Carlsberg expects slower sales growth
Carlsberg proposed an annual dividend of DKK 3.50 for 2008, down from DKK 6 a share in 2007 and said it will cut capital expenditure in 2009 to DKK 3.75 billion from DKK 5.3 billion to improve cash flow and reduce debt.
Revenue in the fourth quarter rose less than expected to DKK 14.52 billion from DKK 10.82 billion and operating profit, before charges and write-downs, rose 49 percent to DKK 1.39 billion.
The figures include earnings from its 50 percent share of UK brewer Scottish & Newcastle (S&N) which Carlsberg bought together with Heineken for EUR 10.3 billion in April last year. The purchase gave Carlsberg full control of Baltic Beverages Holdings (BBH), which operates in Russia and eastern Europe. Prior to the acquisition of S&N, Carlsberg owned only half of BBH.
Full ownership of BBH has lots of advantages for Carlsberg were it not for the trifle matter of profit dependency that Carlsberg now has to contend with. About a third of Carlsberg’s sales now originate in eastern Europe with Russia being the most substantial part of the region.
Despite a contraction in the Russian market, Carlsberg said BBH’s volumes remained steady in the fourth quarter and that it gained market share. BBH is now twice as large as its nearest competitor.
So far, Carlsberg seems to have got the better deal out of the S&N takeover, while Heineken, which obtained S&N’s UK operations, is now heavily exposed to the sharply declining UK economy.
