Carlsberg under the cosh after H1 numbers

Danish brewer Carlsberg was under the cosh on Wednesday as its first-half results failed to impress, although it maintained its outlook for the year.

The company reported 1.87bn Danish kroner, or earnings per share of DKK12.2, up from DKK1.50bn, but group net revenue edged down 4% to DKK31.2bn amid lower beer volumes and due to adverse currency movements.

Adjusted net profit was DKK1.4bn, down 19% from last year due to a negative currency impact and tax expense which more than offset organic operating profit growth and lower financial costs. Adjusted earnings per share were DKK9.2.

Total beverage volumes were down 1% on an organic basis, mainly due to anticipated lower beer volumes in the UK, Finland and Poland, a negative volume development in Eastern Europe in the second quarter and a continued market decline in China. Meanwhile, beer volumes were 2% lower organically.

Carlsberg said it had seen a significant improvement in free cash flow of DKK5.2bn from DKK3bn.

The company said it expects low single-digit percentage organic operating profit growth for 2016 but upped its estimate for currency headwinds to DKK600m based on spot rates as at 15 August, versus a previous estimate of DKK550m.

Chief executive officer Cees’t Hart said: “The Carlsberg Group delivered a good set of results in line with our expectations. Most notably, we achieved a solid top-line and profit development as well as a strong improvement in cash flow. With the satisfactory execution of our plans so far, we maintain our full year outlook for organic growth in operating profit.”

Societe Generale downgraded its rating on Carlsberg to ‘hold’ from ‘buy’ on Wednesday.

It said that after a very strong share price performance since the beginning of the year – the stock is up 15% – in which it outperformed all but two of the European beverage stocks the bank covers, the first-half results lacked a catalyst to drive further outperformance.

At 1435 BST, Carlsberg shares were down 5.1% to DKK644.50.