Carlsberg A/S' share of profit (before goodwill, etc.) was DKK 384m compared with DKK 363m in first half-year 2003 (+6%).

Transcription

1 Copenhagen, 12 August 28/ Stock Exchange H1 Financial Statement Debt reduced sooner than expected Net interest-bearing debt was reduced by DKK 5.6bn in and totalled DKK 23.4bn as at 30 June. Holsten transaction was completed faster and more effectively than originally planned. High organic volume growth and a successful Carlsberg marketing campaign in connection with EURO in Portugal. Net revenue rose by 6% compared with first half-year measured in local currencies. Operating profit exclusive of property gains was at level with last year, despite DKK 250m increase in marketing expenses. When including property gains, operating profit rose by 23%. Carlsberg A/S' share of profit (before goodwill, etc.) was DKK 384m compared with DKK 363m in first half-year (+6%). Bad weather in Northern continuing in July will adversely affect full-year operating profit (EBITA). Therefore, expectations to operating profit, inclusive of property gains, will not be revised upwards. Carlsberg A/S share of profit (before goodwill, etc.) for is revised upwards and is expected to be at the level of DKK bn. (DKK 1,179m last year). For further information Direct phone Investors: Mikael Bo Larsen Media: Margrethe Skov The H1 presentation for analysts, etc. will be available on from 10:00 CET am today. Ny Carlsberg Vej 100 Tel.: CVR.No Carlsberg A/S DK-1760 København V Fax: carlsberg@carlsberg.com Page 1 of 10

2 HIGHLIGHTS AND KEY FIGURES 1 st half-year (unaudited) Income Statement in 1 st half-year 1 st half-year percent Net revenue 16,929 16, Operating profit (EBITA) 1,541 1, Special items, net Financials, net Corporation tax goodwill, etc Consolidated profit Carlsberg A/S' share of profit Carlsberg A/S' share of profit before goodwill, etc Balance sheet, selected items in percent Non-current assets 45,080 29, Current assets 17,740 17, Consolidated capital and reserves 16,379 16,499-1 Provisions 5,696 3, Non-current liabilities 24,044 11, Current liabilities 16,701 15, Balance sheet, total 62,820 46, Net interest-bearing debt 23,438 10, Movements in consolidated capital and reserves Consolidated capital and reserves as at ,906 Dividend, Carlsberg A/S -305 Consolidated profit 24 Acquisition of minorities -4,705 Currency translation adjustments, etc. 94 Issue of shares 3,365 Consolidated capital and reserves as at ,379 Cash flow 1 st half-year 1 st half-year Cash flow from operating activities 1,451 2,078 Cash flow, investments *) -1,596-1,616 Free cash flow *) Sale of properties Holsten acquisition, net -1,840 - Free cash flow -1, *) Excl. sale of properties and net effect of Holsten acquisition. The accounting principles applied are unchanged compared to the Annual Report for. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 2 of 10

3 THE FINANCIAL EFFECT OF THE ACQUISITION OF ORKLA'S MINORITY SHAREHOLDING IN CARLSBERG BREWERIES When calculating its share of profit, Carlsberg A/S has included Orkla's 40% minority share in Carlsberg Breweries until the completion of the transaction (in effect for the months of January and February), which in total affects the minority interests positively and hence Carlsberg A/S' share of profit with plus DKK 93m. As of 1 March, the net profit of the brewery-related activities has been included 100% in Carlsberg A/S' income statement. COMMENTS ON DEVELOPMENTS IN THE 1 ST HALF-YEAR OF During the first half-year of, Carlsberg achieved significant progress in the pro rata calculated beer volume to a total of 29.1m hl (25.8m hl last year), corresponding to growth of 13%. Gross volume for the beer business also showed positive developments with an 8% increase - 6% of which was organic growth - to a total of 42.7m hl, while the soft drink and water business experienced a slight decrease to 9.5m hl following the sale of the water business in Switzerland during the first half of. The Carlsberg brand showed a volume growth of 12%. During the period, net revenue rose by 4% to DKK 16,929m. Growth measured in local currencies was 6%, which reflects, among other things, the continued progress of BBH and the inclusion of revenue from Holsten. Operating profit was DKK 1,541m corresponding to a 23% rise compared with the same period last year. Operating profit includes property gains of DKK 410m against DKK 107m last year. Furthermore, operating profit was affected by increased marketing costs especially in Russia and in connection with EURO in Portugal. Marketing costs in the first halfyear were approximately DKK 250m up on last year, reaching DKK 1.2bn. The not distributed costs have risen by approximately DKK 80m due to increased marketing costs and start-up costs relating to the Excellence programmes. Special items amounted to minus DKK 390m against plus DKK 3m last year. Of this amount, minus DKK 305m is due to an accounting loss related to the agreement to outsource Carlsberg UK s servicing of draught beer equipment. The loss has no cash effect. The outsourcing is expected to reduce cost levels in the UK in the future. Financials totalled a net cost of DKK 583m compared with DKK 365m in the first half of. The financials include an earlier than expected charge to the income statement of DKK 94m ( funding facility fee ), which relates to the earlier than originally expected repayment of a credit facility, which was obtained in connection with the acquisition of Orkla s minority shareholding in Carlsberg Breweries. Financials also include exchange rate adjustments, etc. of minus DKK 40m. The period's effective tax rate was 23% (23% in the first-half year of ) and the tax charged thus amounted to minus DKK 129m. After the deduction of minorities, Carlsberg's share of profit before amortisation and writedown of goodwill, etc. was DKK 384m against DKK 363m in the first half-year of (+6%). The total balance sum amounted to DKK 62.8bn including a net interest-bearing debt of DKK 23.4bn (approx. DKK 29bn at end-q1 this year). Following the end of the first half-year, the debt was further reduced with the proceeds from the sale of Licher (approx. DKK 0.8bn). The planned sale of the Holsten activities has now been completed. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 3 of 10

4 The free cash flow of the Carlsberg Group - before sale of properties in Carlsberg A/S and net effect of Holsten acquisition - amounted to minus DKK 0.1bn against plus DKK 0.5bn in the first half-year of. The deviation is mainly due to increased funds tied up in debtors at the end of June related to the very high level of activity up till and during EURO. The sale of properties favourably affects cash flow by DKK 1.0bn (plus 0.3bn in the first half of ), and the effect of the Holsten acquisition after the acquisition of shares and divestment of assets is minus DKK 1.8bn. Consequently, the period's total free cash flow amounted to around minus DKK1.0bn. A review of the three regions of the brewery-related activities is set out below with comparative figures for the first half of. OPERATIONAL DEVELOPMENT In the first half-year, the brewery-related activities reached an operating profit of DKK 1,120m compared to DKK 1,190m last year. Apart from the special excise duty situation in Turkey, the companies' earnings have by and large been in line with last year and hence weaker than expected. This is not least due to the fact that the Group has chosen to use the achieved cost savings to counter increased price competition for instance in Norway and Sweden, and to increase marketing costs to strengthen market positions in a generally difficult market. Furthermore, the bad weather in Northern which continued in July had an adverse effect on profits. One year ago, Carlsberg initialised a comprehensive and ambitious efficiency programme "Operational Excellence" with the aim of optimising structures and processes within large parts of the production facilities. The initiatives carried out so far have shown positive results and total savings on these projects are expected to amount to approximately DKK 800m annually, i.e. DKK 500m in relation to Production Excellence, DKK 200m in relation to Administration Excellence and DKK 100m in relation to Procurement Excellence. The implementation of the programmes and thus the total cost effect is expected to be final at the end of The continued development of Carlsberg's business potential warrants further investments in building strong brands and this, together with the expected continued intensification of competition, including continued price pressure, will consequently reduce the efficiency programmes' total favourable effect on profits. Western Net revenue 12,648 12, ,614 7, Operating profit Operating margin (%) Beer sales (million hl) The activities in Western had a net revenue of DKK 12,648m (+2%) and realised an operating margin of 6.6% (+0.5 percentage-point) in the first half. The majority of Carlsberg's markets showed generally favourable developments, however, price competition in Norway as well as restructuring in Italy adversely affected results. Furthermore, was characterised by bad weather in Northern which adversely affected the achieved results. The average sales price achieved per hectolitre was affected by the inclusion of the Holsten beer volumes which are sold at a significantly lower price than the average in Carlsberg's other Western an businesses. The decline in prices in was Stock Exchange 12 August H1 Financial Statement as at 30 June Page 4 of 10

5 approximately 3%, mainly due to the price competition in Norway and a high promotion level during the period. The EURO activities were a marketing success and England in particular showed major progress in Carlsberg sales. Unicer-Bebidas (Portugal) and Carlsberg UK showed the largest profit improvement during the half-year, whereas Ringnes (Norway) and Carlsberg Italia both registered profit decline. Generally, the other Western businesses have shown favourable developments and, in total, they show satisfactory profit developments compared to last year. The acquired Holsten activities contribute with around DKK 30m in operating profit and thus fulfil expectations, despite lower sales than expected. Eastern excluding BBH Net revenue 1,300 1, Operating profit Operating margin (%) Beer sales (million hl) The Eastern an activities showed favourable volume developments, however, the excise duty rises in Turkey still apply and the decline in earnings in Türk Tuborg is thus significant. As expected, the investments in the Balkans will continue to affect earnings adversely. The Carlsberg brand continued to show fine growth, especially in Poland. BBH (50%) Net revenue 2,426 2, ,522 1, Operating profit Operating margin (%) Beer sales (million hl) During the first half of, BBH (50%) achieved an 18% increase in net revenue to DKK 2,426m. Beer volume rose by 10% to a total of 8.3m hl. The favourable development in BBH s most important markets continued and the market thus rose 13% in Russia, 7% in Ukraine, 6% in the Baltic countries and around 40% in Kazakhstan. In the short term, significant investments in marketing, product launches and the development of new packaging to create a higher profile for the brand have squeezed the operating margin, but will at the same time speed up the current consolidation of the Russian beer market. In the first half-year, BBH achieved a market share in Russia of 32.1% (minus 1.3 percentagepoints), which however covers a change towards more favourable developments at the end of the period. Also in the Russian market, the Carlsberg brand continues its progress and with a growth of more than 250%, it was the fastest growing brand in the premium segment. The favourable volume developments in Russia are expected to continue in the second halfyear and the total full-year market increase is expected to be around 8%. BBH is expected to maintain the fine momentum and hence regain the market share which the company achieved in. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 5 of 10

6 This year, operating margin (EBITA) will be influenced by the significant marketing activities and full-year operating margin (EBITA) is expected to be just below 20%. Asia The half-year accounts for Asia (Carlsberg Asia Pte. Ltd.) were based on a 50/50% joint venture structure where Carlsberg Asia Pte. Ltd. was proportionally consolidated. Carlsberg has terminated the joint venture and the accounting procedure has been changed accordingly with effect from 1 July. Net revenue Operating profit Operating margin (%) *) Beer sales (million hl) * Exclusive of the one-line consolidated brewery Hite (South Korea) as well as in the effect from the profit guarantee for the companies in Thailand. The companies in Asia showed an underlying operating progress, which, however, compared with last year was reduced by unfavourable exchange rate developments, especially for the Malaysian ringgit, and the absence of the Thai business. The activities in Malaysia and Hong Kong contributed to the favourable development, which should however also be seen in the light of the SARS-epidemic last year. Singapore showed a minor decline in profit due to higher excise duties as a result of the change of sourcing from Thailand to Malaysia. PROFIT EXPECTATIONS Expectations to operating profit are maintained at DKK bn inclusive of property gains not previously included in the expectations. The adjusted expectations must be seen in the light of unfavourable weather in Northern which continued in July as well as high marketing costs, especially in Russia, for the rest of the year. As previously mentioned, DKK 305m were charged to the income statement in in connection with the final agreement in the UK regarding the sale of draught beer equipment to an independent company. This expense, which has no cash effect, has been included under special items. Over the year special items net is expected to be minus approximately DKK 100m, as gains relating to restructuring projects, e.g. from the sale of property, are expected in the second half-year. Expectations to Carlsberg A/S share of profit (before amortisation and write-down of goodwill, etc.) are revised upwards to DKK bn (previous expectations were DKK bn and last year DKK 1,179m). The main reason for the upwards revision is less uncertainty about financials, which are partly affected by faster debt reduction and partly by lower interest rates than originally expected. Furthermore, the tax percentage is expected to become slightly lower than previously expected due to favourable regulations to last year's tax in especially England and Russia. Earnings per share (before amortisation and write-down of goodwill, etc.) are consequently expected to be a little above last year despite the significant transactions carried out during the year (the acquisition of the remaining 40% shareholding of Carlsberg Breweries and the acquisition of Holsten-Brauerei) as well as a capital increase. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 6 of 10

7 Net interest-bearing debt is expected to total approx. DKK 22bn at the end of the year. FORWARD-LOOKING STATEMENT The forward-looking statements contained herein, including forecasts of sales and earnings performance, inherently involve risks and uncertainties and could be materially affected by factors such as global economic matters, including interest rate and currency developments, raw material developments, production and distribution related problems, breach or unexpected termination of contracts, price reductions resulting from market-driven conditions, market acceptance of new products, launches of competing products and other unforeseen factors. As to the current arbitration cases with Chang Beverages/Carlsberg Brewery (Thailand), please refer to the separate announcements made. No financial provisions have been made regarding these cases. Carlsberg will only update and adjust the specifically stated expectations in as far as this is required by law, etc. Yours sincerely, Carlsberg A/S Appendix Segment Information by Quarters This financial statement is available in Danish and English. In case of doubt, the Danish version shall apply. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 7 of 10

8 Appendix Segment Information by Quarters Q1 : Western Eastern Asia Not distributed * Beverag es, total Other Carlsberg Group, total Net revenue 5,034 1, ,765 6,765 Operating profit Special items, net Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit -172 Carlsberg A/S share of profit -96 goodwill, etc. 26 Q1 : Net revenue 5,274 1, ,855 6,855 Operating profit Special items, net -2-2 Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit -260 Carlsberg A/S share of profit -126 goodwill, etc. -70 * Not distributed includes corporate functions, other undertakings, elimination of inter-company trade in the three geographic segments, etc. of Carlsberg A/S. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 8 of 10

9 Appendix (continued) Segment Information by Quarters : Western Eastern Asia Not distribut ed * Beverag es, total Other Carlsberg Group, total Net revenue 7,614 2, ,164 10,164 Operating profit , ,387 Special items, net Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit 81 Carlsberg A/S share of profit 93 goodwill, etc. 358 : Net revenue 7,128 2, ,442 9,442 Operating profit , ,230 Special items, net 5 5 Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit 573 Carlsberg A/S share of profit 381 goodwill, etc. 433 * Not distributed includes corporate functions, other undertakings, elimination of inter-company trade in the three geographic segments, etc. of Carlsberg A/S. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 9 of 10

10 Appendix (continued) Segment Information by Quarters First half-year : Western Eastern Asia Not distribut ed * Beverag es, total Other Carlsberg Group, total Net revenue 12,648 3, ,929 16,929 Operating profit , ,541 Special items, net Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit -91 Carlsberg A/S share of profit -3 goodwill, etc. 384 First half-year : Net revenue 12,402 3, ,297 16,297 Operating profit , ,248 Special items, net 3 3 Financials, net Corporation tax of goodwill goodwill, etc Consolidated profit Minority interests' share Carlsberg Breweries' share of profit 313 Carlsberg A/S share of profit 255 goodwill, etc. 363 * Not distributed includes corporate functions, other undertakings, elimination of inter-company trade in the three geographic segments, etc. of Carlsberg A/S. Stock Exchange 12 August H1 Financial Statement as at 30 June Page 10 of 10