H1 net profit up 25% at Carlsberg

By Jo Gilbert

Published: 18 August, 2016

Danish brewer Carlsberg posted its half-year 2016 results to June 30, reporting net revenue of 31.2bn Danish krones (DKK) and a 4% rise in organic growth.

Reported net profit was up 25% to 1,867m.

Organic operating profit growth was up 8%, however reported operating profit of 3,448m DKK was down 4% from 389m the previous year.

The company said this was down to due to a currency impact on DKK.

The results were slightly below expectations, but the brewer said it would maintain its 2016 outlook as its cost-cutting strategy shows progress.

CEO Cees 't Hart said: "The Carlsberg Group delivered a good set of results in line with our expectations. Most notably, we achieved a solid top-line and profit development as well as a strong improvement in cash flow. With the satisfactory execution of our plans so far, we maintain our full-year outlook for organic growth in operating profit."

Across the group, total volumes declined organically by 1%, mainly due to the lower beer volumes in the UK, Finland and Poland, a negative volume development in Eastern Europe, and a continued market decline in China.

This follows is in line with Carlsberg strategy since 2010 which has been to significantly reduce its reliance on the challenging Eastern and Western European markets.

"In 2010, Eastern and Western Europe jointly accounted for 84% of Carlsberg's total alcoholic drinks volumes. By 2015, this share had fallen to 69%, partly as a result of the company experiencing falling volumes in both regions due to a range of factors including difficult macroeconomic conditions, market maturity, government efforts to reduce alcohol consumption and beer facing competition from rival alcoholic drinks," Anna Ward, alcoholic drinks analyst at Euromonitor International, said.

The shift in Carlsberg's geographic profile was primarily driven by the company's efforts to reduce its reliance on these core regions through expansion in emerging markets in Asia Pacific.

Carlsberg's Asia Pacific volumes posted an 18% CAGR over 2010-2015, driven primarily by acquisitive expansion in China and supported by strong growth in markets such as India and Vietnam.

In today's results, H1 net sales were up 2%, volumes down 1% in Western Europe, whereas in Eastern Europe, net sales were up 8% and volumes flat.

In Asia, net sales were up 4% and volumes were down 3%.

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