Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Carlsberg bets on China, expensive beer for higher growth goals

Published 02/07/2024, 02:37 AM
Updated 02/07/2024, 05:26 AM
© Reuters. FILE PHOTO: A bar worker carries a tray of Carlsberg beer in Copenhagen, Denmark, July 30, 2022. REUTERS/Andrew Kelly/File Photo

LONDON (Reuters) -Shares in Carlsberg (CSE:CARLb) rose 5% on Wednesday as the market welcomed the Danish brewer's plans to reach its stepped-up growth ambitions through 2027, including higher spending in key countries such as China.

The world's third-largest brewer and maker of brands such as Kronenbourg 1664 also reported forecast-beating full-year revenue, though its expectations for 2024 operating profit growth were behind many analysts' expectations.

On Tuesday, Carlsberg raised its 2027 targets for revenue and operating profit growth after new CEO Jacob Aarup-Andersen reviewed his predecessor's strategy, but gave few details about how it would reach its more ambitious goals.

Aarup-Andersen told journalists on Wednesday that during a challenging past few years with the COVID-19 pandemic and war in Ukraine, Carlsberg had been defensive. But now it could accelerate its long-term plans.

"We see clear opportunities to inject investments and accelerate our long-term growth," he said.

Those investments include more spending on marketing for its portfolio of more expensive beers, pushing further into other categories like ciders and seltzers and doubling down on its expansion in Asia, in particular China, its largest market.

In 2024 alone, Carlsberg expects to increase sales and marketing investments by over 10%, with most of that spending dedicated to China and Vietnam, premium brands and digital projects.

However, in 2024, it expects organic operating profit growth of between 1% and 5% in 2024, well below some analysts' expectations.

Laurence Whyatt, analyst at Barclays, said the company has a reputation for setting more conservative guidance at the start of the year and upgrading it later, but its current guidance suggested Carlsberg could struggle to reach his estimates.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"Maybe we're being too optimistic," he said of his forecast for operating profit growth of around 12%.

Carlsberg's 2027 growth goals were more ambitious, he continued, but appeared to rest on as yet unclear factors such as a rebound in the Chinese economy.

Carlsberg said while the consumer environment in China remained subdued, it expected to grow volumes there through market share expansion.

The company reported a 4.7% rise in 2023 revenue to 73.59 billion Danish crowns, narrowly topping the 73.31 billion expected by analysts, LSEG data showed.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.