Kalina JSC, one of Russia’s most successful health and beauty product maker, has recently been reported to experience a 6.8% decrease in profits in 2005 against the year before and comprised 512.3 million RUR.

According to the company’s report, the concern still managed to make 22% more in sales (6.3 billion against 5.2 billion RUR in 2004). Despite the decrease in net profits, Standard & Poor’s announced the increase in the national scale long-term credit rating for Kalina Concern JSC (from ruBBB+ to ruА-) owing to the company’s stable business dynamics and the fairly low financial risks. Russian analysts, however, don’t believe the results for 2005 are something to go by and suggest hoarding the shares for the time being.

Kalina is on of the major players on the Russian market, with its successful brands such as Cherniy Zhemchug, Chistaya Liniya and MIA skin care products, 32 and Lesnoy Balsam toothpastes and mouthwashes, and some perfumes selling incredibly well. It comprises an in-plant and subsidiaries in Yekaterinburg, an out-plant in Omsk and Kalina Overseas Holding B.V. in the Netherlands. The concern became the majority shareholder (61.01%) of Dr. Scheller of Germany in April 2005; its authorized capital is estimated at 682,662,000 million RUR.

Following the IPO in April 2004 and launch of ADR program the company’s GD Timur Goryaev and European Bank of Reconstruction and Development became the largest shareholders (50.18% and 5.7%, respectively); the rest of the shares either belongs to some Western investment companies or is offered publicly.

Nefis Cosmetics JSC, Kalina’s major rival, believes the decrease in profits could be explained by the company’s wish to build up its share of the market and the losses occasioned by merging with Dr. Sheller. ‘The only thing that seems unclear is why Kalina turned to Russian accounting rolls from US GAAP to publish its financial report,’ said the spokesperson for Nefis Cosmetics Alexei Brusnitsin.