Carlsberg Group expects the continuing challenging economic conditions in some countries in Eastern Europe and destocking among distributors in Russia, a major market for the Danish brewer, to adversely impact its second half financial performance. Carlsberg expects reported adjusted net profit to decline by mid- to high-single-digit percentages (previously low-single-digit growth). Reported operating profit is expected to decline low- to mid-single digit percentages versus last year (previously low- single-digit growth). Organic operating profit is projected to grow low- to mid-single-digit percentages (previously high-single-digit percentages).
In the first half of 2014, Carlsberg reported a 0.7% rise in operating profit to DKr4.1 billion on net revenue up 1% to DKr32.1 billion. Despite a strong beer volume performance in Western Europe, group beer volume declined organically by 3% impacted by market decline in Eastern Europe. The group’s market share increased in its Asian region and was flat in Western Europe. Group market share declined in Russia during the first half.
Jorgen Buhl Rasmussen (pictured), chief executive of Carlsberg Group, comments: “I am satisfied with the financial results of the group for the first six months. Our focus on key priorities and strong execution in our markets and central functions have strengthened our business commercially and increased profits and cash flow. We continue to grow our international premium brands across markets, with particularly strong performance in Asia where Tuborg has become the number one international brand in India and is the fastest growing international premium brand in China. Our Western European region delivered another set of strong results driven by solid topline performance and continued execution on an ambitious efficiency agenda.”
He continues: “In Eastern Europe, our teams are doing an excellent job mitigating the impact of the current market challenges. Unfortunately, we believe the Eastern European beer markets will be impacted further as consumers are facing increased challenges and this will impact the group’s profits negatively this year. We will continue to do what is right for our business long-term, and this includes investing in our brands, keeping commercial activities at a high level and at the same time balancing value and volume. But we will also make tough decisions and adapt the cost structure to ensure that we maintain a strong and very profitable Eastern European business.”
