Carlsberg Earnings Beats Estimates as Market Shares Gain

Carlsberg A/S (CARLB) reported earnings that beat analyst estimates as the world’s fourth-biggest brewer gained market share in Russia by selling more premium beer. The stock rose the most in two years.

Fourth-quarter earnings before interest and taxes rose to 2.32 billion Danish kroner ($428 million) from 2.15 billion kroner a year earlier, the Copenhagen-based company said in a statement today. The average of 13 analyst estimates compiled by Bloomberg was 2.19 billion kroner.

“We had concerns for the Russian market and how the currency would hit, and Carlsberg is performing better in those very difficult conditions,” Michael Friis Jorgensen, an analyst at Alm Brands A/S, said by phone. “Where we really see the positive is from price.”

In Russia, where Carlsberg is the largest brewer and has a quarter of its total revenue, consumption has been curbed by the economic slowdown and regulation. The Danish company gained market share in the quarter measured by the value of sales, aided by marketing efforts such as its sponsorship of the Sochi Olympic Games and the country’s national hockey league as well as by strong sales for premium brands like Tuborg.

Carlsberg’s stock rose as much as 6.8 percent, the biggest intraday gain since Feb. 20, 2012, and advanced 6.4 percent to 581 kroner at 12:18 p.m. in the Danish capital.

Photographer: Freya Ingrid Morales/Bloomberg

Trays of empty glass Carlsberg Pilsner bottles sit in an outdoor storage site at the Carlsberg A/S brewery in Fredericia, Denmark. Close

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Photographer: Freya Ingrid Morales/Bloomberg

Trays of empty glass Carlsberg Pilsner bottles sit in an outdoor storage site at the Carlsberg A/S brewery in Fredericia, Denmark.

Challenging Markets

“I’m pleased about our performance in our different regions,” Chief Executive Officer Joergen Buhl Rasmussen said in an interview with Bloomberg TV today. “Yes, we have some challenging markets, in particular Eastern Europe, but we have done very well compared to competition.”

Brewers are increasingly turning to Asia to seek relief from Europe, where tough economic conditions are weighing on drinking. In December, Carlsberg agreed to pay Chongqing Beer Group Co. 1.56 billion yuan ($257 million) for eight Chinese breweries in its second acquisition in less than a month in the country. Anheuser-Busch InBev NV (ABI), the biggest beermaker, last month agreed to pay $5.8 billion for South Korea’s Oriental Brewery Co.

Ramon Ang, the billionaire chief of San Miguel Corp. (SMC), said in January he’s received about $6.6 billion of offers for stakes in the Philippine company’s brewery and gin units as he seeks to grow in oil and infrastructure rather than spirits.

“We still want to be part of beer consolidation,” Rasmussen said, adding Carlsberg is focusing on China when it comes to mergers and acquisitions.

‘Healthy’ Growth

In Russia, the market will continue to be hurt by the macroeconomic slowdown and weaker consumer sentiment this year, the company said. The market there will decline by “low-single-digits” in volume in 2014 while continuing “healthy” growth in the value of sales.

So-called organic beer volume, which excludes acquisitions and disposals, fell 3 percent in the quarter as growth in Asia failed to offset declines in western and eastern Europe. Revenue decreased to 15.7 billion kroner from 15.8 billion kroner a year earlier, beating an average estimate of 15.5 billion kroner.

Asian beer volume grew organically by 10 percent in the fourth quarter, positively affected by earlier sales into the Chinese New Year, Carlsberg said. In Russia, the brewer’s market share improved by about a half of a percentage point measured by value, it said. The company said it gained market share in all three main regions last year.

Carlsberg forecasts that western European beer markets will decline “slightly” this year while Asian markets will continue to grow in line with 2013. The brewer expects to deliver “high-single-digit” organic operating profit growth and a “mid-single-digit” advance in reported adjusted net income. Organic measures exclude the effects of currencies and acquisitions.

“Carlsberg still has plenty to do to rid itself of its accident prone reputation but these results are a step in the right direction,” James Edwardes Jones, an analyst at RBC Europe Ltd., said in a report to clients.

To contact the reporter on this story: Katarina Gustafsson in Stockholm at kgustafsson@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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