Reopenings lift Carlsberg as drinkers return to bars


Drinkers emerging from lockdowns in China and western Europe helped Carlsberg to better than expected results in the first quarter, cheering investors seeking to assess the fallout of coronavirus on the world’s biggest brewers.

The world’s third-largest brewer said it expected profits to be down 8.9 per cent for the first half — far above the 25.8 per cent decline that analysts had expected, according to Jefferies, after bars, pubs and restaurants across large parts of the world were forced to close.

The Danish company, whose brands also include Kronenbourg and Holsten, said business in China, where coronavirus first struck, had “rebounded strongly” in the second quarter.

Western European trade improved towards the end of the second quarter as pubs, bars and restaurants reopened, helped by sunny weather in June, it said. Some Asian countries, especially India and Nepal, were still “significantly impacted” by efforts to contain the virus.

Cost cuts had also helped soften the blow to profitability from the pandemic, Carlsberg said as it issued preliminary figures ahead of the release of its first-half results in August. Carlsberg shares jumped 5 per cent in early trading.

Carlsberg said sales volumes had declined 7.7 per cent in the six months to the end of June, with revenues down 11.6 per cent.

Despite the better than expected outcome, Carlsberg cautioned that “the sales development across our regions in the coming months continues to be volatile and uncertain, not least during the important summer months”.

Carlsberg’s update follows a brighter outlook for the full year from the smaller Danish brewer Royal Unibrew. Royal Unibrew said earnings before interest and tax would be about DKr1.25bn to DKr1.38bn, down from DKr1.47bn in 2019. Carlsberg has suspended guidance for the full year.

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Simon Hales, an analyst at Citi, said Carlsberg’s figures suggested that “cost mitigation actions and the recovery in profitability in markets like China have been stronger than expected”.

However, Edward Mundy, an analyst at Jefferies, cautioned that relatively positive results from Carlsberg did not necessarily imply good news for other major brewers. Anheuser-Busch InBev, the world’s largest brewing group, reports first-half results on July 30 and Heineken on August 3.

The postponement of major sports events in 2020 has also affected brewers, both cutting into sales and resulting in lower marketing spend linked with sports sponsorships. Predicting 2021 would be a “summer of sport”, Mr Mundy said Carlsberg was an “attractive investment proposition”.

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