8/20/2014 7:00 


Operating profit growth in H1; outlook changed due to recent events in Eastern Europe

Unless otherwise stated, comments in this announcement refer to H1 performance.
Financial highlights

  • Organic net revenue up by 4% to DKK 32.1bn (Q2: +4%).
  • Positive price/mix of 5% (Q2: +5%).
  • Organic gross profit growth of 6% (Q2: +7%).
  • 8% organic operating profit growth (Q2: +14%) with particularly strong performance in Western Europe.
  • Reported operating profit growth of 1% to DKK 4,054m (Q2: +6%) negatively affected by a currency impact of DKK 403m (10%).
  • Flat adjusted net profit at DKK 2,238m (Q2: 7% growth to DKK 2,288m).

Operational highlights

  • Strong beer volume performance in Western Europe. Group beer volume declined organically by 3% (Q2: -2%) impacted by market decline and last year’s strong Q2 in Eastern Europe.
  • Our market share increased in our Asian region and was flat in Western Europe. In Russia, our market share declined.  
  • Our international premium portfolio delivered strong growth rates: Tuborg (+26%), Somersby (+48%) and Grimbergen (+39%). The Carlsberg brand grew 3% in its premium markets.
  • The implementation of the supply chain integration and business standardisation project (BSP1) continues and we are on track preparing for implementation in Poland, Switzerland and Finland.
  • The integration of Chongqing Brewery is running according to plan.

2014 earnings expectations

  • Due to the recent macro events the consumer sentiment and the outlook for some of the economies in Eastern Europe are becoming increasingly challenging and uncertain.
  • Consequently, we believe that the beer category will deteriorate further in the second half of the year. In addition, we expect considerably less stocking among distributors in Russia than in recent year. As a consequence and in the current cirumstances, the Group now expects:
    • Organic operating profit to grow low- to mid-single-digit percentages (previously high-single-digit percentages). Reported operating profit is expected to decline low- to mid-single digit percentages versus last year (previously low- single-digit growth).
    • Reported adjusted net profit to decline by mid- to high-single-digit percentages (previously low-single-digit growth).

Commenting on the results, CEO Jørgen Buhl Rasmussen says: “I am satisfied with the financial results of the Group for the first six months. Our focus on key priorities and strong execution in our markets and central functions have strengthened our business commercially and increased profits and cash flow. We continue to grow our international premium brands across markets, with particularly strong performance in Asia where Tuborg has become the no. 1 international brand in India and is the fastest growing international premium brand in China. Our Western European region delivered another set of strong results driven by solid topline performance and continued execution on an ambitious efficiency agenda.

 “In Eastern Europe, our teams are doing an excellent job mitigating the impact of the current market challenges. Unfortunately, we believe the Eastern European beer markets will be impacted further as consumers are facing increased challenges and this will impact the Group’s profits negatively this year. We will continue to do what is right for our business long-term, and this includes investing in our brands, keeping commercial activities at a high level and at the same time balancing value and volume. But we will also make tough decisions and adapt the cost structure to ensure that we maintain a strong and very profitable Eastern European business.”


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