Danish brewer Carlsberg has lifted its forecast for full-year operating profit growth, despite posting weaker-than-expected sales for the second quarter, hit by bad June weather.
The company said it now expects full-year organic operating profit growth of between 4% and 6%, up from the previously guided range of 1% to 5%.
'As a result of continued solid execution and good cost control, we're increasing our earnings expectations for the year despite volumes in Q2 being challenged by bad weather and weak consumer sentiment in some Asian markets,' the company noted.
Outperforming The Market
Carlsberg, the maker of brands such as Kronenbourg 1664, Tuborg and Somersby, said its China business continued to outperform the market despite a slowdown in the quarter due to heavy rainfalls in southern China and weak consumer sentiment.
Sales for the April to June period came in at DKK 21.64 billion (€2.9 billion), slightly up from DKK 21.38 billion (€2.87 billion) a year earlier, and below the DKK 22.1 billion (€2.96 billion) forecast by analysts in a poll conducted by the company.
Carlsberg's total volumes fell 3% in the three-month period, hit by poor weather in most markets in June, the company said.
'An Exciting Year'
“It’s been an exciting year for Carlsberg with the launch of our refreshed strategy – Accelerate SAIL – and higher growth ambitions, the recommended offer for Britvic, and the signing of an agreement that will give us full control of our businesses in India and Nepal," commented CEO Jacob Aarup-Andersen. "These major events will support the long-term health of our business, our brands and delivery of our long-term growth ambitions.
“We continued to step up sales and marketing investments behind our key growth categories and saw above-average growth of premium, Beyond Beer and alcohol-free brews."
Analyst Comment
Commenting on Carlsberg's announcement, Laurence Whyatt, an analyst with Barclays, said, "Overall, we expect a muted reaction, with the guidance upgrade likely to be seen as modest (the quantum is below the company consensus for FY24, but this has likely been revised down since it was collected due to the weak Heineken results and Nielsen data).
"Given high debt levels post-Britvic and India, and the absolute EBIT and EPS miss, we suspect the market will be less likely to give Carlsberg the benefit of the doubt especially with ongoing uncertainty in China and Ukraine."
Additional reporting by ESM
