Danish brewer Carlsberg has reported strong H1 profits that beat analysts’ estimates, but the beer giant has not changed its full-year profit forecast. It says how strong earnings growth and cash flow leaves the company “well on track to deliver on key priorities for 2017” after it has reduced costs and cut debt.
Today’s (August 16) statement says how earnings before interest, taxes and one-time items rose 20 percent to 4.13 billion kroner (US$650 million), against a reported analysts expectation of 3.82 billion kroner (US$601 million).
The Copenhagen-based company maintained its full-year guidance of mid-single-digit organic growth in operating profit even after earnings on that basis rose 15 percent in the first half.
Highlights
• Organic and reported net revenue growth of 2 percent to DKK 31,765million, while there was a solid price/mix improvement of +4 percent with good progress across all regions.
• Total organic volume was down 2 percent, impacted by PET downsizing in Russia.
• Tuborg volume +3 percent driven by Asia, Carlsberg -1 percent impacted by tough Euro 2016 comparable.
• Meanwhile, craft & specialty volume was up 25 percent and alcohol-free beer volume in Western Europe increased 13 percent.
• Strong organic operating profit growth of 15 percent; reported growth of 20 percent to DKK 4,125m, supported by a DKK 0.2bn positive currency impact. Reported net profit of DKK 2,304m (+23 percent) and adjusted net profit of DKK 2,286m (+63 percent).
2017 Earnings expectation maintained
In a bid to defend itself against rival Anheuser-Busch InBev and SABMiller, Carlsberg is looking to cut significant kroner with some reports saying this could be as much as DKK2bn.
Earlier this month Anheuser-Busch InBev and Turkish Anadolu Efes agreed to merge their operations in Russia and Ukraine in an attempt to strengthen the position in a declining market.
Carlsberg also has a relatively strong position in this market, controlling around one-third of beer sales.
“We delivered a strong set of results for the first half-year, improving earnings and cash flow and reducing leverage. The results show that we’re well on track to deliver on our key priorities for this year: achieving a substantial proportion of the remaining Funding the Journey benefits, enabling investments in SAIL’22-related activities to grow the top-line in the future,” says Carlsberg CEO Cees ’t Hart.
“Funding the journey is now well established and being embedded as normal procedure across our markets and functions.”
“Our strong financial results enable us to accelerate our investments in the SAIL’22 priorities to drive the sustainable long term growth of the Carlsberg Group. The growth of Tuborg in Asia, the expansion of Grimbergen and the further development of our fruitful cooperation with Brooklyn serve as excellent examples of SAIL’22 at this point in time.”
