Nine-month report as at 30 June 2000 of the Carlsberg Group

Transcription

1 Nine-month report as at 30 June 2000 of the Carlsberg Group The improvement in results is greater than expected as operating profit increased to DKK 1,555m (16% up on last year when using comparable figures). The comparable change in volume was 4 per cent up on last year (beer: 27m hl (+1%) and soft drinks: 11m hl (+12%)). For the first 12 months of 1999/2000, operating profit is still expected to be higher than in 1998/99. At an extraordinary general meeting on 30 August 2000, it was agreed to extend the present financial year until 31 December 2000 (15 months). In future, the company's financial year will coincide with the calendar year. Carlsberg A/S will investigate the possibilities of commercialising the widely recognised competencies in biotechnology held by The Carlsberg Research Center. Contact: President and Group Chief Executive Officer Flemming Lindeløv Group Managing Director Jørn P. Jensen Telephone Highlights and Key Figures for the period 1 October March 2000 Changes in the basis of accounts The accounting figures for the first nine months of the present financial year are influenced by the fact that the companies in Malaysia and Poland are now fully consolidated as a result of Carlsberg increasing its ownership share. Furthermore, a few Group companies which, for practical reasons, were previously included in the Group accounts with a certain time lag are now included up until 30 June The full effect of these changes is illustrated with the figures in brackets in the table below, expressing the development had the basis of the accounts not been changed (the comparable development). - in DKK million 1998/99 9 months Unaudited 1999/00 9 months Unaudited Changes in % 1998/99 12 months Audited Turnover 23,134 28, (+8) 31,285 Net turnover 17,879 20, (+4) 23,912 Operating profit 1,231 1, (+16) 1,673 Special items Profit before financials 1,320 1, (+40) 1,752 Financials Profit before tax 1,293 1, (+30) Group profit 829 1, (+45) Profit, Carlsberg A/S's share 798 1, (+58) 1,633 1,156 1,164

2 Equity - 11,950-11,853 Total assets - 32,539-29,889 The accounting policies applied remain unchanged from the annual accounts for 1998/99. The attached appendix shows the Carlsberg Group's results divided into quarters. However, for comparison with 1998/99 please see the comments above regarding changes in the basis of accounts. The appendix also shows movements in Group equity. Comments on developments in the past nine months The Carlsberg Group's beer sales (27m hl) and soft drink sales (11m hl) increased by about 15 per cent. Before the changes in the basis of accounts, growth saw an increase of 4 per cent on last year. The net turnover of the Carlsberg Group for the first nine months amounted to DKK 20.9bn against DKK 17.9bn for the same period last year (+17%). The com-parable increase (before changes in the basis of accounts) is 4 per cent and is mainly attributable to soft drink sales in Coca-Cola Nordic Beverages (CCNB) and positive exchange rate developments. Operating profit amounted to DKK 1,555m against DKK 1,231m last year. The comparable increase of DKK 194m (16%) covers progress in all substantial Group companies. The most pronounced progress was made by CCNB, although the company still does not contribute positively to operating profit before application of provisions in relation to start-up and running-in expenses. Within the international beer business, the most substantial progress was achieved by Carlsberg-Tetley in the United Kingdom - particularly because of a favourable exchange-rate devel-opment - and by Falcon in Sweden. Satisfactory progress in earnings was also achieved in Denmark, and the effect of the restructuring projects is now becoming evident. Total operating profit was higher than expected. Special items totalled DKK 438m and can be explained as follows: Sale of shares in Grupo Cruzcampo Sale of shares in Tivoli Sale of properties Write-down of brewery in China Net adjustment of provisions Furthermore, DKK 247m of the total net sales price in connection with Grupo Cruzcampo has been taken directly to equity, writing back previously written-off Group goodwill. As expected, financials showed expenditure of DKK 123m, which is the result of considerable investments in acquisitions of companies and production plant in re-cent years. In addition, the previous years were characterised by significant gains from the sale of shares and bonds. Profit before tax thus totalled DKK 1,860m against DKK 1,293m last year, which is higher than expected. The period's effective tax rate of 29.3 per cent was influenced by, among other things, tax-exempt gains from sale of shares as well as non-deductible costs. During the period, the Group's provisions were reduced in line with plans. In total, the first nine months saw disposals of DKK 587m as against DKK 691m last year.

3 Supplementary information: In Denmark, sales of taxed beer saw a decline of about 1 per cent on the same period last year. Beer consumption in Denmark shows continued decline although the situation seems to be stabilising. Because of the large differences in excise duties between Denmark and Germany about 18 per cent of Danish beer consumption is still pur-chased south of the border. In the United Kingdom, Carlsberg-Tetley achieved results above expectations. Carlsberg-Tetley continues the increased focus on the main brands Carlsberg and Tetley's as well as the restructuring programme within production, distribution, and administration. In 1995/96, Carlsberg-Tetley was granted a compensation to cover future reductions in income and additional expenses in relation to new supply agreements and pension schemes. Of this compensation, DKK 47m after tax was booked as income after the first nine-month period as against DKK 111m for the same period last year. In Finland, earnings were higher than expected. Sinebrychoff increased its market share to about 43 per cent of the Finnish beer market and shows sales progress in other beverage sectors, for example for the energy drink Battery. In Sweden, the Falcon brewery registered progress in earnings and the market share for beer increased. The Asian markets are experiencing a positive trend in earnings. The conditions in the loss-making Chinese market remain difficult however, although results are better than expected. In August 2000, a co-operation agreement was made in that market, which will mean substantial future annual savings, cf. below. As announced in the notice to the Copenhagen Stock Exchange on 25 February 2000, the Carlsberg Group intended to increase its shareholding in Carlsberg Brewery Malaysia Berhad to 50 per cent. The Malaysian company is listed on the Kuala Lumpur Stock Exchange and purchase of the shares was subject to ap-proval by the authorities, which has now been given. The Malaysian company is fully consolidated in the accounts as a subsidiary as of 1 April Coca-Cola Nordic Beverages, which now includes production and sale of Coca-Cola products in Denmark, Sweden, Norway, Finland, and Iceland, registered in-creases in both sales and market shares compared to last year. CCNB's financial results are still affected by substantial running-in expenses. These are, however, covered in Carlsberg's accounts by the Group provisions made when the company was established, and the CCNB group is thus registered in the accounts with a positive contribution. In the first nine-month period, DKK 180m after tax of the pro-visions was used, against DKK 315m in the same period last year. Among non-beverage Group companies, Royal Scandinavia achieved a profit before tax of DKK 55m against DKK 33m last year, which is better than expected (see notice to the Copenhagen Stock Exchange of 19 September 2000). The company expects an improvement in both turnover and operating profit for the full year of about 15 per cent compared to the previous financial year. Extraordinary General Meeting An extraordinary general meeting was held on 30 August 2000 with two proposals for amendments to the Articles of Association on the agenda: the number of Ex-ecutive Board members was reduced from 3-7 to 1-5, and the proposal to change the company's financial year to coincide with the calendar year was also adopted. The present financial year is extended until 31 December 2000 (15 months), and in future the financial year will coincide with the calendar year. Albani

4 On 18 August 2000, Carlsberg made a cash offer to the shareholders of Albani Bryggerierne A/S. On 11 September 2000, Bryggerigruppen A/S made a higher offer, and Carlsberg consequently extended the original offer until 10 October 2000, the expiry date of Bryggerigruppen's offer. As stated in the notice to the Copenhagen Stock Exchange of 20 September 2000, Carlsberg Danmark has again analysed its offer and has reached the conclusion that the offer is fair and reflects the value of Albani Bryggerierne. Against that background and seen in the light of the significant demands that the Danish Competition Authority will make in order to approve the deal, Carlsberg Danmark has decided not to offer a higher price. Carlsberg A/S would realise a gain of about DKK 24m from the sale of its per cent share in Albani Bryggerierne at the price offered by Bryggerigruppen. Royal Scandinavia As explained in the statement of 29 November 1999, the Supervisory Board of Carlsberg A/S approved a strategic plan entailing continued focus on the Group's beer and soft drink activities. Among other initiatives, it involved a decision to di-vest the 65 per cent shareholding in Royal Scandinavia A/S. Carlsberg engaged the investment bank Morgan Stanley Dean Witter to manage and advise on the sales procedure for Royal Scandinavia, which Carlsberg wished to sell as a single unit. The process started at the beginning of March Negotiations with potential buyers continue. Carlsberg A/S still expects a conclu-sion within the present year. Tivoli On 19 June 2000, the shareholding in Tivoli was sold to Skandinavisk Tobaks-kompagni A/S and Chr. Augustinus Fabrikker Aktieselskab for the total amount of DKK 308m. China As explained in the statement to the Copenhagen Stock Exchange of 9 August 2000, a co-operation agreement has been reached between the 51 per cent Carlsberg owned Carlsberg Hong Kong Ltd. (CBHK) and the Chinese brewery China Tsingtao Brewery Co. Ltd. (Tsingtao). The agreement entails, among other things, that Tsingtao will take over a 75 per cent shareholding in Carlsberg Brewery (Shanghai) Limited (CBS), which is 95 per cent owned by CBHK and 5 per cent by a local partner. The purchase price is ap-prox. DKK 154m. The remaining 25 per cent shareholding in CBS will in due course be transferred from CBHK to Carlsberg A/S for the amount of approx. DKK 51m. As a result of the agreement, total book value has been written down by DKK 235m. Considerable annual savings are expected as a result of the agreement. The agreement is subject to approval by the authorities, which is expected in Oc-tober Carlsberg A/S establishes Carlsberg Breweries A/S, which assumes control over Orkla ASA's beverage activities

5 As announced in Carlsberg's statement to the Copenhagen Stock Exchange on 31 May 2000, Carlsberg A/S is establishing the company Carlsberg Breweries A/S with headquarters in Copenhagen as of 1 July Carlsberg Breweries A/S will include all the domestic and overseas beer activities of Carlsberg A/S together with Saltum and Neptun Bryggerier A/S. Orkla will contribute all its beer and soft drink activities as payment in kind to Carlsberg Breweries A/S in exchange for shares. Carlsberg A/S will own 60 per cent and Orkla ASA 40 per cent of the company. The agreement is subject to approval by the authorities, to the approval by Orkla's corporate assembly and to a due diligence procedure satisfactory to both parties. Orkla's corporate assembly has approved the agreement, and once the remaining preconditions have been met, the agreement with Orkla will take effect as of 1 July Coca-Cola Nordic Beverages A/S (CCNB) will not be part of Carlsberg Breweries A/S, and Carlsberg A/S is conducting constructive negotiations with The Coca-Cola Company Inc. about the future of the jointly owned company CCNB. Business development Following the spinning-off of beer activities into Carlsberg Breweries A/S and the related focus on creating and optimising shareholder value, a new general busi-ness development strategy will be established for Carlsberg A/S. The strategy will still be characterised by focus on the core business, Carlsberg Breweries A/S, but Carlsberg A/S will also investigate the possibilities of commercialising the widely recognised competencies in biotechnology of The Carlsberg Research Center. One particular project is currently being considered. Expectations for 1999/00 The annual report for 1998/99 expressed expectations for the current year of an operating profit at level with 1998/99 and an increase in profit before tax, subject to the realisation of gains in connection with the sale of the Grupo Cruzcampo share-holding or non-beverage shareholdings. The sale of shares in Grupo Cruzcampo was completed at the end of January 2000, and Carlsberg's net profit from the sale of about DKK 354m has been booked as income under special items. The remaining difference compared to book value relates to a write-off of goodwill in previous years and has been written back to equity with approx. DKK 247m. Carlsberg A/S's shareholding in Tivoli and a number of properties have been sold off with a total gain of DKK 223m, and the Chinese activities have been written down by DKK 235m. After adjustment of other provisions by DKK 86m, special items as a whole is at present expected to reach the amount of DKK 428m, which is included in the accounts as at 30 June As previously mentioned, results for the first nine months are higher than ex-pected. However, the summer weather in Europe was not as favourable as we might have wished, which is why the fourth quarter results (July-September) are not expected to show a growing trend like the first three quarters. When using comparable figures, an increase of about 10 per cent for operating profit and an improvement in results of about 20 per cent before and after tax are expected for the full 12-month period compared to last year. For the full accounting year (15 months) - and including the effects of the changes in the basis of accounts - operating profit is expected to be approx. 45 per cent higher than last year (12 months). Profit before and after tax are expected to be approx. 55 per cent higher than last year (12 months). The effects of the agreement with Orkla have not been taken into consideration when determining expectations for the results of the present year. Additional information

6 This financial statement is available in Danish and English. In case of doubt, the Danish version shall apply. Poul Chr. Matthiessen Professor, D.Econ Chairman Flemming Lindeløv President Group Chief Executive Officer Appendix 1st quarter - in DKK million 1999/ /99 Changes Turnover 9,044 8,114 11% Operating profit % Special items Profit before financials % Financials (27) (12) - Profit before tax % Group profit % 2st quarter - in DKK million 1999/ /99 Changes Turnover 6,960 6,417 8% Operating profit % Special items Profit before financials % Financials (83) 57 - Profit before tax % Group profit % 3st quarter * - in DKK million 1999/ /99 Changes Turnover 9,094 8,603 6% Operating profit % Special items Profit before financials % Financials (58) (72) - Profit before tax % Group profit % 1st - 3st quarter *

7 - in DKK million 1999/ /99 Changes Turnover 25,098 23,134 8% Operating profit 1,425 1,231 16% Special items Profit before financials 1,853 1,320 40% Financials (168) (27) - Profit before tax 1,685 1,293 30% Group profit 1, % 1st - 3st quarter ** - in DKK million 1999/ /99 Changes Turnover 28,410 23,134 23% Operating profit 1,555 1,231 26% Special items Profit before financials 1,983 1,320 50% Financials (123) (27) - Profit before tax 1,860 1,293 44% Group profit 1, % - in DKK million 4th quarter 1998/99 Year 1998/99 Turnover 8,151 31,285 Operating profit 442 1,673 Special items (10) 79 Profit before financials 432 1,752 Financials (92) (119) Profit before tax 340 1,633 Group profit 327 1,156 * Exclusive of changes in the basis of accounts ** Inclusive of changes in the basis of accounts Movements in equity: - in DKK million Equity at 1 October ,853 Group profit 1,315 Write-off of Group goodwill, etc. -2,233

8 Write-back of previously written-off Group goodwill in connection with sale of Grupo Cruzcampo 247 Dividend paid to minority shareholders -333 Minority interest in Malaysia and Poland 725 Currency translation adjustments etc. 376 Equity 30 June ,950