Carlsberg Lifts Lower End of Guidance as Nonalcoholic Drinks Offset Beer Declines

Dow Jones
Aug 19
 
 

Carlsberg lifted the lower end of its full-year guidance range, citing synergies from its Britvic acquisition and tight control over costs.

The Copenhagen-based brewer said total volumes grew by 2.8% in the first six months of the year, reflecting the integration of Britvic--the British maker of soft drinks and cordials that Carlsberg bought for some 3.3 billion pounds ($4.47 billion) in a deal completed early last year.

Soft drinks and other beverages delivered organic growth of 7.8%, driven by solid growth in multiple markets, while beer volumes declined slightly by 1.0%, mainly because of Poland, China and Ukraine, it said.

"China was the clear disappointment of the quarter, with falling volumes and a market characterized by weak demand and challenging weather conditions," Jyske Bank senior analyst Haider Anjum said in a note to clients.

In contrast, India continued its growth journey with double-digit volume growth, while soft drinks and nonalcoholic beers were once again among the strongest growth drivers in the country, Anjum added.

Overall group organic volume growth in the period landed at 1.7%.

"Carlsberg delivered solid top-line and earnings growth for the first half-year despite the continued uncertain macro environment, and we saw sustained good progress on our key strategic priorities, with particularly strong growth for soft drinks and alcohol-free brews," said Chief Executive Officer Jacob Aarup-Andersen.

The company's growing sales of drinks that fall outside of its traditional mainstream beer market echo trends noted by rival Heineken, which recently reported a sales boost from premium labels and lower-alcohol products.

AB InBev, the world's largest brewer behind the Budweiser, Stella Artois and Michelob brands, has also seen how a focus on its more premium labels as well as this summer's FIFA World Cup support revenue and earnings growth.

Carlsberg reported first-half revenue of 47.05 billion Danish kroner ($7.28 billion), up from 45.86 billion kroner last year and just shy of the 47.16 billion kroner forecast in a company-compiled consensus.

Adjusted operating profit rose to 7.45 billion kroner from 7.13 billion kroner, also just below the 7.55 billion kroner expected in a consensus forecast.

The company now expects organic operating profit growth this year of 4%-6%, from 2%-6% previously, while it still assumes no currency translation impact on operating profit.

"The clarification was expected, but sends an important signal that earnings momentum remains positive," Jyske Bank's Anjum said.

 
 

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