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Carlsberg Q4 Profit Surges On Higher Beer Volumes

2/20/2012 3:10 AM ET

Danish brewer Carlsberg AS (CABGY.PK) reported Monday that its fourth-quarter profit grew nearly three times from last year on higher revenues and volumes, as well as tight cost control and efficiency improvements. The results were benefited mainly by stock building by Russian distributors despite a challenging Russian market and adverse weather conditions.

Looking ahead for fiscal 2012, the company projects slightly higher adjusted net profit. Carlsberg also said it would launch a voluntary offer for the remaining shares in its Russian unit Baltika.

In its fourth quarter, Copenhagen-based Carlsberg reported solid results in Northern & Western Europe driven by efficiency improvements and market share gains. Operating margin improved 350 basis points as on-going efficiency improvements reduced operating expenses.

In Eastern Europe, organic net revenue growth was 33 percent on 14 percent higher volume, while the results were impacted by a 4 percent decline in Russian beer market due to 30 percent price increases since November 2009 and high inflation on basic food items. Also, Russian market share lost due to a high level of promotional activities from competitors.

In Asia, the company continued its strong performance with market share gains in most markets.

Further, the company proposed a 10 percent increase in 2011 dividend to 5.50 kroner per share.

Looking ahead for fiscal 2012, Carlsberg expects slightly higher adjusted net profit and a flat operating profit before special items. In 2011, adjusted net profit was 5.20 billion kroner and operating profit was 9.82 billion kroner. The outlook reflects a negative volume and earnings impact from de-stocking by Russian distributors in 2012 first quarter.

For the new year, the company projects a challenging Northern & Western Europe market, while sees continued strong growth in Asia. In Eastern Europe, it will focus on improving market share trend.

CEO Jørgen Buhl Rasmussen said, "In our planning for 2012, we're investing to grow market share and continuing the implementation of efficiency improvements. Strong prioritisation on the most important activities will be a key driver for how we approach businesses in what we expect to be a challenging environment in Northern & Western Europe in 2012. In Russia, the steps we've taken to strengthen the business will begin to bear fruit in 2012."

In addition, Carlsberg said it plans to launch a voluntary offer for the remaining outstanding shares in its Russian unit, Baltika, by May 2012. Depending on market conditions, indicated offer price would be up to a maximum of 1550 Russian ruble per share. The net cost in 2012 would be up to 4.4 billion kroner.

If the voluntary offer is successful, Carlsberg's ownership would increase to more than 95 percent from current slightly below 85 percent. The company said the deal when completed would be immediately earnings-enhancing and a full ownership of Baltika would give it greater operational flexibility.

For the fourth quarter, net profit attributable to shareholders surged to 912 million Danish kroner from 316 million kroner a year earlier. earnings per share were 6 kroner, significantly higher than 2.1 kroner in the previous year. Pre-tax profit for the period jumped to 1.27 billion kroner from 373 million kroner in the comparable period last year.

Net revenue increased 11 percent on a reported and organic basis to 14.85 billion kroner from prior year's 13.4 billion kroner.

In Copenhagen, Carlsberg shares closed Friday's trading at 429 kroner, down 8.60 kroner or 1.96 percent.

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by RTT Staff Writer

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