Carlsberg Reports Solid Performance in 2008
For Carlsberg 2008 was a year of significant progress," says CEO Jørgen Buhl Rasmussen. “We completed the Scottish & Newcastle acquisition followed by substantial business integration. At the same time Carlsberg continued to develop its business in line with its stated strategy, building on its strong brand portfolio and execution skills.
18/02/09 For the full year, pro rata organic beer volume growth totalled 3% (33% including acquisitions), driven by mid-single-digit growth in Eastern Europe and double-digit growth in Asia.
• Carlsberg achieved progress in all geographic segments. Net revenue was DKK 59,944m (DKK 44,750m in 2007) with organic growth of 8% (5% in DKK), and operating profit before special items was DKK 7,979m (DKK 5,262m in 2007) with organic growth of 9% (6% in DKK).
• The beer category is resilient but not immune to economic recession. However, market conditions softened further in the fourth quarter of the year. In both Northern & Western Europe and in Eastern Europe reduced consumer spending combined with various market-specific factors have impacted performance. Carlsberg’s continued focus on strong execution and cost control has compensated for the more challenging trading environment.
• Both pricing and mix contributed positively to the performance in all regions. Premiumisation in the total beer market in Russia has taken place in each and every quarter of 2008 compared to 2007. In Northern & Western Europe there has been a negative channel mix from on-trade to off-trade but no significant change to mix between segments in the off-trade.
• In 2008 the Russian business achieved a market share of 38.3% (37.6% in 2007) in an overall flat market. In the fourth quarter Baltika again outperformed the market, achieving flat volumes despite a drop in market volume of c. 5.4% and once more demonstrating superior execution power in a tougher trading environment.
• The international brands Carlsberg, Tuborg and Baltika continued to grow and the Baltika brand is now the biggest beer brand in Europe. Carlsberg’s portfolio includes four of Europe’s top ten beer brands.
• In spite of major movements in special items, financial items and corporation tax, net profit was DKK 2,631m (DKK 2,297m in 2007) and earnings per share was DKK 22.2 (DKK 24.3 in 2007). Proposed dividend of DKK 3.50 per share (adjusted, DKK 4.84 in 2007).
• In line with our plans, synergies of c. DKK 0.1bn were realised in 2008.
• Net interest-bearing debt end 2008 amounted to DKK 44.2bn.
• Increasing cash flow and protecting earnings will be Carlsberg’s top priorities in 2009. Restructuring plans in Denmark, Norway and the Baltics were announced in early January 2009. Further plans across all markets and all functions in the Group are currently being implemented to compensate for weak macroeconomic conditions. These include initiatives to significantly reduce the cost base and increase efficiency. In addition there will be a significant reduction in capital spend across the Group.
• If operational or financial conditions become worse than currently expected, contingency plans for various scenarios across the Group will continue to be developed to be able to take action quickly and effectively. Notwithstanding this, Carlsberg will continue to drive brand growth through focused innovation, marketing support and strong execution.
• For 2009 Carlsberg assumes and expects:
* Average EUR/RUB rate of 47.
* Net revenue of around DKK 63bn.
* Operating profit of more than DKK 9bn.
* Net profit of more than DKK 3.5bn.
* Free cash flow of more than DKK 6bn.
* Operating capital expenditures of less than DKK 3.75bn.
* Net interest-bearing debt vs EBITDA of around 3.
In DKK and excluding effects from acquisitions/divestments net revenue is not expected/assumed to grow.
• According to Carlsberg's banking documentation, Carlsberg should be at an adjusted net interest-bearing debt vs EBITDA end 2009 of no more than 4 (4.25 end June 2009).
• Baltika has announced proposed dividend for 2008 of c. EUR 265m (Carlsberg's share).
• Monetisation of redundant assets, including the Valby site, remains a priority for the Group but is not factored into the current expectations for 2009.
“For Carlsberg 2008 was a year of significant progress," says CEO Jørgen Buhl Rasmussen. “We completed the Scottish & Newcastle acquisition followed by substantial business integration. At the same time Carlsberg continued to develop its business in line with its stated strategy, building on its strong brand portfolio and execution skills. A global economic recession is now a reality. Consequently, our focus in 2009 will be on increasing cash flow and protecting earnings, cost control, significantly reducing capital expenditure, and accelerating debt repayment. After a solid performance in 2008 Carlsberg is well prepared for a challenging 2009, ready to take all necessary actions to protect our business as much as possible.”
