FDBusiness.com

Carlsberg Group has increased operating profit organically by 14.2% in the first half of 2018 with all three of its regions – Western Europe, Asia and Eastern Europe – delivering very solid performances. Organic net revenue growth was 5.1%. Reported operating profit rose by 6.0% to DKr4.373 billion (€586.5 million), impacted by negative currency factors mainly relating to Asia. Adverse currency movements also impact Carlsberg Group’s reported net revenue, which declined by 0.7% to DKr30.966 billion in the first half.

Adjusted net profit (adjusted for special items after tax) was DKr2.506 billion, and adjusted earnings per share were DKr16.4, corresponding to a 9.3% improvement. Group beer volumes grew organically by 3.3%, driven by continued strong volume growth in Asia and improved dynamics in Eastern Europe. Other beverages grew organically by 4.1%. Total volumes grew by 3.4% organically.

Carlsberg Group is on track to deliver on its regional financial priorities for 2018 – to improve margins and operating profit in Western Europe, accelerate organic growth in Asia through premiumisation, and rebalance the focus towards top-line growth in Eastern Europe. In Western Europe, the operating margin improved by 120bp to 13.7%, and organic operating profit grew by 7.8%. The Asia region delivered strong organic net revenue growth of 14.3%, driven by +4% price/mix and 10.4% volume growth. Organic operating profit growth was 17.4%. The Eastern Europe business reported 9.1% organic revenue growth and achieved an operating margin above last year’s level.

Carlsberg Group also continued to make steady progress in implementing its ‘Funding the Journey’ cost saving and profit improvement programme and its ‘SAIL 22’ development strategy, which aims to deliver sustainable organic top- and bottom-line growth.

Following good progress in 2016, 2017 and in the first half of 2018, Carlsberg Group now expects Funding the Journey to deliver more than DKr2.3 billion, well above the original expectation of DKr1.5-2.0 billion. Due to the good progress of Funding the Journey, reinvestments in the SAIL’22 priorities in 2018 are expected to amount to approximately DKr500 million.

When Funding the Journey finishes by the end of 2018, the focus on efficiency and costs will remain and will continue to be embedded into business operations and procedures across the group.

Based on its strong first half performance, Carlsberg Group has adjusted its full year earnings expectations upwards from mid-single-digit to high-single-digit percentage organic growth in operating profit.

Cees ’t Hart, chief executive of Carlsberg Group, comments: “We delivered strong results for the first six months of 2018 with healthy top-line growth, margin improvements across the regions, strong cash flow and continued debt reduction. We’re pleased to be able to adjust our earnings outlook upwards. This is a proof point that our SAIL’22 investments support our ambition of sustainable top-line growth.”