Carlsberg maintains outlook for 2020 despite coronavirus issues

Denmark | Times are a-changing. Ten years ago, Russia was Carlsberg’s big profit spinner. Today, most of the Danish brewer’s growth comes from Asia.

Sometimes things don’t work out as planned. When Carlsberg fully took over Russia’s leading brewer Baltika in the Noughties, the reason was to reduce Carlsberg’s dependency on Western Europe, a region of mature beer markets and often declining consumption. Until 2009, the plan worked. Eastern Europe contributed over half of Carlsberg’s profit.

Come 2019, and Eastern Europe’s contribution is down to 16 percent of operating profit, the brewer reported on 4 February 2020. Although the Russian beer market grew in 2019, Carlsberg said that tough competition pushed its volumes down 5.2 percent. Operating profit declined almost 18 percent. Its market share fell to 27 percent, per Carlsberg’s 2019 annual report, as rivals make it hard for Carlsberg to regain lost market share. The brewer expects the challenges to continue into 2020.

Fortunately, sales in Asia grew organically by 12.3 percent, mainly driven by China, where Carlsberg sold more expensive beers. Asia’s profit contribution amounts to 33 percent nowadays.

Relying on Western Europe

This means that Western Europe, despite declining volumes sales, is back to providing the bulk of Carlsberg’s profit (51 percent) as it did before Carlsberg embarked on its globalisation course.   

The group’s full-year sales grew organically by 3.2 percent to DKK 65.9 billion (USD 9.76 billion). Operating profit was up 12.2 percent to DKK 10.5 billion (USD 1.5 billion). Volume sales only nudged up organically by 0.1 percent.  

Carlsberg said in a statement that it expects its operating profit to grow in the mid-single digits in 2020. It will propose increasing its dividend by 17 percent to DKK 21 per share, and initiate a share buy-back programme worth DKK 5 billion (USD 720 million) in the next 12 months.