Carlsberg has maintained its profit forecast for 2023 but the brewer’s third-quarter sales were mixed and it remains wary about consumer sentiment in Europe and South East Asia.

The Tuborg maker is still predicting a 4-7% rise in operating profit this year after booking a 5.8% increase in third-quarter revenue on an organic basis. Revenue per hectolitre was up 9%, with Carlsberg pointing to “strong growth” in parts of Europe. Reported revenue grew by 0.3% to DKr20.3bn ($2.88bn).

However, organic volumes fell 3% (they dipped 0.6% over the first nine months of the year as a whole). Volumes dropped in western, central and eastern Europe, though they rose in Asia.

Speaking to analysts after the Danish brewer published its trading update, CFO Ulrica Fearn said: “Looking at the trading environment across our markets, consumer sentiment in Europe is weak and that may pose a risk for our volumes, channel and brand mix.”

She added: “In Asia, we’re optimistic about Q4 in China, mainly due to favourable comps last year because of the lockdown but we are concerned about the macroeconomic environment in South East Asia and the continued possible negative impact on the beer market.”

In western Europe, organic revenue was up 7% in the third quarter, although volumes fell 5.2%. Fearn said Carlsberg “roughly estimates” two-thirds of the decline in volumes was due to poor weather, with the remainder down to “weak consumer sentiment”.

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Recently installed Carlsberg CEO Jacob Aarup-Andersen explained trading conditions in Europe varied and underlined the brewer was “generally outperforming in premium across markets”.

However, in western Europe, the on-trade had fared less well than the off-premise, he added.

“The on-trade is declining more than off-trade. Of course, there’s a big weather impact on that and we don’t want to conclude anything on the basis of one month but, if you look at the month of September, where weather was actually good, we still saw on-trade performing worse than off-trade, which could indicate that the high inflation is impacting consumer behaviour,” Aarup-Andersen said. “There's no doubt that we’ll go through a period now where the European consumer will remain sluggish.”

Carlsberg’s revenues in Asia grew 3.7% in the third quarter, with volumes up 1.5%. Volumes were “mainly supported by growth in China” where volumes rose 6%.

However, China’s slowing economy has affected other countries in South East Asia, weighing on demand, including for beer, Carlsberg said. Nevertheless, the brewer said it had gained share in “most markets”.

“What we see right now is a clear impact from the Chinese overall macroeconomic slowdown that is impacting the South East Asian economies and you see that evidently in how the markets have reacted,” Aarup-Andersen told analysts.

“There is no doubt that we see a weakness right now in the main markets in South East Asia, which are not just about to turn around. I think we need to see a stabilisation of the Chinese consumer before we start seeing that breaking through to the other South East Asian markets.

“Asia for us is as you know a multifaceted region. We’re going to see a Q4 where we expect good growth in China given the easier comps and the momentum we’re having there. India should also continue while, [in] the rest of the countries that have suffered from this macroeconomic slowdown, we do expect most of those trends to continue into Q4 but not any dramatic step change as such.”

Carlsberg on costs and pricing

The Kronenbourg 1664 brewer was asked for its outlook on costs into 2024. Fearn said 40% of Carlsberg commodities “have not yet been hedged” and the company is in talks with suppliers about next year “and beyond”.

She added: “It is unlikely that we see a meaningful decline in COGS per hectolitre in 2024. Our best guess currently is that it will be flat.”

Aarup-Andersen said the brewer would stay “disciplined” in ensuring “we cover our costs via our pricing”.

He added: “I was asked whether prices would be going down or rolling back next year and I made it very clear that we have seen significant cost increases across the base this year and, when we look into ’24, we are still seeing the overall envelope of cost across all categories to be increasing not decreasing and, as a consequence, we do not expect to see price declines.”