Carlsberg Boosts Dividend Pledge as Brewer Sets Out Strategyby and
Tuborg maker to boost payout ratio to 50 percent of earnings
Shares drop as strategy announcement contains few other goals
Carlsberg A/S, the world’s fourth-biggest brewer, pledged to pay more earnings in the form of dividends as its new chief unveiled his strategy through 2022.
The company will distribute 50 percent of annual net income to investors, Carlsberg said Wednesday, exceeding the current payout ratio of 31 percent. The Danish brewer also reaffirmed its commitment to Russia, where it’s the biggest beermaker and has closed plants in response to falling consumption.
There were few other firm goals in the strategy statement unveiled Wednesday by Chief Executive Officer Cees ’t Hart. The company said it will seek to keep debt at less than two times earnings before interest, tax, depreciation and amortization, and will distribute excess cash through buybacks or extraordinary dividends.
Carlsberg’s shares fell 3.2 percent in Copenhagen as analysts questioned the breadth of information in the company’s presentation.
“What would have gotten me excited is a clearer roadmap about how they will get the exposure to the growing categories within beer or if they’ll divest businesses that are structurally substandard,” said Javier Gonzalez Lastra, an analyst at Berenberg. The company appreciates that some of the analysts would have liked more guidance and figures to support what it’s seeking to achieve, Carlsberg’s ’t Hart said in an interview.
Carlsberg’s new strategy comes as the brewer battles slowing demand for mass-market beer in Europe and North America, and weakening consumption in China. The beermaker has also announced 2,000 job cuts to increase profitability as it faces an enlarged rival from the $106 billion combination of Anheuser-Busch InBev NV and SABMiller Plc.
“As consolidation in the industry goes further, there’s a focus and pressure on returning value to shareholders,” ’t Hart said. The brewer’s outlook for a modest rise in operating income in 2016 should serve as an indication of the pace at which the company is likely to increase profitability in the near-term, he added.