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Carlsberg Operating Profit Jumps 38%

Carlsberg A/S, the world’s fourth- largest brewer, reported a 38 percent increase in first-quarter operating profit, helped by a rebound in Russia’s beer market.

Earnings before interest, taxes and some one-time items rose to 1 billion kroner ($194 million), exceeding the 993 million-kroner average estimate of 16 analysts compiled by Bloomberg. The operating margin widened by 1.4 percentage points to 8 percent, the Copenhagen-based company said today.

Carlsberg shares rose the most in four months. The brewer gets about 45 percent of profit from eastern Europe, where first-quarter volume increased 28 percent compared with a period of last year when Russian sales were depressed after the government tripled alcohol taxes.

“This is a good start to the year,” Andy Smith, an analyst at MF Global in London, said in a note to clients. The Russian recovery “is gathering pace.”

Carlsberg shares gained as much as 24.5 kroner, or 4.1 percent, to 617 kroner, the steepest intraday gain since Jan. 18. They were up 21 kroner, or 3.5 percent, at 613.5 kroner as of 11:07 a.m. in Copenhagen trading.

The brewer reiterated its February forecast of “high single-digit” percentage growth in 2011 operating profit and adjusted net income growth of more than 20 percent.

“We are particularly pleased that the important Russian market has returned to growth,” Chief Executive Officer Joergen Buhl Rasmussen said in the statement.

Raw Materials Costs
Margin growth was “light of consensus,” as higher input costs and advertising expenses weighed on results, Dirk Van Vlaanderen, an analyst at Jefferies International Ltd. in London, wrote in a note today.

Raw materials costs rose in eastern Europe after record droughts led to poor grain harvests last year, Carlsberg said.

Beer sales, excluding acquisitions, slid 2 percent in northern and western Europe in the quarter as “consumer dynamics remain challenging,” the company said.

Total organic volume rose 10 percent, inflated by a low comparative due to last year’s Russian tax increase. Excluding the effect of the destocking in the first quarter of 2010, volume grew 2 percent, according to Carlsberg estimates.

First-quarter net income totaled 173 million kroner, the company said. That missed the 280 million-kroner median estimate of 14 analysts surveyed by Bloomberg.

Net income “was negatively impacted by an increase in special items related to restructuring and in other net financial items due to currency movements,” MF’s Smith said.

11 May. 2011

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