Carlsberg misses profit targets and pledges to continue cutting costs

Analysts describe results as ‘disappointing’ but the brewer has maintained its outlook for the year

The Danish brewer is expecting organic earnings growth to slow (Reuters)

Danish brewer Carlsberg reported first-half profit that missed analysts’ estimates as the company pledged to continue cost-cutting.

Earnings before interest, taxes and one-time items fell to 3.45bn Danish kroner (£405m), below expectations, the Copenhagen-based company said on Wednesday.

Cees ’t Hart, chief executive said he expects organic earnings growth to slow to about 1 per cent in the second half from 8 per cent in the first half on higher costs in Russia, where Carlsberg is the biggest brewer.

“We expect the headline miss and lack of guidance upgrades to disappoint,” wrote Carl Walton, an analyst at UBS.

Carlsberg raised its estimate for the headwind from currencies to 600m kroner for the full year from 550m kroner previously after a significantly negative currency impact from Eastern Europe, where it has a 35 per cent share of the Russian market.

The brewer plans to cut up to 2b kroner of costs by the end of next year as it readies to face an enlarged and more profitable rival after the combination of Anheuser-Busch InBev NV and SABMiller.

The company is also pulling out of markets where growth is slowing, such as Malawi and some operations in Finland and Poland.

“We have a number of operations that are not operating in the way we would have liked, we are reviewing these and we continue the program of streamlining our business,” Mr ’t Hart said, adding that other operations could be exited by year-end.

First-half sales rose 4 per cent on an organic basis, which excludes currency and acquisition effects. That beat the consensus of 3.2 per cent. Revenue in western Europe, which accounts for about 60 per cent of Carlsberg’s sales, grew by 2 per cent on an organic basis, in line with the beer market, the company said.

Bloomberg

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