Carlsberg in 2011

Carlsberg (OMX: CARL A, OMX: CARL B) has opened with a one percent decline after presenting quarterly numbers this morning. The Danish brewing company said the year was characterized by solid Western European and strong Asian operations but the year was challenging in Eastern Europe particularly in Russia. The market share in Russia was down from 39,2% to 37,4%, something which was attributed to promotions and price competition. Carlsberg has not actively entered such a competition. Overall the market share was up 1% in a year of flat beer market as Carlsberg sold nearly 140 million hectolitres.

Carlsberg will be promoting in Euro 2012 as it seeks to reposition the brand with international premium and strong local brands. An efficiency improvement plan has been ongoing but higher input and logistics costs as well as increased marketing activities meant higher costs overall. Nearly 200-year old Tetley's brewery in Leeds, England and even older Cardinal brewery in Fribourg, Switzerland were closed during the year.

Net revenues in 2011 were 63.5 billion, up 6% from 60 billion last year. Full-year operating profit is 9.8 billion as operating margin was down to 15.4%. Unadjusted net profit was 5.15 billion (diluted EPS of 33.7, down from 35 in 2010) The Board proposes a dividend increase of 10% to 5.50 DKK. Fourth quarter revenues were 14.9 billion, operating profit 1.86 billion and net profit 912 million.

Carlsberg plans to make an offer for the remaining shares of its Russian subsidiary Baltika this May and plans to delist the company. Currently Carlsberg has around 85% of the shares. Carlsberg says that maximum offer price is RUB 1550 per share. At this price net cost in 2012 would be up to 4.4 billion DKK.

Destocking by distributors in Q1 2012 in Russia will have a negative year-on-year impact for the numbers in the ongoing quarter. For 2012 the company expects operating profit on par with the 2011 (higher at 2011 average EUR/RUB rate) and slightly improved adjusted net profit. The impact of the Baltika offer is not included in these numbers. The outlook is based on the assumption of low single-digit decline in Northern & Western Europe sales, continued growth in Asia and Russian market returning to growth at a modest pace.