Better outlook for FY19
Carlsberg reported Q3 figures slightly ahead of consensus expectations (DKK18.5bn revenue vs. DKK18.3bn estimated). The group stands out, particularly from ABI, thanks to the upward revision of its FY19 expectations (for the second time this year!) and its well-managed price/mix.
31 Oct 19
Brewers | Lasting forever
In this research we analyze in depth the past and future organic revenue growth rates of the brewers. Over the past five years, AB InBev’s 4.9% annual organic revenue growth and Heineken’s 4.5%, look spectacular. However, as both have nearly 40% of their revenues from high-inflation countries, their inflation-corrected organic revenue growth rate has been a disappointing at 0.5% and 0.7%, respectively; well below the 2.1% that Royal Unibrew managed but better than the -1.4% from Carlsberg and the -3% from Molson Coors
CARLB RBREW ABI TAP HEIO
10 Sep 19
Good momentum is continuing
Carlsberg reported a good financial performance, with a strong top-line and improving profitability. The first six months reflect that the long-term strategy is working well, supported by significant growth in Asia and the Craft/Alcohol free portfolio. The group sees slower momentum in H2 but we are confident that it will reach (or even beat?) its target anyway.
15 Aug 19
Strong start to the year for European breweries
The Q1 results modestly beat expectations on the net revenue side. Satisfying volume growth and price/mix, thanks particularly to Asia which continued to boost the top-line. We note positive signs in European breweries and we are likely to raise our expectations for the year.
02 May 19
LIBERUM: Carlsberg - Sitting FY'19 out due to tough comp & cost inflatio
Carlsberg delivered a strong FY18, helped by warm summer weather on an easy comp base and strong financial discipline. We struggle to get excited about the shares because Carlsberg is unlikely to deliver a blowout year in FY19 given the tough comp base and rising cost environment.
11 Feb 19
LIBERUM: Morning Comment
PraxisIFM Initiation, Early Cycle Indicator, Frontier Developments, Consumer Staples Best Ideas Video, Infineon Technologies, Carlsberg, AMS, Electrocomponents, Market Highlights
CARLB FDEV IFX AMFW ECM ABB WEIR ALO BOY G1A KNEBV LR PHIA SCHP SIE SMIN IMI SAND SU SKFB RB/ IMB IRV BDEV MELE VCT RDW
06 Feb 19
A robust set of FY18 results. The Craft, Premium and Alcohol-free beers have done well, pushing up the top-line, and the cost savings initiatives, through “Funding the Journey”, have positively driven profitability. We see strong potential for further growth, through investments and acquisitions, while returns to shareholders have proved to be very satisfying. The group is actually managing its capital allocation well.
06 Feb 19
LIBERUM: Consumer Staples: Our Best Ideas - We expect sector rotation into defensives: Buy ABI, Imperial, Reckitt
In 2019, we expect moderating global GDP growth, led by deceleration in the U.S. and further softening in China. We expect tariffs and trade disputes, political uncertainty and volatility in key markets (U.S., EU, UK) to lead to further systemic shocks which may adversely impact valuations.
CARLB NESN BN ABF KYGA TATE ULVR OR RB/ BEI ONTEX MCB DGE RI CPR RCO BATS IMB
22 Jan 19
A strikingly good Q3
A very strong quarter across all regions, additionally helped by the warm weather in Western Europe. As positives, we note the very favourable development of price/mix in Asia as well as an acceleration in Craft & Specialities and Alcohool Free. Our Add recommendation is maintained.
02 Nov 18
LIBERUM: Carlsberg - 3Q’18 sales beat sets the group up for tough comps
Carlsberg’s 3Q’18 organic sales growth of 9% beat expectations of 5.6%. The beat stems from a healthy performance in Western Europe and Asia. While the results this quarter demonstrate clear momentum, we are concerned about the sustainability of such results as the group had highly supportive weather in Western Europe, the World Cup in Russia and easy comps in some Asian markets like India. Investors should not extrapolate this result as the comp base will more difficult in FY19. We rate Carlsberg a HOLD.
01 Nov 18
LIBERUM: Consumer Staples Weekly - Brewers raided; Altria-Aphria; BAT’s CMO
On 11th October, Reuters reported that the Competition Commission of India (CCI) conducted raids on the Indian offices of brewers United Breweries, ABI and Carlsberg as part of a price-fixing investigation. CCI was tipped off by one of the three companies after it filed a leniency application with the regulator. The CCI can impose fines of up to 3x annual profit or 10% of annual sales, whichever is higher. Liberum view: Heineken's United Breweries, ABI and Carlsberg have 51%, 20% and 13% share, respectively, of the Indian beer market. The Indian alcohol market is highly regulated but is an attractive growth market for global brewers. An increase in regulations, if these allegations are proven, could hurt the brewers’ long-term prospects in the country.
CARLB ABF HEIA BATS
15 Oct 18
LIBERUM: Mountain or Molehill in H2 – Pan-Europe
In a bid to leave full-year estimates unchanged, management will often cite a higher H2 weighting after a miss at the interims. Conversely, we often see prudence after a strong H1, with analysts reluctant to upgrade numbers. The ‘anchoring’ around the full-year estimates can lead to companies facing either mountains or molehills in H2. Last year, Rotork and Rightmove were identified prior to warning and beating, respectively, (PDF). In this screen we search for further possible ‘warners’ – both positive and negative – focussing on 2018E H2 EPS weightings vs. their five-year median. AB InBev and Spirent Communications face tougher H2s than usual but are rated Buy by Liberum. Conversely, IAG, Publicis and Travis Perkins look well-placed to exceed full-year expectations.
CARLB ABI AZN ASML GIVN SPT VIV DOM GSK IAG PAGE PSON PUB SCHP SHP TPK ULVR
02 Oct 18
LIBERUM: Consumer Staples Weekly - Carlsberg ; DIA; Nestlé; Arla Foods
Carlsberg to invest €100m in Kronenbourg brewery in France | Spanish discount supermarket DIA joins purchasing alliance | Nestlé finalizes re-organization of its Swiss IT operations | Dairy firm Arla offers entire 2018 net profit to drought-stricken
CARLB NESN ULVR BN
03 Sep 18
LIBERUM: Consumer Staples Weekly - Carlsberg; E-cigarettes in U.K.; Cannabis
On 13th August, Carlsberg increased its stake in its Cambodian 50/50 joint venture Cambrew Limited by 25%, providing it with a 75% stake. Cambrew is the #3 brewer in Cambodia with the Angkor Premium Beer brand and also produces and bottles Pepsi for the Cambodian market. The acquisition provides Carlsberg with management control of the business, taking over from the local partner. Liberum view: Cambrew lost significant market share to Heineken and Khmer Brewery as Cambrew’s share went from 66% in 2013 to 20%. We expect Carlsberg to invest in its brands and to strengthen its route-to-market
20 Aug 18
LIBERUM: Carlsberg - 1H'18 clean net income beats by 10%; raised guidance
Carlsberg’s 2Q’18 organic sales growth of 7.4% exceeded the market's expectation of 4.5%. Revenues were 9.5% higher than consensus in the Eastern Europe division in the quarter. Operating profit came in 5.3% higher than consensus and the organic EBIT growth of 14.2% far exceeded the median estimate of 8% led by strong results in Eastern Europe and Asia. Lower than expected net financial expenses helped drive the 9.9% clean net income beat. The company raised the guidance from MSD to HSD organic growth in operating profit. Despite this, we still rate Carlsberg a HOLD.
16 Aug 18
Q1: Asia offsets a weak Russia
Q1 update: organic net revenue was up +2% (cons. +2.0%) with volumes up +1% (cons. 0%) and +1% price/mix. On a reported basis, revenue was down 5% (FX: -5%, net acquisitions -2%). OG net revenue by region: Western Europe -3%, Eastern Europe -3% and Asia +16%. OG beer volume by region: Western Europe -2%, Eastern Europe -6% and Asia +12%. The FY guidance is maintained.
02 May 18
LIBERUM: Carlsberg - 1Q’18 sales supported by Asia, otherwise a soft start
Carlsberg’s 1Q’18 organic sales growth of 2% is in line with expectations. Reported sales came in a touch soft at DKK 12,704m vs consensus expectations of DKK 12,811 due to a 2% and 5% headwind from M&A and FX, respectively. Asia performed well, growing 16% organically. Western Europe and Eastern Europe came in below expectations and both saw volume declines of -3%. The group still targets MSD organic growth in operating profit but the translation impact slightly deteriorated to DKK -550 from DKK -450. We rate Carlsberg a HOLD, TP DKK 745.
01 May 18
LIBERUM: Consumer Staples Weekly - Russian beer ban; Remy; Pet food; Nestlé
Russia proposes ban on sale of beer in PET bottles over 0.5 litres | Remy Cointreau’s CEO of the House of Rémy Martin resigns | Another deal in U.S. pet foods as Smuckers buys Ainsworth | Nestlé dispute with European retail buying group escalates
CARLB RCO NESN
09 Apr 18
LIBERUM: Consumer Staples Weekly - Unilever; Carlsberg; Nestlé; Japan Tobacco
Unilever to sell Alsa baking and dessert business to Dr. Oetker | Carlsberg buys remaining 49% stake in Olympic brewery | Nestlé acquires LatAm organic foods company Terrafertil | Japan Tobacco to launch new ‘heat-not-burn’ products
CARLB TATE ULVR
12 Feb 18
LIBERUM: Carlsberg - Bumpy road and tough decisions ahead
We remain bullish on Carlsberg's Asia division, with strong fundamentals demonstrated in China and reasons why the rest of the division could accelerate. Our volume growth assumptions in Russia remain flat, in line with guidance; however, we are less convinced that they are truly nearing a bottom. The group's balance sheet strength enables dealmaking. While we are attracted to beer economics in Vietnam, we question if the Habeco deal is accretive to equity capital employed at FY1 43x earnings. Remain HOLD.
07 Feb 18
LIBERUM: Consumer Staples - 4Q preview: Improving outlook for 2018 likely balanced by full sector valuation
On balance, we expect a solid, if unspectacular, set of results. Growth remains constrained - we forecast 3.7% LfL sales growth for Consumer Staples with headwinds from soft consumer demand, geopolitical turmoil and disinflation. Input prices remain benign but intense price competition, retailer pressures and online deflation impede margin growth, putting the onus on cost savings and M&A to drive EPS. Sector valuation remains elevated at 20.8x cal’18E, a 36% premium to STOXX600. We expect valuations to remain capped, particularly if bond yields continue to rise.
CARLB ULVR OR TATE RI HEIA NESN BN RB/ KYGA CPR ABF BEI ABI
31 Jan 18
LIBERUM: Consumer Staples Weekly - Nestlé-Third Point; Carlsberg; Patron; USDA
Dan Loeb demands further clarity and actions from Nestlé | Carlsberg establishes new brewery in Karnataka, India | Bacardi buys Patron Tequila for a valuation of $5.1bn | USDA exploring cuts to food stamps in upcoming Farm Bill
CARLB NESN DGE
29 Jan 18
LIBERUM: Consumer Staples: Our Best Ideas - Valuation capped in 2018: buy value, FCF yield and self-help – Reckitt, Danone, Heineken
In 2018, we expect interest rates and inflation will continue to rise on the back of reflationary policies and stronger global GDP growth. Emerging Market growth is picking up bolstering resilient Developed Markets and leading to a more synchronous, broader global economic picture. The risk to global trade remains elevated due to rising protectionism and the potential for trade wars. We expect continued market volatility as nationalistic politics heighten the risk of unintended geopolitical events.
CARLB NESN BN ABF KYGA TATE ULVR ULVR OR RB/ BEI ONTEX MCB ABI HEIA DGE RI CPR RCO
19 Jan 18
LIBERUM: Consumer Staples Weekly - Reckitt; Chinese beer & IMF; Nestlé candy
Reckitt agrees license with Orbis Biosciences | New Chinese infant formula laws remove 1,400 products | Local Chinese beer companies raise prices | Hershey & Ferrero submit final bids for Nestlé’s U.S. candy
CARLB TATE RB/ ABI RCO RI NESN
08 Jan 18
Q3: speeds up Funding the Journey
Q3 update: organic sales were down 1% (cons. -0.2%) with volumes -4% (cons. -4.5%) and a +3% price/mix. On a reported basis, revenue was down 5% (FX: -1%, net acquisitions -3%). OG net revenue by region: Western Europe -4% (cons. -0.9%, impacted by poor weather), Eastern Europe -2% (cons. -6%, with strong pricing +10%) and Asia +7% (cons. +5.7%). OG beer volume by region: Western Europe -4% (cons. -2.3%), Eastern Europe -11% (cons. -11.8%) and Asia +3% (cons. +1%). The FY guidance is upgraded: 7-8% organic operating profit growth (prev. mid single-digit) and a further reduction in financial leverage. The company adjusted its Funding the Journey guidance to DKK2bn (previously a DKK1.5-2.0bn cost savings target).
02 Nov 17
H1: costs savings are coming through
H1 update: Organic net revenue was up +2% (cons. +3.2%, Q2: 0%) with beer volume -3% (cons. -0.8%) and +4% price/mix. On a reported basis, revenue was up 2% (FX: +2%, net acquisitions -2%). The operating margin was up 200bp to 13% (better than cons. +100bp) and improved across all geographies. OG net revenue by region: Western Europe +2%, Eastern Europe -1% and Asia +6%. OG beer volume by region: Western Europe +0%, Eastern Europe -9% and Asia -1%. The FY guidance is maintained: mid single-digit organic operating profit growth and a further reduction in financial leverage.
16 Aug 17
Q1 beat, growing in all geographies
Q1 update: organic net revenue was up +4% (cons. +2.8%) with flat volumes (cons. -0.6%) and +4% price/mix. On a reported basis, revenue was up 5% (FX: +3%, net acquisitions -2%). OG net revenue by region: Western Europe +2% (cons. 1%), Eastern Europe +10% (cons. 2.1%) and Asia 6% (cons. 7.2%). OG beer volume by region: Western Europe +1% (cons. 0.5%), Eastern Europe -2% (cons. -4.2%, impacted by the PET 1.5l ban) and Asia -1% (cons. +1%). FY guidance is maintained.
04 May 17
Weak Q4;FY17 will be a year of delivery for “Funding the Journey”
Carlsberg’s Q4 update: organic sales were down 2% (cons. +1.3%) with volumes down 5% (cons. -2.8%) and +3% price/mix. On a reported basis, revenue was down 6% (FX: -2%). OG net revenue by region: Western Europe -3% (cons. 0.7%), Eastern Europe -4% (cons. 1.2%) and Asia 4% (cons. 1.6%). OG beer volume by region: Western Europe -5% (cons. -2%), Eastern Europe -10% (cons. -3.6%, impacted by the PET 1.5l+ ban) and Asia -2% (cons. -1.9%). On a FY basis, sales progressed organically by +2% and were down 4% on reported figures. The group’s beer volumes were down 2% (impacted by restructuring costs in Russia and China, as well as a reduction in margin-dilutive contracts in Western Europe). The operating profit was up +5% organically. The operating margin was up +30bp on reported figures. For FY17, Carlsberg expects to deliver mid single-digit organic operating profit growth and a further reduction in financial leverage. By region, the group expects improving margins and operating profit in Western Europe, continuing top-line and earnings growth in Asia and growing operating profit organically in Eastern Europe. FX should also provide some tailwinds. The proposed dividend is DKK10.00 per share, up from DKK9.00 a year earlier.
08 Feb 17
Q3 is a mixed bag; upgrade of its FY guidnace
Q3 update: Organic sales were up +1% (cons. +1.5%) with flat volumes (cons. -1.8%) and +1% price/mix. On a reported basis, revenue was down 4% (FX: -4%). OG net revenue by region: Western Europe -4% (cons. 0%, impacted by destocking), Eastern Europe 16% (cons. 4.9%) and Asia 2% (cons. 3.5%). OG beer volume by region: Western Europe -4% (cons. -3%), Eastern Europe +10% (cons. 0%) and Asia -1% (cons. -2.3%). The company upgraded its FY guidance: organic operating growth should be up c. 5% (previously low-single digit) and a FX translation impact of DKK-550m (vs.DKK-600m previously).
09 Nov 16
H1: Funding the Journey improves profitability but FX drags down the figures
Carlsberg’s H1 update: organic revenue was up 4% (cons. +3.2%, Q2: 6%). Volumes were down 1% (cons. -0.8%), price/mix stood at 5%. On a reported basis revenue was down 4% due to adverse currency effects. H1 organic net revenue by region: Western Europe 2% (Q2: +7%), Eastern Europe +8% (Q2: -4%), Asia +4% (Q2: +3%). The group’s operating margin was up +50bp in organic terms and contracted by 10bp on a reported basis due to higher central costs linked to investments behind EURO 2016. Operating profit grew 8% organically. The group maintains its FY guidance: low single-digit operating profit growth and financial leverage reduction.
17 Aug 16
Carlsberg released its Q1 update. Organic volumes contracted by 2% (cons. -1.1%). Organic revenue was up +2% (cons. 1.3%). Price/mix stood at 4%. On reported figures, revenue was down -3% (FX: -5%). Q1 beer volumes by region: Western Europe -7% (cons. -4.1%), Eastern Europe +6% (cons. -2.5%), Asia -1% (cons. +1%). Q1 organic net revenue by region: Western Europe -3% (cons. -2.6%), Eastern Europe +20% (cons. +10%), Asia +5% (cons. +4.6%). The group maintains its FY guidance of organic operating profit growth in a low single-digit.
11 May 16
SAIL ’22 strategy
Carlsberg presented its SAIL ’22 strategy. The group aims to deliver a continuous organic operating profit growth and continuous improvement in the ROIC. On the financial side, the group is targeting a net interest-bearing debt/EBITDA ratio of less than 2.0x and increasing its dividend payout ratio to 50% of the adjusted net result. The excess cash will be distributed to shareholders via share buy-backs or extraordinary dividends.
16 Mar 16
Strategic review to be announced on 16 March. Fingers crossed.
Carlsberg reported its Q4 & FY results. In Q4, organic beer volumes were down 4% (consensus -2.7%) whereas the net revenue grew organically by +5% (cons +1.8%). Price/mix stood at +6%. Q4 organic beer volume by region: Western Europe -2% (consensus -0.5%), Eastern Europe -9% (cons -8%), Asia -1% (cons +2%). Q4 organic net revenue by region: Western Europe +2% (cons -0.8%), Eastern Europe +12% (cons +5.9%), Asia +3% (cons +4.6%). For the full year, organic beer volumes were down 4% whereas the organic net revenue rose +2%. On reported figures, net revenue increased +1% whereas the operating margin was down 140bp to 12.9%. The net profit attributable to shareholders was down to DKK-2,926m. The proposed dividend is DKK9.00. For FY16, the group expects the developments in its major beer markets to be in line with 2015: Europe flat with some positive impact from UEFA Euro 2016 (Carlsberg is a global sponsor). South-East Asia should perform well whereas Eastern Europe should remain under pressure. Consequently, Carlsberg expects in FY16 to deliver low single-digit percentage organic operating profit growth and reduce financial leverage. The revised strategy, SAIL’22, will be announced on 16 March.
10 Feb 16
Q3 net profit squeezed painfully by impairment charges; announces 15% workforce cut
Carlsberg released its Q3 update. Organic net revenue grew by 3% (cons. +1.7%). Organic beer volume was down by 3% (cons. -3.2%) whereas price/mix was up 4%. On a reported basis, net revenue was up +1% (FX -3% due to Russia and Ukraine, net acquisitions +1%).
12 Nov 15
Very poor Q2; FY guidance sharply cut; strategic review outcome to be known in H1 16
Carlsberg reported its Q2. Net revenue stood at DKK18.9bn (in line with consensus). Operating trading profit before special items was DKK2.9bn (cons. at DKK3.2bn). Organic net revenue growth stood at -3% (cons. at -0.1%). OG net revenue by region: Western Europe -6%, Eastern Europe -5%, Asia +10%. The overall organic beer volume was down by 7% (cons. at -4%; -19% for Eastern Europe and -5% for Western Europe, Asia up by 5%). On a reported basis, Q2 net revenue was down by 1% whereas the operating margin contracted by 340bp (280bp contraction in Western Europe, -460bp for Eastern Europe and -110bp for Asia).
19 Aug 15