Carlsberg reports strong first half boosted by Asia, premium beers sales

DENMARK – Global brewing company, Carlsberg has reported strong first-half results, with solid profit improvement of 17.7% boosted by premium beer and sales in the Asian market.

The Tuborg and Holsten owner reported a 6.5% rise in half-year sales to US$4.9 billion (DKK32.99 billion) while profits during the six months period climbed to US$768 million (DKK5.17 billion).

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In Asia, net revenue growth was 14.5%, driven by 8.5% volume growth and increased sales of premium brands. Operating profit growth was particularly strong at 35.5%.

The Danish brewer’s craft and speciality portfolio also saw significant growth rates of 17%, proving particularly strong in Asia and Eastern Europe.

Carlsberg’s wheat beer brand, 1664 Blanc recorded 29% growth in volumes with markets such as China, Malaysia, France, Denmark, the Baltics, Russia and Ukraine reporting good performance.

However, the brewer saw declining sales in Russia, its second-largest market, due to tough competition and price hikes at the beginning of the year leading to a loss of market share.

Carlsberg acquired Russia’s top beer maker, Baltika, in 2008 but has since issued a string of profit warnings due to toughening regulation of beer – which was only officially classified as an alcoholic drink in 2011.

Last week, Carlsberg raised its expectations for organic operating profit to “high-single-digit” from “mid-single-digit” percentage growth and said it had achieved a strong operating margin improvement.

Following its successful cost-cutting programme, especially by selling more of its pricier brands, the group’s priorities for 2019 are shifting towards driving revenue growth.

Commenting on the results, Chief Executive Officer Cees ‘t Hart said: “We delivered a strong set of results for the first six months of 2019, with healthy top-line development, strong margin improvement and continued solid cash flow.

“We’re pleased that last week we were able to adjust our earnings outlook upwards due to the performance in the first half and a solid start to Q3, and despite tough comparables.

“The earnings upgrade is yet another proof point that the execution of our SAIL’22 priorities is driving sustainable, long-term value creation for the Group.”

According to report by Reuters, Carlsberg is also in talks to increase its 17% stake in major Vietnamese brewery Habeco, in which the Vietnamese government has a majority stake.

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