Wimm-Bill-Dann, the Russian dairy group, has reported an increase in full-year profits on improved margins at its dairy and baby food units.

In 2009, net income increased 14.6% year-on-year to reach US$116.5m. On a constant-currency basis (in rubles), net income rose by 46.4% compared to 2008.

Sales decreased 23% year-on-year to $2.18bn, driven by the devaluation of the ruble, and partially offset by an improved sales mix in dairy and stronger volumes in beverages and baby food.

Dollar sales at within dairy fell 27%, driven by the negative exchange rate. However, gross margins in dairy increased to 29.4% from 29.1% in 2008, thanks to an improved sales mix, the company said.

In baby food, the sales decline was less marked, dropping just 4%. The negative impact of the exchange rate was partially offset by strong volume growth. The gross margin in the baby food business increased to 48% from 46.9% in 2008.

“Wimm-Bill-Dann achieved solid growth in profitability and significantly improved its balance sheet in 2009 despite continuing macroeconomic pressure and a temporary shortage of raw milk late in the year, which impacted dairy sales and margins in the fourth quarter,” said Tony Maher, Wimm-Bill-Dann’s CEO.

“While we were forced to restrict the production of some of our dairy products in the fourth quarter, on the whole, we succeeded in further strengthening our market position.”

Operating income for the 12-month period dropped 17.7% to $201.7m, while EBITDA dropped 15.1% to $306.6m.