ADVERTISEMENT

Tuborg Boosts Carlsberg in Asia as Rivals Jockey for Position

Carlsberg Raises Earnings Forecast on Savings and Asia Demand

(Bloomberg) -- Carlsberg A/S raised its full-year profit guidance amid soaring demand for Tuborg beer in Asia.

Sales volume for the label, one of the top foreign brews in China, rose 8 percent in the first half, the Danish company said Thursday. That gave Carlsberg a lift in one of its key markets as larger rival Heineken NV seeks an edge through its purchase of a $3.1 billion stake in the country’s top beer maker, China Resources Beer Holdings Co.

The shares rose as much as 4.1 percent, the most in more than two years.

The Heineken deal will boost demand for premium beer in China, Carlsberg Chief Executive Officer Cees ’t Hart said on a call, referring to it as a “strong competitive move.” Net revenue from China grew 17 percent in the first half, led by the international brands Tuborg and 1664 as well as the company’s namesake lager.

Carlsberg is also wringing costs out of its business to weather a slowdown in beer demand in more established markets. As a result, earnings before interest, taxes and one-time items will rise by a high-single-digit percentage over the course of the year, the Copenhagen-based brewer said in a statement, up from a previous forecast of mid-single-digit growth.

Carlsberg is on track to cut more than 2.3 billion kroner ($350 million) of costs as it defends its turf against an enlarged and more profitable rival following the combination of Anheuser-Busch InBev NV and SABMiller Plc.

Russia Rebound

Last year, AB InBev merged its Russia and Ukraine business with that of Turkey’s Anadolu Efes, heaping pressure on Carlsberg’s operations in Russia, where the brewer controls more than a third of beer sales.

While consumer sentiment in Russia remains low, the company expects the local beer market to grow between 1 percent and 2 percent over the course of the year, reversing a decline of as much as 5 percent last year, ’t Hart said. The company has also recouped market-share losses from 2017, he said.

As the Heineken deal reshapes the competition in Asia, Carlsberg has minimal overlap with China Resources Beer’s distribution network, ’t Hart said. The Danish company won’t immediately increase its investment as a result of the deal, as it already has the funds in place that it needs for further growth, he said.

Earnings in the first half rose 6 percent to 4.37 billion kroner, beating a company-compiled analyst estimate of 4.15 billion kroner.

To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III

©2018 Bloomberg L.P.