11/11/2015 7:00 

Solid Q3 performance; announcing plans to improve profits and right-size operations through “Funding the Journey”

Unless otherwise stated, comments in this announcement refer to nine months performance.


Preparing for the future

· To improve profit and cash flow, we are unifying under one overall programme, called Funding the Journey, all the existing and also new profit improvement initiatives, with the objective of achieving fuller and faster delivery of benefits.

· Funding the Journey contains impairment and restructuring costs during 2015-2017 of DKK 10bn, of which around DKK 8.5bn will be charged in 2015.

· Funding the Journey is expected to deliver annual benefits by 2018 of DKK 1.5-2.0bn. The benefits will partly improve the Group’s profitability and partly be reinvested in to the business, subject to the outcome of our SAIL2022 strategy review.

· Strategy review well underway; SAIL2022 ­ to be communicated by the end of Q1 2016.

2015 earnings expectations

· The Group’s expectations to the underlying business performance for 2015 remains unchanged.

· The translation impact on operating profit is expected to be DKK -200m (previously DKK -300m)

· Due to the reclassification of one-off items in the UK and restructuring costs in Q4, organic operating profit is expected to be lower than previous expectations.

Q3 financial highlights

· Solid performance in Q3 with organic growth in net revenue of 3% and in operating profit of 9%.

· Group beer volumes down organically 3% due to Eastern Europe.

· Total price/mix of +4%.

· Reported operating profit grew 2% to DKK 3,465m.

· Adjusted net profit[1] was up 2% to DKK 2,220m.

· Q3 impacted by special items of DKK 7.7bn, mainly related to impairment of Russian brands and Eastern Assets in China, leading to a reported net loss of DKK -4,499m.

Nine months financial highlights

· Reported net revenue of DKK 50.7bn; organic growth of 1% with total price/mix of +4%.

· Organic operating profit decline in Eastern Europe and Western Europe, partly offset by growth in Asia; organic decline in Group operating profit of 3%.

· Reported operating profit decline of 5% to DKK 7,048m.

· Adjusted net profit1 of DKK 3,954m.

· Reported net profit, including the substantial asset impairment in Q3, of DKK -3,004m.

· Significant improvement of free cash flow to DKK 5.6bn vs DKK 2.6bn last year due to a strong working capital improvements and lower capex.

Nine months operational highlights

· Group beer volumes declined organically by 4% due to continued decline in Eastern Europe.

· Strong performance of our international premium brands: Tuborg (+17%), Somersby (+22%), Kronenbourg 1664 (+4%) and Grimbergen (+16%). The Carlsberg brand declined by 2% in its premium markets cycling tough comparables.


CEO Cees ‘t Hart says: “We delivered solid performance in Q3 and confirm underlying business performance to be in line with previous expectations. Acknowledging the fact that the profit development of recent years has not been satisfactory, we are taking further steps to prepare the Carlsberg Group for the future. The strategy review process is on track to be communicated by the end of Q1 next year.

In order to successfully execute on the strategy, short-term measures are being taken to ensure that we have an appropriate cost base. Consequently, we have launched Funding the Journey, which merges all existing and new profit-enhancing initiatives under one umbrella and sees us taking significant steps to right-size parts of our business.

Funding the Journey will release funds to be invested in the SAIL2022 agenda as well as increase profits. This, and the fact that we are approaching the inflection point where our growth markets in Asia more than compensate for the declining markets in Eastern Europe, gives me confidence in the future.”

Read the full statement here (PDF)


Investor Relations:
Peter Kondrup +45 3327 1221
Iben Steiness +45 3327 1232

Media Relations:
Anders Bering +45 3327 1217
Kasper Elbjorn +45 4179 1216

[1] Net profit adjusted for special items after tax