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Carlsberg has lifted profit expectations after “an exciting year” for the Danish brewer, despite volumes being held back by bad weather in Europe.
Organic volumes increased by 1.4% in the first half of 2024, thanks to a 1.9% rise in Asia and a 4.5% jump in Central & Eastern Europe and India, while Western Europe declined 1.7%.
Growth was supported by the group’s premium portfolio of brands, which registed a volume increase of 4%. It’s ‘Beyond Beer’ strategy also made progress, with the drinks outside its core offering growing by 4% and alcohol-free brews up 6%.
It helped organic revenues grow by 3.9% in the half, with reported sales up 2.6% to DKK 38.8bn.
Growth in operating profit was driven by “solid gross profit improvement” and partly offset by an increase in marketing investments of almost 20%.
Reported operating profits increased 1% to DKK 6.3bn, while net profits fell 4.2% to DKK 3.7bn as the group absorbed higher financial costs.
Carlsberg, which is in the midst of a £3.3bn takeover of Britvic, upped its organic operating profit growth forecasts from the range of 1-5% to 4-6%.
CEO Jacob Aarup-Andersen said: “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.
“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.
“Our performance management remains strong, and 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.”
Morning update
Inflation in the UK is back on the rise for the first time this year, according to the latest official figures from the Office for National Statistics.
Prices increased by 2.2% in the year to July, compared with 2% in the previous month, pushing the figure back above the Bank of England’s target.
However, the widely predicted increase was not a big as economists expected.
Food and non-alcoholic beverage prices rose by 1.5% in the year to July, the same rate as the year to June. It is the joint lowest annual rate since October 2021, but the first time since March 2023 that the annual rate has not eased, having recorded 15 consecutive months of slowing prices.
ONS chief economist Grant Fitzner said: “Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.
“This was partially offset by hotel costs, which fell in July after strong growth in June.”
Balwinder Dhoot, director for sustainability and growth at the Food and Drink Federation, added: “We’re pleased that as pressures across the food supply chain ease, food and drink price inflation continues to stabilise. While energy and global commodity prices remain elevated due to a series of shocks, including the war in Ukraine and ongoing geopolitical uncertainty, there are strong signs that the industry is turning a corner.”
Listed nutrition group Glanbia has launched a further share buyback of up to €50m.
It’s part of a €100m buyback programme announced in February.
The move comes as the group reported a 1.1% fall in first-half revenues to $1.82bn as prices tumbled 4%, while volumes rose 1.8%.
The Glanbia Performance Nutrition saw volume growth of 3.1% and a fall in pricing of 3.9%, while Optimum Nutrition delivered like-for-like revenue growth of 7.7%, driven by volume growth of 11.8%.
EBITDA before exceptional costs increased 12.7% to $261.6m.
CEO Hugh McGuire call the results a “strong performance”.
“Looking ahead, we continue to focus on driving growth across our portfolio of great brands and ingredients,” he added.
“The category trends remain positive, and with the continued consumer and customer demand for our Better Nutrition brands and ingredients we will see a sequential improvement in volumes across GPN and NS in the second half of the year.”
Spirits group Distil is exploring funding options to meet an unexpected shortfall in its finances after revenues plunged by 55% to £204k in the four months to July.
The trading update for the owner of RedLeg Spiced Rum, Blackwoods Gin and Vodka and Blavod Black Vodka said the board’s full-year expectations had been reduced but remained positive versus the 2023 outturn.
Executive chairman Don Goulding called it a “disappointing performance” and added the lower sales had been expected because of “phasing trends” but the actual results had been below forecasts.
He said the global alcohol market had been facing persistent challenges in recent years.
“The decline has been driven by an extraordinarily challenging economic environment, as consumers are faced with ongoing inflationary pressures, which are putting a strain on spending,” he said.
“While this is an issue affecting all global markets, for 2024, this has been exacerbated in the UK by the poor weather, leading to further curbs on socialising both in and out of home.
“The effects of these changes to consumer spending have been felt throughout the drinks industry, across all arms and at all levels, including our business.”
Goulding said this backdrop had created “an immediate short-term funding need” within the business and the board was currently exploring funding options to address this need.
“The interests of shareholders remain at the heart of all decisions taken by the board,” he added. “Further updates will be notified as required.”
The FTSE 100 is up 0.6% so far today to 8,281.81pts.
Shares in Carlsberg increased 1.5% to DKK 816.40, while Glanbia soared 9.1% to €18.48.
Distil collapsed by 43.5% to just 24p following its update.
Yesterday in the City
The FTSE 100 nudged up 0.3% to 8,235.23pts.
Shares in Tate & Lyle rose 0.8% to 648p as it revealed Sarah Kuijlaars as the new CFO.
Tesco was up 0.4% to 334.9p and Sainsbury’s jumped 1.7% to 274.2p as the latest Kantar data showed food inflation climbed once again, boosting supermarket sales.
Other risers including Science in Sport, up 4.3% to 24.5p.
Naked Wines led the fallers, down 7% to 50.2p.
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