DENMARK: Carlsberg FY led by Eastern Europe, Asia

By | 19 February 2008

Carlsberg has delivered a strong set of full-year results, driven by its operations in the emerging markets of Eastern Europe and Asia.

The Denmark-based brewer said today (19 February) that net sales in 2007 were up by 9% on 2006, coming in at DKK44.75bn (US$). Operating profit climbed to DKK5.26bn from DKK4.05bn, with net profit increasing to DKK2.30bn from DKK1.88bn.

The poor summer in Western Europe slowed sales for Carlsberg in the region, particularly in the UK, German and Danish markets. Volume sales inched up by 1% in the region, as sis net revenue. Considering the tough conditions, Carlsberg desctibed the 1% lifts as "satisfactory".

It was Carlsberg's joint venture with Scottish & Newcastle in Russia, however, that drove growth in 2007. In volume terms, sales were up by 25% year-on-year at Baltic Beverages Holding, at 29.1m hectolitres. Net sales and operating profit both leapt by 30% from the unit. Despite a strong increase in the level of activity, however, higher raw material and distribution prices meant that costs developed in parallel with revenue.

Carlsberg's performance in Eastern Europe outside of BBH saw sales leap by 22% in value, with operating profit soaring, up 254% to DKK477m. This figure also includes income of DKK63m from a real estate sale in the first quarter in Poland.

Finally, China and Vietnam were credited with helping Asia deliver sales volume growth of 25%, although operating profit from the region slipped by 1% to DKK330m. The brewer blamed lower earnings in Malaysia for the slip.

"The results for 2007 are very satisfactory and confirm that Carlsberg is in good shape," said company CEO Jorgen Buhl Rasmussen. "The results for 2007 demonstrate once again that we are well equipped both to face challenges and for the next major transformation of Carlsberg."

Looking forward, Carlsberg said it expects this year's figures to benefit from poor comparatives in the first half, thanks to the exceptionally good weather in Eastern Europe in the beginning of the year and the poor weather in Western Europe throughout the year. "Both of (these factors) will result in higher comparative figures in the first six months of 2008," the company said. Net revenue growth of 10% in 2008 is the current target, driven by BBH, Eastern Europe and Asia, although higher financial expenses may hamper profits this year.

"The marked increases in raw material prices will make 2008 a challenging year, so it will be more important than ever to focus on value growth in sales and efficiency in the organisation," Rasmussen added.

Separately, Carlsberg confirmed that it will close its brewery in Valby in Denmark at the end of this year. The subsequent sale of real estate is expected to have a "substantial positive effect" on Carlsberg's net interest-bearing debt and balance sheet in the medium term. The Carlsberg site at Valby in Copenhagen covers a total area of around 330,000 square metres.

Sectors: Beer & cider

Companies: Carlsberg, BBH

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