FDBusiness.com

Carlsberg Group has announced organic and reported net revenue growth of 2% to DKr31.77 billion (€4.27 billion) for the first half of 2017 although group beer volumes fell organically by 3%, chiefly due to a decline in Russia. Operating profit was up 15% organically, with all three regions – Western Europe, Eastern Europe and Asia – delivering double-digit growth. Reported operating profit was DKr4.13 billion, corresponding to a growth rate of 20%, as the positive currency impact from Russia and some Asian countries more than offset the small negative scope impact from divestment of businesses. The operating margin improved by 200bp to 13.0%.

Carlsberg Group continues to make steady progress in executing its ‘Funding the Journey’ cost saving and profit improvement programme while implementing its new ‘SAIL 22’ growth strategy, as the Danish brewer strives to consolidate its position in developed markets in Western Europe, improve profitability in Eastern Europe and to expand in emerging markets.

Funding the Journey is progressing as expected, and Carlsberg Group is on track to deliver a large proportion of the expected total net benefits of DKr1.5-2.0 billion this year and the full net benefits in 2018.

The group is also delivered according to plan on its regional financial priorities for 2017. In Western Europe, the operating margin improved by 160bp to 12.5% and organic operating profit grew by 14%. The Asia region delivered organic revenue growth of 6% because of a strong price/mix. Organic operating profit growth was 12%. The Eastern Europe business delivered 17% organic operating profit growth and an operating margin improvement of 320bp despite challenging market conditions.

Cees ’t Hart, chief executive of Carlsberg Group, says: “We delivered a strong set of results for the first half-year, improving earnings and cash flow and reducing leverage. The results show that we’re well on track to deliver on our key priorities for this year: achieving a substantial proportion of the remaining Funding the Journey benefits, enabling investments in SAIL’22-related activities to grow the top-line in the future. Funding the Journey is now well established and being embedded as normal procedure across our markets and functions.”

He adds: “Our strong financial results enable us to accelerate our investments in the SAIL’22 priorities to drive sustainable long-term growth of the Carlsberg Group. The growth of Tuborg in Asia, the expansion of Grimbergen and the further development of our fruitful co-operation with Brooklyn serve as excellent examples of SAIL’22 at this point in time.”

Carlsberg Group is maintaining its financial expectations for 2017 for did-single-digit percentage organic growth in operating profit and financial leverage reduction.