Carlsberg, the Danish brewer, has announced better-than-expected half-year profits, attributing the success to increased consumer spending on premium beers, despite significant price hikes. The company reported an operating income of 6.3 billion krone (€845m) in the first half of the year, surpassing analyst consensus estimates by almost 3%. Carlsberg also noted a 10% increase in revenue per hectolitre, indicating strong pricing power and growth across all regions.
Outgoing CEO Cees ‘t Hart commented on the price increases, stating, “We have been able to ensure that we would remain having the gross profit that we needed in order to further develop our business and also to invest further in our brands.”
Carlsberg’s stock experienced a slight decline in early trading following the announcement. The company’s positive financial results were revealed a day after it raised its annual profit outlook and disclosed volume, profit, and sales growth for the first half of the fiscal year.
Amidst rising input costs for grains, aluminium, freight, and power, brewers have been forced to implement price increases to protect their margins. Carlsberg’s report indicates that its customers have shown a relatively strong demand for its high-end beers and have been willing to accept the price hikes. This contrasts with its major competitor, Heineken, which recently lowered its profit forecast after customers shifted to cheaper beer options in some markets.
However, Carlsberg has faced challenges in implementing price increases in certain countries, such as Poland. CEO Cees ‘t Hart expressed difficulty in determining whether volume developments are influenced by weather conditions or higher price increases.
Carlsberg’s Russian operations were recently seized by the government following the company’s announcement of a deal to sell the business. The future of these assets remains uncertain, with ‘t Hart stating that he is not in contact with the management there since Vladimir Putin’s decree. Despite this, Carlsberg has not written down the value of the Russian assets in its books.
Jacob Aarup-Andersen, a turnaround expert known for his work at facility management company ISS, will assume the role of CEO at Carlsberg next month, replacing Cees ‘t Hart, who held the position for approximately eight years.