter of 2009 demonstrated our ability to adapt quickly to changing market conditions, the resilience of our brands and our business model. It also proved that profitable growth can be achieved despite somewhat weakened consumer demand,” said Tony Maher, Wimm-Bill-Dann’s Chief Executive Officer.

"We are very pleased with our results. We have delivered substantial margin improvement on the EBITDA and gross margin levels. In the second quarter of 2009, group gross margin improved 220 basis points year-on-year to 35.2%. It also improved for each of the business segments, reaching 31.4% in dairy, 40.4% in beverages and 48.8% in baby food. Our EBITDA margin stood at 15.4% in the second quarter of 2009, reflecting both enhanced efficiency and seasonally lower input costs. Our net profit in the second quarter grew 42.6%.”

"Our operating cash flow continued to show significant improvement, while our net debt decreased 49.0% year-on-year and stood at US$280.8 million, the lowest level for many years,” Tony Maher added.

Dairy

Sales in US dollars in the Dairy Segment decreased 32.5% to US$746.7 million in the first half of 2009 from US$1,105.4 million in the first half of 2008. This was driven by negative exchange rate and partially offset by improved sales mix. The average dollar selling price declined 23.2% to US$1.07 per 1 kg in the first half of 2009 from US$1.40 per 1 kg in the first half of 2008. The gross margin in the Dairy Segment increased significantly to 30.3% in the first half of 2009 from 28.3% in the same period last year, driven by lower costs and improved sales mix. The gross margin improved to 31.4% in the second quarter of 2009 from 30.1% in the second quarter of 2008.

Beverages

Sales in US dollars decreased 19.0% to US$209.9 million in the first half of 2009 compared to US$259.0 million in the first half of 2008. This was driven by exchange rate and partially offset by good volume growth. The average dollar selling price decreased 24.0% to US$0.74 per liter in the first half of 2009 from US$0.98 per liter in the first half of 2008. The gross margin in the Beverage Segment increased to 38.8% in the first half of 2009 from 38.0% in the same period last year, due to improved efficiency and lower concentrate costs. The gross margin in the Beverage Segment increased to 40.4% in the second quarter of 2009 from 38.0% in the second quarter of 2008.

Baby Food

Sales in US dollars in the Baby Food Segment decreased 10.0% to US$114.9 million in the first six months of 2009 from US$127.7 million in the same period last year due to unfavorable exchange rate, offset by strong volume growth. The average dollar selling price decreased 28.7% to US$1.72 per kg in the first six months of 2009 from US$2.42 per kg in the first six months of 2008. The gross margin in the Baby Food Segment increased to 48.6% in the first six months of 2009 from 46.7% in the first six months of 2008.

Key Cost Elements

In the first six months of 2009, selling and distribution expenses decreased 23.5% year-to-year to US$184.5 million. Sales and distribution expenses as a percentage of sales increased to 17.2% in the first half of 2009, compared to 16.2% in the same period of 2008, driven by advertising and marketing expenditure, which increased, as a percentage of sales, to 6.2% from 4.0%. General and administrative expenses decreased 34.1% year-on-year to US$63.8 million in the first half of 2009. General and administrative expenses, as a percentage of sales, decreased to 6.0% in the first six months of 2009 from 6.5% in the same period last year.

Operating profit in US dollars decreased 11.3% year-on-year to US$111.8 million in the first half of 2009. Operating profit margin improved to 10.4% in the first half of 2009 from 8.4% last year. EBITDA in US dollars declined 13.9% to US$158.3 million. EBITDA margin improved significantly to 14.8% in the first half of 2009 compared to 12.3% in the same period last year, and to 15.4% in the second quarter of 2009 from 12.2% in the second quarter of 2008.

In the first six months of 2009, financial expenses increased 119.3% to US$25.8 million compared to US$11.8 million in the same period of 2008. This was mainly due to currency remeasurement loss incurred in the first half of 2009, as a result of our US$250 million syndicated loan taken out in the second quarter of 2008. In the first half of 2009, currency remeasurement loss amounted to US$11.1 million compared to currency remeasurement gain of US$11.3 million in the first half of 2008. Currency remeasurement loss is not a cash item.

Our effective tax rate decreased to 24.1% in the first six months of 2009 from 28.8% in the same period of 2008.

Net Income

In the second quarter of 2009, net income in US dollars increased 42.6% to US$52.3 million from US$36.7 million in the same period last year. Net income in US dollars decreased 17.4% to US$64.9 million in the first half of 2009 from US$78.6 million in the first half of 2008 as a result of ruble devaluation.

On a constant currency basis (in rubles), net income increased by 12.3% year-on-year in the first half of 2009, and almost doubled in the second quarter of 2009 year-on-year.

Debt and Cash Flows

As of the end of the first six months of 2009, our net debt decreased by 49.0% year-on-year to US$280.8 million.

As a result of effective working capital management, our operating cash increased 64.0% to US$180.3 million in the first half of 2009 from US$109.9 million in the same period of 2008. Free cash flow grew to US$131.1 million in the first six months of 2009 from US$13.5 million in the same period last year.

Attachment A

Reconciliation of EBITDA and EBITDA margin to US GAAP Net Income

EBITDA is a non-U.S. GAAP financial measure. The following table presents reconciliation of EBITDA to net income (and EBITDA margin to net income as a percentage of sales), the most directly comparable U.S. GAAP financial measure.

EBITDA represents net income before interest, income taxes and depreciation and amortization, adjusted for interest income, currency remeasurement gains, bank charges and other financial expenses and minority interest. EBITDA margin is EBITDA expressed as a percentage of sales.

We present EBITDA because we consider it an important supplemental measure of our operating performance. In particular, we believe EBITDA provides useful information to securities analysts, investors and other interested parties because it is used in the "debt to EBITDA” debt incurrence financial measurement in certain of our financing arrangements.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as substitute for analysis of our operating results as reported under U.S. GAAP. Moreover, other companies in our industry may calculate EBITDA differently or may use it for different purposes than we do, limiting its usefulness as a comparative measure.

EBITDA also should not be considered as an alternative to cash flow from operating activities or as a measure of our liquidity. In particular, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.

Some of the information contained in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Wimm-Bill-Dann Foods OJSC, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to conform them to actual results. We refer you to the documents Wimm-Bill-Dann Foods OJSC files from time to time with the U.S. Securities and Exchange Commission, specifically, the Company's most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, and risks associated with our competitive environment, acquisition strategy, ability to develop new products or maintain market share, brand and company image, operating in Russia, volatility of stock price, financial risk management, and future growth.

NOTES TO EDITORS

Wimm-Bill-Dann Foods OJSC was founded in 1992 and is the largest manufacturer of dairy products and a leading producer of juices and beverages in Russia and the CIS. The company produces dairy products (main brands include: Domik v Derevne, Neo, 2Bio, 33 Korovy, Chudo and more), juices (J7, Lubimy Sad, 100% Gold), Essentuki mineral water and Agusha baby food. The company has 37 manufacturing facilities in Russia, Ukraine, Kyrgyzstan, Uzbekistan and Georgia with over 18,000 employees. In 2005, Wimm-Bill-Dann became the first Russian dairy producer to receive approval from the European Commission to export its products into the European Union.

In 2009, Standard & Poor's Governance Services confirmed WBD’s governance, accountability, management, metrics, and analysis (GAMMA) score "GAMMA- 7+”. The score reflects the effective work of the Board of Directors and, in particular, the real influence of independent directors in the decision-making process and the adherence of the controlling shareholders to the highest standards of corporate governance.

¹ Note: See Attachment A for definitions of EBITDA and EBITDA margin and reconciliations to net income.