Carlsberg beats profit forecasts
Fin24/ Reuters - May 8th, 08:04
Copenhagen - Danish brewer Carlsberg's first-quarter operating profit and revenue beat forecasts on Tuesday, as strong beer sales in Asia cushioned sluggish mature European markets and a decline in its former growth driver Russia.
Beer sales in Asia accounted for nearly 20% of group revenue in the first quarter, approaching Eastern Europe sales which accounted for 22%.
The two-digit percentage rise in Asia revenue was helped by strong beer sales in countries such as Vietnam, Cambodia and India, as well as Carlsberg increase in ownership at the Chongqing Jianiang Brewery joint venture.
"Asia is the new growth driver," said Nykredit analyst Ricky Rasmussen.
"The company exceeds expectations in all three regions, and they are gaining market share," Rasmussen said.
Asia has become a battleground for the world's biggest brewer's like Carlsberg, the world's fourth biggest, AB Inbev , SABMiller and Heineken.
The Danish brewer recently launched a partial takeover bid to raise its stake in Chongqing Brewery Company, and announced its return to Myanmar after the easing of international sanctions.
Last month, Carlsberg's chief executive Jorgen Buhl Rasmussen pledged he would ensure the strategy and acquisition plans continue unchanged in Asia, after the head of the region resigned.
Meanwhile, mature Western European beer markets have been hurt by sluggish consumer sentiment following years of financial crisis.
In Russia, the brewer spent years building up a market-leading position in the hope its burgeoning middle classes could help cut is reliance on Western Europe.
But growth rates have been hurt by government measures to curb alcohol abuse, including tax increases and a ban on advertising in all media, including the Internet.
In February, Carlsberg scrapped its profit margin target for eastern Europe, blaming volatile markets and raw material costs, and damping hopes the region can offset sluggish demand in western Europe.
Two weeks ago, Heineken, the world's third largest brewer, said austerity-hit Europe and inflation in Nigeria had lowered its expectations for growth this year, after its beer sales fell in every region except Asia in the first three months.
Russia share up
In the first quarter, Carlsberg reported a 5% rise in beer volumes overall. The first quarter is traditionally is the smallest quarter of the year in terms of volume.
"This is a very good start to the year for Carlsberg," said Sydbank analyst Morten Imsgard.
"Asia lights up the result..and both the Tuborg and Carlsberg brands are doing well in the region," Imsgard said.
Carlsberg is consistently working to increase earnings in Asia through premium brands such as its Carlsberg, Tuborg and Baltika beers, which are more expensive than the local brands within its portfolio.
Western Europe beer markets declined in general by about 2%, while the Russian beer market declined by mid-single digit percentage.
Carlsberg said its market share in Russia, where its brands include market leader Baltika, rose modestly to 38.4% from 38.3% in the previous quarter. Its market share in the country was 37.6 percent in the first quarter last year.
First-quarter operating profit before one-off items was 661bn crowns, exceeding analysts' average forecast for 626bn. Sales rose 3%, also above forecasts. .
The brewer reiterated a forecast for operating earnings this year of around 10bn Danish crowns ($1.75bn) from 9.8bn in 2012.
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