FDBusiness.com

Carlsberg Group has reported a net profit of DKr1.259 billion (€169.2 million) for 2017, down from DKr4.486 billion in 2016, as the global brewer was impacted by problems in the Russian beer market and special items, including a DKr4.8 billion impairment of its Baltika brand. Net sales declined by 1.3% to DKr61.8 billion in 2017 and organic net revenue growth was 1%.

Carlsberg achieved organic operating profit growth of 8.4% – reported growth was up 7.7% to DKr8.876 billion – during 2017 as the operating margin rose by120bp to 14.4%, with improvement across all three regions – Western Europe, Asia and Eastern Europe.

Carlsberg Group’s efficiency programme, Funding the Journey, delivered accumulated benefits of around DKr1.7 billion for 2016 and 2017, with DKr1.2 billion generated last year.

The group also delivered according to plan on its regional financial priorities for 2017, namely: improving margins and operating profit in Western Europe; continuing top-line and earnings growth in Asia; and organic growth in operating profit in Eastern Europe. In Western Europe, the operating margin improved by 130bp to 14.2% and organic operating profit grew by 7.5%. The Asia region delivered organic revenue growth of 5% due to a strong price/mix. Organic operating profit growth was 8.1%. The Eastern Europe business delivered 12.2% organic operating profit growth and an operating margin improvement of 240bp to 20.4%.

Cees ’t Hart (pictured above), chief executive of Carlsberg Group, comments: “We delivered a strong set of results for 2017, fuelled by disciplined execution of our efficiency programme – Funding the Journey – which we now believe will deliver around DKr2.3 billion, well above our initial expectations of DKr1.5-2.0 billion. During the year, we invested DKr500 million in our strategic growth priorities, which should lead to healthy and sustainable top- and bottom-line growth going forward.”

In 2016 and 2017, Carlsberg Group’s key focus was the delivery of Funding the Journey to create the financial flexibility to invest in the business. In 2018, it intends to strengthen the focus on revenue growth while maintaining a sharp focus on costs and delivering on the remaining Funding the Journey benefits. The brewer will also continue to exercise strict cash flow discipline.

At regional level, its priorities for 2018 are: continued improvement in margins and operating profit in Western Europe; accelerating organic growth in Asia through premiumisation; and rebalancing the focus towards top-line growth in Eastern Europe.

Based on these priorities, for 2018 Carlsberg is predicting mid-single-digit percentage organic growth in operating profit.