FDBusiness.com

Carlsberg Group has reported net revenue of DKr62.6 billion (€8.4 billion), up 2% on an organic basis, for the financial year ended 31 December 2016, as the brewer continues to make steady progress against its key priorities. Group operating profit increased organically by 5% with all three regions – Western Europe, Eastern Europe and Asia – delivering growth. Reported operating profit was DKr8.245 billion with the decline of 3% due to a translation impact of -6% and a net acquisition impact of -2%. The operating margin improved by 30bp in reported terms to 13.2% with improvement in all three regions.

Carlsberg Group made good progress on achieving its key priorities for 2016 – executing Funding the Journey; announcing and embedding the group’s new strategy, SAIL’22; improving margins in Western Europe; continuing the growth trajectory in Asia; and mitigating the negative earnings impact from the currency weakness and market decline in Eastern Europe. During 2016, Funding the Journey delivered approximately DKr0.5 billion of the anticipated benefits of DKr1.5-2.0 billion by 2018.

Cees ‘t Hart, chief executive of Carlsberg Group.

Carlsberg Group also achieved its three regional priorities for 2016. In Western Europe, the operating margin improved by 50bp to 14.2%, mainly as a result of value management focusing on delivering price/mix and GPaL margin improvement. Its Asia region continued to deliver solid organic revenue growth (+4%) as a result of a strong 6% price/mix and despite a negative volume development in China. Organic operating profit growth was 6%. The Eastern Europe business achieved 12% organic operating profit growth and a 60bp improvement in reported operating margin in spite of challenging market conditions and currency headwind.

Cees ‘t Hart, chief executive of Carlsberg Group, comments: “2016 was a good year for the Carlsberg Group. We’re satisfied with our performance and the delivery of 5% organic growth in operating profit, a solid price/mix, strong cash flow and a further reduction in financial leverage. During the year, we took significant steps to become a more successful company. We launched our new strategy – SAIL’22 – and its priorities are now well integrated in our plans for 2017. In addition, Funding the Journey delivered benefits faster than anticipated for the year.”

He adds: “In 2017, we’re determined to achieve a substantial proportion of the remaining Funding the Journey benefits, allowing us to grow earnings organically and invest in SAIL’22-related activities to support the future growth of the company.”

At regional level, Carlsberg Group plans to improve margins and operating profit in Western Europe; continuing top-line and earnings growth in Asia; and grow operating profit organically in Eastern Europe. Based on these priorities, for 2017 Carlsberg Group expects to deliver mid-single-digit percentage organic operating profit growth and financial leverage reduction.