11/4/2009 8:00 


Strong cash flow and operating profit growth despite challenging markets

• Carlsberg delivered a strong set of results for the first nine months of 2009. This was based on detailed planning and superior execution across the Group overcoming the ongoing challenging market environment. Organic operating profit growth for the beverage activities was 27% and Group operating margin improved to 16.9% (14.5% in 2008). This was driven by the intense focus on efficiency improvements and value management. Combined with significant improvement in working capital and reduced capital expenditures, free cash flow increased substantially to DKK 6.1bn.

• Beer volumes increased by 6% to 88.9m hl. Organic beer volume declined by 5% while net acquisitions contributed 11%. The Asian business delivered high single-digit organic volume growth whereas organic volumes declined in Eastern Europe and Northern & Western Europe. Q3 beer volumes developed in line with the first six months.

• Net revenue increased by 1% to DKK 45.8bn (DKK 45.4bn in 2008). Organic net revenue growth was flat. Pricing remains robust and price increases implemented in 2008 and 2009 combined with the value management initiatives have driven a positive price effect of +5% year on year ('yoy'). The overall mix effect was flat. Q3 net revenue was DKK 16.4bn with organic net revenue growth of -1%.

• In the first nine months Carlsberg launched several new products across all regions and initiated construction of breweries in Vietnam and India. Carlsberg gained market shares in most markets in Eastern Europe and Asia with particularly strong gains in the Ukraine and Russia, and maintained overall market share in Northern & Western Europe.

• Operating profit increased to DKK 7,747m (DKK 6,592m in 2008). The beverage activities delivered strong organic operating profit growth of 27%. For Q3, Group operating profit was DKK 3,304m (DKK 3,054m in Q3 2008) with 22% organic growth. The Northern & Western European region accelerated organic profit growth in Q3 as the sustainable impact from the accelerated efficiency programmes materialises. The Eastern European and Asian businesses delivered strong improvement throughout all nine months.

• Operating margin increased to 16.9% (14.5% in 2008). Q3 Group operating margin was 20.2% (16.6% in Q3 2008).

• Free cash flow improved to DKK 6.1bn driven by improved working capital, higher profits and lower capital expenditure.

• Net debt at the end of Q3 was DKK 38.5bn compared to DKK 44.2bn at the end of 2008.

• The integration of the S&N assets is on track and synergies are coming through as expected. Of the DKK 1.3bn synergy target around DKK 725m annualised savings have been extracted as at 30 September 2009.

• The Russian market declined by around 10% in the first nine months of the year and Carlsberg expects the Russian market for the full-year to decline in line with the first nine months. Carlsberg improved its Russian market share by 220bp to 40.9%.

• Carlsberg upgrades full-year target for free cash-flow, revises the target for financial leverage downwards and keeps earnings targets unchanged despite lower net revenues:

• Net revenue of around DKK 59-60bn
• Operating profit of at least DKK 9bn
• Net profit of at least DKK 3.5bn
• Free cash flow of at least DKK 6.5bn
• Operating capital expenditure of less than DKK 3.5bn
• Net interest-bearing debt to EBITDA ratio less than 3x

• The overall challenging market environment will continue in 2010. One challenge being the Russian government's proposal of a significant beer excise duty increase in 2010 which is still being debated and where a decision is expected later this year. If this proposal combined with a proposed moderate increase in spirit excise duties is passed, it will clearly affect the beer market negatively. The Group has done a thorough scenario-planning for 2010 and subsequent years based on different assumptions on beer excise duty levels.

Commenting on the results, CEO Jorgen Buhl Rasmussen said: “We are very pleased with the strong Q3 and nine months results that again demonstrate that our efforts to drive sustainable efficiency improvements without losing top-line focus have been successful and sufficient to off-set the impact from the challenging markets. We were well-prepared going in to 2009 and remain comfortable in our ability to deliver on our profit and cash flow targets for the year. We are currently planning for an equally challenging 2010 and we will be as prepared for 2010 as we were for 2009. Our focus will remain on growing volume and value market share, improving efficiencies and reducing debt.”

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Investor Relations:    Peter Kondrup                     +45 3327 1221

Media Relations:        Jens Peter  Skaarup             +45 3327 1417