Revenue, profits down, but Carlsberg bets on a summer free of Covid curbs

Carlsberg is banking on most COVID-19 restrictions being lifted in coming months to buoy its earnings in its peak summer season, which could include the beer bonanza that accompanies the European soccer championship.

The world’s third-biggest brewer after Heineken and Anheuser Busch Inbev said on Friday it expected operating profit to grow between 3 per cent to 10 per cent in 2021, after reporting fourth-quarter sales slightly below expectations.

The outlook follows a bruising 2020.

Its on-trade business dropped by more than 20 per cent last year due to lockdown curbs. Off-trade sales in stores grew by mid-single digit percentages.

Chief Executive Cees ‘t Hart said the first quarter of this year would continue to be challenging for its on-trade business, but that the company expected a gradual improvement in the second quarter and for most restrictions to be lifted by summer.

“While the pandemic is not yet behind us and we don’t know how long it will remain a challenge in 2021, we believe that Carlsberg will emerge even stronger from the crisis,” he added.

“The guidance we provide is broader than usual, reflecting these uncertainties,” he said, adding that was partly due to uncertainty over whether the European soccer championship, already pushed back from 2020, will go ahead as planned.

“Its not a secret that championships always help support volume development,” he told Reuters.

Sales in the fourth quarter came in at 12.5 billion Danish crowns (£1.47bn), just below the 13.1 billion estimated by analysts in a Refinitiv poll.

Overall for 2020, beer sales suffered during the pandemic and Carlsberg saw its annual organic revenue decline by 8.4 per cent to its lowest since 2007, while volumes shed 3.8 per cent.

But annual operating profit declined by just 3.1 per cent to 9.7 billion crowns – above analysts’ forecast of 9.42 billion – mainly driven by Western Europe, its biggest market, with both Asia and Eastern Europe seeing growth.

Carlsberg said it would propose a dividend of 22 crowns per share, a 5 per cent increase, and would launch a 750 million share buyback programme running until 23 Aprril.

Carlsberg also said it cut travel, entertainment and marketing costs in 2020. Its operating margin rose to 16.6 per cent, up from 15.9 per cent in 2019. Hart said advertising costs this year could return “more or less” to the levels of 2019.