DENMARK: Carlsberg toasts European recovery
A turnaround in Western Europe and continued growth in Asia has driven annual earnings at Carlsberg, the Danish brewing giant said today (20 February).
Carlsberg reported a 15% jump in operating profit to DKK4.04bn (US$713m) for 2006 as sales and earnings rose in Europe, a region that has been challenging for the brewer in recent years.
Group revenues rose 8% to DKK41.1bn as sales were also driven by a strong performance from Carlsberg's Baltic Beverages Holding (BBH) joint venture, and growth in Asia.
"The progress made in 2006 is very pleasing - partly because it is based on broad progress in our key companies," said Carlsberg CEO Nils S. Andersen. "This shows that the many changes made in Carlsberg in recent years are bearing fruit and that we have created a professional organisation and with it a solid foundation for continued strengthening of the business in the years ahead."
Profits from Carlsberg's operations in Western Europe jumped 20% thanks to higher earnings in the Nordic countries and the UK, markets where the brewer has worked hard to drive down costs in recent years.
The Nordic countries also drove a rise in sales from Carlsberg's core brewing business, as well as its soft drinks interests in the region - Carlsberg holds the local Coca-Cola franchise in Denmark. The company added that beer sales rose in each of its Western European market except Italy.
The brewer saw earnings from BBH soar by 37%, boosted by synergies extracted from the merger of its brewing operations in Russia. Nevertheless, revenues leapt 21% as sales in Russia, the Baltic states, Kazakhstan and, notably, the Ukraine rose.
In Asia, Carlsberg saw revenues jump 40% thanks in part to acquisitions in China, Cambodia and Laos.
On a reported basis, operating profit in the region fell 15% on 2005. However, Carlsberg said the sale of its former stake in South Korean brewer Hite had bolstered earnings in 2005. Once that contribution was stripped out from its earnings in Asia, profits on an underlying basis were up 21%.
The picture in Eastern Europe was not as buoyant as elsewhere for Carlsberg. Revenues inched up 3% but operating profit slumped 55% due to falling sales and earnings in Carlsberg's largest market in the region, Poland.
Carlsberg blamed a hike in marketing costs and a scaling back of inventories in the off-trade for the soft performance in Poland, where the beer industry as a whole saw sales rise 7% last year.
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