Carlsberg A/S reported better-than-expected half-year profit after consumers shelled out more money for premium beers even after unprecedented price increases.
(Bloomberg) — Carlsberg A/S reported better-than-expected half-year profit after consumers shelled out more money for premium beers even after unprecedented price increases.
The Danish brewer said operating income rose to 6.3 billion krone ($923 million) in the first half, topping analyst consensus estimates by almost 3%. Revenue per hectoliter, a key metric of pricing power, climbed 10% with growth in all regions, the company said in a statement Wednesday.
“We have been able to ensure that we would remain having the gross profit that we needed in order to further develop our business and also to invest further in our brands,” outgoing Carlsberg Chief Executive Officer Cees ‘t Hart said of the price increases in an interview with Bloomberg TV.
Carlsberg stock fell slightly in early trading.
The report came a day after the maker of Tuborg and its namesake beer raised its annual profit outlook and disclosed volume, profit and sales growth for the first half of its fiscal year.
Faced with soaring input costs for grains, aluminum, freight and power, brewers have been raising prices at the fastest rate in decades to protect margins.
But Carlsberg’s report indicates fairly resilient demand among its drinkers, who have been willing to swallow price hikes for its high-end beers. That contrasts with Carlsberg’s bigger rival Heineken NV, which cut its profit forecast after customers switched to cheaper beer in some markets.
Still, the company is experiencing problems pushing through prices rises in some countries such as Poland.
“It’s very difficult to see at this moment in time whether some volume developments are caused by the weather or by higher price increases,” ‘t Hart said in the interview.
Carlsberg’s Russian operations were seized by the government last month after the company said it had struck a deal to sell the business.
The CEO said the future of its Russian assets was “relatively unclear” and he is not in contact with the management there since Vladimir Putin’s decree. But Carlsberg has not written down the value of those assets in its books, he added.
Read More: Western Companies in Russia Fear More Asset Grabs by the Kremlin
Jacob Aarup-Andersen, a turnaround expert who revamped facility management company ISS A/S, will take over the running of Carlsberg next month, replacing ‘t Hart who held the role for about eight years.
–With assistance from Anna Edwards and Tom Mackenzie.
(Updates with shares and CEO comments starting from the third paragraph)
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