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February 19th, 2013

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Upon the Monday release of Carlsberg's 2012 financial report, which revealed a net profit of 5.6 billion kroner, the Danish beer giant saw its stock drop by six percent due to the report's indication of stagnant growth. But Carlsberg CEO Jørgen Buhl Rasmussen insists there are positives to be taken from 2012 despite company cutbacks, a production decrease and a set-back in sales.

“The economy has been at a low point, which obviously affects consumer purchases,” Rasmussen told Børsen financial daily. “But we’re expecting good things from our Asian markets, where we’re always looking for new investments.”

According to the company’s annual report, bad summer weather and a change in consumer habits were the main reasons for poor sales in western Europe. However, growth in Asia and a steady performance in Russia indicates that Carlsberg is gaining ground in the East, an ambition Rasmussen set out to achieve in 2012.

“On a whole, I would say there’s a positive trend in our market share since the end of 2011,” Rasmussen said. “And that is a reflection of the business we’ve managed to achieve in Russia at the end of 2011 and the beginning of 2012.”

The company reported that it improved its market share across Asia, pointing particulary to strong performances in countries such as India, Cambodia and Vietnam.

The setbacks closer to home in western Europe however, have meant that Rasmussen has been forced to change strategy after Carlsberg's operating profits fell from 5.4 billion kroner in 2011 to 5.1 billion in 2012. Poland is the only European country in which Carlsberg saw a strong growth in sales.

Carlsberg as a result has re-evaluated its targets, changing them to what the annual report described as "softer and less tangible objectives". And while Rasmussen has argued that these new "clear and simple ambitions will result in better long-term company value", it has already started to attract criticism from analysts in Denmark.

“The results are disappointing,” Morten Imsgard, an analyst from Sydbank, told Ritzau Finans. “This news is only proving the company's critics right.”

In 2010, Carlsberg set its short-term goals of achieving pre-tax earning margins of 15-17 percent in western Europe,  26-29 percent in eastern Europe and 15-20 percent in Asia. The annual report however showed that the operating margin achieved in western Europe in 2012 was 13.6 percent, a decrease from 14.7 percent in 2011. Carlsberg also saw a drop in Asia from 18.8 percent in 2011 to 18.5 percent in 2012. Eastern Europe, on the other hand, saw some growth from 21.3 percent in 2011, to 21.7 percent at the end of 2012.

While Rasmussen said that Carlsberg is out-competing its rivals in Asia, Børsen reported that the three biggest global breweries – AB-Inbev, SAB Miller and Heineken – continue to pull ahead of Carlsberg on the world stage.