DENMARK: Carlsberg earnings up as volumes rise

By | 7 November 2007

Carlsberg has reported double digit growth in revenues and operating profit for its first nine months, as the company benefited from higher sales volumes and positive results from its "Excellence" programme.

The Danish brewer said today (7 November) that net sales in the first three quarters of 2007 increased by 10% to DKK33.9bn (US$6.67bn), leading to an operating profit of DKK4.33bn, an increase of 23% on the same period last year.

The company maintained its full year outlook for operating profit at around DKK5bn, including organic earnings growth for beverage activities of approximately 20%.

In a statement, Carlsberg said that all regions had contributed except the investment region Asia. "In Asia, earnings decreased caused by changes in the business model in Malaysia," it said.

Beer sales in the first nine months of 2007 totalled 63.2m hl (calculated pro rata), an increase of 14%, which breaks down into 13% organic growth and 1% through acquisitions. The parts of the business operating in the growth markets of Asia and Eastern Europe, including its joint venture with Scottish & Newcastle, Baltic Beverages Holding, saw the strongest growth. There was also a small increase in sales in the mature markets of Western Europe delivering market share growth in all key markets.

The international brands Carlsberg and Tuborg continued to grow, achieving volume increases of 5% and 19% respectively, primarily as a result of strong growth in several of BBH's markets, Carlsberg noted.

The company warned, however, that increases in input costs will continue to necessitate increases in selling prices for beer across markets.

Last month, Carlsberg and Heineken made a proposal to the board of S&N for a cash offer for the entire share capital of S&N. The proposal envisages that Carlsberg would acquire 50% of BBH, the French and Greek operations of S&N, together with its investments in China.

S&N, however, has so far rebuffed the advances and has informed Carlsberg that it has commenced arbitration proceedings with regards to alleged breaches of the BBH shareholders' agreement.

Today, Carlsberg said it has "unequivocal legal advice that the claims have absolutely no merit whatsoever. Carlsberg reserves its position with regards to a claim for material damages - also if S&N should decide to withdraw the arbitration."

Sectors: Beer & cider, Soft drinks

Companies: Carlsberg, S&N, BBH, Heineken

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