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Carlsberg Group: Financial statement as at 31 December 2010 

The Carlsberg Group delivered strong performance in 2010 in spite of the significant impact from the increase in Russian excise duties, which affected the beer market in Russia extraordinarily in 2010.

• Operating profit margin grew by 130bp to 17.1% (15.8% in 2009) and operating profit increased to DKK 10.25bn (DKK 9.39bn in 2009). Reported net result grew by 49% to DKK 5.4bn.

• Overall beer market trends improved in 2010 compared to 2009. Importantly, the Russian market was stronger than the Group anticipated at the beginning of the year.

• The Group significantly intensified investments behind its key brands, including innovations, new products, media, digital, consumer and customer activations. Furthermore, the Group invested in innovations to be launched in 2011 and the coming years.

• The Group gained market share in a large part of the business in 2010. The Northern & Western European region grew overall market share. In Eastern Europe, our market share in Russia was flat at 39.7% (source: Nielsen), despite the price leadership throughout the year. In Q4, Carlsberg's share of the Russian market grew by 40bp to 39.7%. Ukraine continued to do well. In Asia, market share gains were once again achieved across the region.

• Supported by football activations and increased investments in a World Cup year, the Carlsberg brand grew by 3%.

• The Group's beer volumes were down by 1% to 114m hl with a 2% organic volume decline (2% decline for total beverages). Excluding the Russian stock-building in Q4 2009 and subsequent destocking in Q1, organic beer volume would have grown by an estimated 1%.

• In Q4, organic beer volumes declined by 5%. Adjusting for the Russian stock-building in Q4 2009, organic beer volumes were flat for the quarter.

• Group net revenue increased by 1% to DKK 60.1bn (DKK 59.4bn in 2009) despite challenging Russian market dynamics due to the significant excise duty increase. The organic decline was 3% and the positive currency impact was 5%, mainly due to stronger Eastern European currencies. Price/mix was -1%.

• Operating profit increased by 9% to DKK 10,249m (DKK 9,390m in 2009). Organic operating profit growth was 1%. Adjusting for the Russian stock-building and subsequent destocking, organic operating profit growth would have been 8%. Currency movements impacted positively by 8%.

• Net profit grew by 49% to DKK 5,351m (DKK 3,602m in 2009). This includes non-cash, non-taxable income in special items of DKK 598m related to step acquisitions.

• Strong growth momentum in Asia with us outperforming market. The Group delivered significant volume, revenue and profit growth in the region.

• The remaining part of the DKK 1.3bn synergies from the Scottish & Newcastle acquisition were successfully achieved in 2010 ? ahead of plan.

• The focus on deleveraging continued and net interest-bearing debt was reduced to DKK 32.7bn (DKK 35.7bn at the end of 2009). Net debt/EBITDA declined to 2.3x (2.7x at the end of 2009). Having spent more than DKK 2.5bn on acquisitions, free cash flow was DKK 5,179m.

• For 2010 the Company proposes a dividend per share of DKK 5.00 corresponding to a 43% increase compared to DKK 3.50 for 2009.

• For 2011, the Carlsberg Group expects:

• Market share growth in markets representing 2/3 of our business
• High single-digit percentage growth in operating profit

• Adjusted net profit growth of more than 20%[1]

Commenting on the results, CEO J?rgen Buhl Rasmussen says: “2010 was an extraordinary year for the Group due to the substantial excise duty increase in our largest market and we are very pleased with the strong 2010 performance. The improved market share in a large part of our businesses demonstrates our ability to strongly execute on our plans. For 2011 we believe market dynamics will improve slightly, not least in Eastern Europe where we anticipate the Russian market to return to growth. In our efforts to balance profitable growth with continuous efficiency improvements we will roll out innovations and market tools to support growth during 2011. The ongoing and new initiatives aimed at ensuring our business model becomes more efficient will be implemented without compromising on the quality and service we deliver to our customers and consumers.”

21 Feb. 2011

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