Carlsberg Profit Beats Estimates as Russian Beer Share Gains
Earnings before interest and taxes, excluding some one-time items, rose to 661 million Danish kroner ($116 million) from 574 kroner a year earlier, the Copenhagen-based maker of Tuborg said in a statement today. Analysts had expected 624 million kroner, according to the average of 13 estimates compiled by Bloomberg.
Carlsberg gained as much as 5.5 percent in Copenhagen trading, the steepest intraday advance since June 6, 2012. In Russia, where the government has raised beer taxes and increased regulation on alcohol sales, Carlsberg extended its market leadership with investment to support both international premium beers and local brands. The brewer reiterated its full-year forecasts after Heineken NV (HEIA) last month cut its outlook and Anheuser-Busch InBev NV (ABI) posted earnings that missed estimates.
“I find some comfort in them winning market share in the Russian market,” said Stig Nymann, an analyst at Alm. Brand Markets, in a telephone interview. “They have had some strong initiatives with product launches, sponsorships and so on in the quarter. We knew that the market was weak from the competitors, but it seems they have been doing OK in Russia.”
Carlsberg was up 1 percent at 553 kroner as of 1:30 p.m. The stock rebounded after falling 7.2 percent in April.
The brewer’s share of the Russian beer market rose to 38.4 percent in the quarter from 37.6 percent a year earlier, Carlsberg said, citing data from researcher Nielsen. The market shrank at a mid-single digit pace, it said.
Several lines of Baltika beer were extended in the country, while Carlsberg started sponsorship of the 2014 Sochi Winter Olympic games and the Russian National Hockey League.
“They sent a strong signal to the market that they have regained control over the Russian business and are now able to harvest some of the advantages there are of being the market leader in such a large country,” said Morten Imsgard, an analyst at Sydbank A/S.
Carlsberg said beer volume in Asia rose 14 percent in the quarter, excluding acquisitions. Including takeovers, volume was up 18 percent, with particularly strong growth in Vietnam, Cambodia and India, helped by increased ownership in the Chongqing Jianiang Brewery joint venture.
The growth in Asia helped offset the effects of declining beer markets in western Europe.
“Asia will be the fastest growing region, as we have always assumed, but I also expect eastern Europe at some point in time to get back to some growth again,” Chief Executive Officer Joergen Buhl Rasmussen said in a telephone interview.
“We are getting better and better at execution, and execution in the broad sense in terms of how we deliver what we want to deliver in all the outlets,” Rasmussen said.
Carlsberg’s first-quarter sales advanced to 13.28 billion kroner from 12.78 billion kroner a year earlier, exceeding the 12.9 billion kroner that analysts expected.
The brewer expects 2013 operating profit before one-time items of about 10 billion kroner while net income, adjusted for some items, will probably rise by a mid-single-digit percentage.
Carlsberg repeated that it expects beer markets in all its three regions to be similar to last year in 2013. In 2012, the western European beer market declined by about 3 percent, while the Russian market was unchanged and Asia expanded.
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