Carlsberg beer sales robust but will seek another price increase to offset higher costs
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Danish brewer Carlsberg has said it has not seen rising living costs impacting beer sales, but that higher raw material prices would pressure earnings in the second half of the year.
The world's third-biggest brewer said sales in the second quarter were boosted by the reopening of bars and restaurants in most markets. "So far we don't any see any impact in our figures [from rising inflation]," chief executive Cees 't Hart said in a conference call.
However, on a call with analysts and investors, Carlsberg executives said they expected earnings growth to slow in the second half of the year as cost of sales percentage inflation will be in the low teens for the year.
The brewer said it was in the process of negotiating another price increase with customers to offset higher costs, including energy.
“We normally have only one price increase per year. We are now in uncharted territory as we need to go back to our customers,” Mr ’t Hart said on the call.
The company, which also produces brands such as Kronenbourg 1664, Tuborg and Somersby, lifted its profit growth forecast last week on the back of strong performances in Europe and Asia. The company's volumes grew by 8.7% in the quarter, with sales reaching 20.51 billion Danish crowns (€2.5bn), compared to the 21.6 billion forecast by analysts in a poll compiled by the company.
"We are now well ahead of pre-pandemic levels, however we see dark clouds on the horizon," Mr 't Hart said. "We will see full effect of rising input costs in the second half of the year."
The company expects "high single-digit-percentage" organic profit growth for the full year, much below the 32% growth it achieved in the first six months of the year.
Rival Heineken said this month that consumers bought more beer in the first half of the year despite cost of living pressures, but that it expected rising costs to squeeze profit margins next year.
Shares in Carlsberg closed about 2.5% higher in the session. The value of the shares has now increased by over 25% since a trough in early-March.
Carlsberg, which has eight breweries and 8,400 employees in Russia, said in March it would sell its business in the country, joining an exodus of Western companies since Russia's invasion of Ukraine.
The sale would most likely be concluded 12 months after it announced the plan to divest, Mr 't Hart said. On Wednesday, the company reported a write-down of its Russian business.
It also said a legal dispute with its partner in India and Nepal had been heard through arbitration in Singapore. The arbitration tribunal found that Carlsberg’s business partner was “in incurable material breach of the shareholder’s agreement”, Carlsberg said.
• Reuters and Bloomberg