Carlsberg A/S Ny Carlsberg Vej 100 Tel +45 33 27 33 00
1760 København V CVR no: 61056416
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 1 of 32
INTERIM RESULTS AS AT 30 SEPTEMBER 2008
Strong brands drive resilient value performance compensating for lower
volume growth
• For the first nine months, organic beer volume growth totalled 4% (32%
including acquisitions). Volume growth has been driven by double digit growth in
Asia and reasonable strong growth in Eastern Europe.
• In the first nine months of 2008, Carlsberg achieved progress in underlying
operations in all geographic segments. Net revenue was DKK 45,420m, with organic
growth of 7% (9% in local currencies) and operating profit before special items
was DKK 6,592m with organic growth of 10% (13% in local currencies).
• Eastern European full year revenue and earnings continue to be in line with
previously provided expectations. Focus on positive pricing and mix, driven by
strong brands, continues to benefit the Russian business and compensates for the
slowdown in market growth, driven by the very bad weather and the above-average
price increases this year. Russian beer market growth for this year is expected
to moderate to c. 1- 2% following weak volume development in late August and in
September. The overall uncertain short-term economic outlook will affect
consumer spending going into 2009 but medium term volume growth is still
expected to be an average of 3-5% per year.
• In the third quarter, market development slowed in Northern and Western Europe
to -1.7% and in Eastern Europe to -2%. In addition to the secular decline in
mature markets in Northern and Western Europe, deteriorating consumer and
customer sentiment has impacted short term performance in this region. In
Eastern Europe the performance was impacted by the very bad weather. Strong
value growth in Eastern Europe continues, driven by positive pricing and mix
which more than compensates for the lower market volume growth.
• Deteriorating markets in the United Kingdom and the Baltics have impacted
earnings in Northern and Western Europe. Today, Carlsberg announced the proposed
closure of the brewery in Leeds. Earlier in October, Carlsberg announced
restructuring plans in Estonia to promptly address the challenges in the Baltic
area and today a further downsizing of the Baltics was announced - all in all a
headcount reduction of more than 80.
• The integration of acquired business from S&N is on track and Carlsberg
remains fully committed to extracting confirmed synergies of approx. DKK 1.3bn.
In Northern and
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 2 of 32
Western Europe, the main restructuring programme in France has been announced
and the integration plans in Eastern Europe are advancing in line with plans.
• Reduction of interest bearing debt has high priority. The sale of the
activities in Turkey was completed 23 October and the proceeds have been
received. Working capital programmes, scrutiny of capex programmes, etc are well
under way. Carlsberg has sufficient funding surplus through major committed
credit facilities and can decide - even at the current debt level, i.e. without
any further debt reduction - not to refinance in the market until 2011. Only 35%
of the net financial debt is on floating interests and an average interest rate
("all in") on financial debt of around 6% is still valid.
• Full year earnings expectations are marginally revised, primarily reflecting
negative impact from the United Kingdom and the Baltics and the impact from the
current consumer and customer sentiment. For Eastern Europe, the earnings
expectations follow previous forecast. Operating profit in the brewing
activities is expected to grow organically to around DKK 5.4bn (c. +8% vs.
previously expected c. +12%). The contribution of approximately DKK 300m from
other activities is confirmed. Including the contribution from acquired
businesses the total operating profit for the current year is thus c. DKK 7.9bn
(previously expected to be c. DKK 8.1bn).
Contacts:
Investors Mikael Bo Larsen +45 3327 1223
Media Jens Peter Skaarup +45 3327 1417
Carlsberg will present the financial statements at a conference call for
analysts and investors today at 9.30 am CET (8.30 am GMT). The conference call
will refer to a slide deck, which will be available beforehand at
www.carlsberggroup.com.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 3 of 32
KEY FIGURES AND FINANCIAL RATIOS
DKK million Q3 Q3 9 mths 9
mths 2007
20- 2007 2008
2007
8
Total sales
volumes (million
hl)
Beer 36- 33.3 97.9
89.3 115.2
6
Soft drinks 6.1 5.6 16.9
15.8 20.8
Income statement
Net revenue 18,- 12,430 45,420
33,932 44,750
43
Operating profit items 3,- 2,078 6,592
4,334 5,262
54
Special items, net -1- -42 -297
-184 -427
9
Financial items, -8- -277 -2,175
-773 -1,201
net 3
Corporation tax -5- -461 -1,210
-865 -1,038
3
Consolidated 1,4- 1,298 2,910
2,512 2,596
profit 9
Attributable to:
Minority interests 188 120 403
252 299
Shareholders in 1,2- 1,178 2,507
2,260 2,297
Carlsberg A/S 1
Balance sheet
Total assets 153,357
61,257 61,220
Invested capital 127,695
45,651 45,394
Interest-bearing 46,323
20,135 19,726
debt,
Equity, in Carlsberg A/S 61,813
19,038 18,621
shareholders
Cash flow
Cash flow from 2,1- 1,366 4,233
3,009 4,837
operating 0
activities
Cash flow from -1,- -1,003 -55,863
-3,107 -4,927
investing activiti 98
es
Free cash flow 652 363 -51,630
-98 -90
Financial ratios
Operating margin %16- 16.7 14.5
12.8 11.8
6
Return on average (ROIC) (ROIC) 9.7
10.8 11.7
invested capital
Equity ratio % 43.6
31.1 32.6
Debt/equity ratio x 0.7
1.1 1.0
(financial
Interest cover x 3.0
5.6 4.4
Stock market
ratios*
Earnings per share - 8.0 12.4 23.3
23.7 24.1
(EPS) -
K
Cash flow from per share per share 14- 14.3 39.4
31.6 50.8
operating 1
activities
(CFPS)
Free cash flow per - 4.3 3.8 -480.7
-1.0 -0.9
share (FCFPS) -
K
Share price - 398
576 498
(B-shares) -
K
Number of shares 152- 76,278 152,554
76,278 76,246
(period-end) 1,0-
0
554
Number of shares (average, excl. treasury 15- 95,274 107,405
95,288 95,282
,1-
000
553
shares)
* Adjusted for bonus factor from rights issue in June 2008 in accordance with
IAS 33.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 4 of 32
BUSINESS DEVELOPMENT
Carlsberg has continued to develop its business in line with its stated
strategy, building on the strong brand portfolio and execution skills throughout
the regional operations. Beer market growth reflects the secular decline in
mature Northern and Western Europe, positive development in Eastern Europe and
continuing strong growth in Asia.
Third quarter volumes in Northern and Western Europe have been slightly lower
than trend volumes as primarily the United Kingdom and the Baltic markets have
been severely hit by sharp declines in consumption driven by on-trade in the
United Kingdom and deteriorating economies across the Baltics. In Eastern Europe
and Asia, growth continued in the third quarter, although the expected recovery
of growth in the Russian beer market did not materialize primarily due to
extremely poor weather and a strong value focus.
Some negative impacts were seen on overall market growth due to decline in
consumer and customer sentiments in the latter part of the third quarter,
although beer is proven to be one of the most resilient categories to changes in
economics.
Carlsberg Group beer volumes were up 32% to 83.6m hl of beer (calculated pro
rata) versus 63.2m hl in the first nine months of 2007. Organic growth accounted
for 4% of this increase and acquisitions for 28%.
The international brands Carlsberg, Tuborg and Baltika continued to grow,
achieving volume increases of 2%, 11% and 17% respectively. The Carlsberg brand
benefited from increased sales in connection with the EURO 2008 football
championships and the fact that volumes in Malaysia have increased after the
restructuring programme put in place last year. Tuborg's growth was mainly due
to the continued unparalleled success in Eastern Europe. Likewise, the Baltika
brand is growing rapidly in Russia and in export markets.
Net revenue climbed 34% to DKK 45.4bn (DKK 33.9bn in the nine months of 2007);
organic growth amounted to 7% (9% in local currencies). Strong focus on brand
driven value growth through pricing and mix continue. Price increases have been
implemented throughout the year, including the third quarter, increasing average
sales prices per litre of beer. However, above average volume growth in
low-priced markets capped the net effect of growth on net revenue per hl beer to
4%.
Operating profit before special items increased by 52% to DKK 6,592m (DKK 4,334m
in the first nine months of 2007), with organic growth of 10% (13% in local
currencies). Beverage activities generated DKK 6,197m against DKK 4,167m in the
first nine months of 2007, an increase of 49%, 5% of which can be attributed to
organic growth (8% in local currencies). This improvement has been driven by
continued growth in Eastern Europe and Asia.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 5 of 32
Despite beer being a non-cyclical consumer product and relatively resistant to
wider macro economic developments, the very turbulent global economic climate
and a more negative consumer and customer sentiment across most markets have
created a more challenging business environment. Against this background,
Carlsberg is further accelerating its focus on significant in-house cost cutting
and efficiency initiatives that will deliver value.
Plans for securing transaction synergies of DKK 1.3bn have been fully validated
and are being implemented in France, Greece and the former BBH countries.
Ongoing efficiency improvements include the closure of the Valby brewery in
Copenhagen by year end realising expected annual earnings improvements.
Management changes have taken place in both the United Kingdom and France
recently, substantial restructuring programmes will be carried out in France,
and today Carlsberg has announced a proposal to close the Leeds brewery in the
United Kingdom in 2011. The proposed closure of the Leeds brewery is expected to
improve the efficiency of operations in a challenging market in the United
Kingdom.
To address the worsening economies in the Baltics, Carlsberg has already
announced restructuring programmes in Estonia and today Carlsberg has announced
a downsizing of the Baltic companies - all in all a total headcount reduction of
more than 80. Finally, it was today announced that Sinebrychoff in Finland will
reduce its workforce in 2009 by approx. 60 employees due to the transfer of the
remaining refillable plastic bottles to one-way PET bottles.
NORTHERN AND WESTERN EUROPE
DKK million Q3 Q3 Change 9 mths 9 mths Change
2008 2007 (%) 2008 2007 (%) 2007
Beer sales (million 15.4 12.2 26 38.9 33.7 15 44.4
hl)
Net revenue 10,804 8,624 25 28,213 24,099 17 32,087
Operating profit 1,401 1,179 19 3,106 2,652 17 3,383
Operating margin 13.0 13.7 -0.7 11.0 11.0 0.0 10.5
Total beer market development in the region indicates an average decline of 1.5%
vs. last year for the first nine months and around 1.7% for the third quarter.
This reflects various factors including the smoking ban in the United Kingdom,
France and Germany; decline in Denmark due to a higher consumer campaign price
on beer, the economic slowdown specifically in the Baltics affecting consumer
spending, and then a worsening consumer and customer sentiment in general. A
large market like the United Kingdom is experiencing significant decline in
on-trade vs. last year (-9%), whereas the beer markets in Norway, Switzerland
and Bulgaria continue to grow with increases of 1-3%.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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Total beer volumes were 38.9m hl against 33.7m hl in the nine months of 2007.
This includes a total of 5.3m hl from the activities acquired in France, Greece
and the Baltics. Across the region, Carlsberg achieved stable volume performance
organically and the market share was at level with last year. Other beverages
achieved a total volume of 12.5m hl, which organic was at level with last year.
Net revenue was DKK 28,213m against DKK 24,099m in the first nine months of
2007, equal to an increase of 17% (3% organic growth and 14% from acquisitions).
Organic growth has been achieved throughout the region except for the United
Kingdom mainly due to the effects from the loss of legacy contracts.
One of the key priorities for the region has been to focus on portfolio value
management and to increase beer prices to mitigate for the substantial increase
in input prices. Average sales prices on beer in the period have increased by
approximately 5% compared to last year, compensating for higher prices on key
inputs like malt, hops and bottles. Total beer net revenue (organic) increased
by 5%, reflecting the price effect of +5%, a volume effect of 0%, a mix effect
of +1% and currency impact of -1%. The positive mix effect has been slightly
off-set by negative channel mix from a change in consumer behaviour as a
consequence of the toughening economic environment. The pressure from cost
inflation continued in the third quarter and additional price increases have
been implemented.
As part of Carlsberg's on-going ambition to accelerate efficiency, the roll-out
of Excellence programmes in newly acquired assets continues and significant
restructuring projects are already being rolled out in France, the United
Kingdom, and the Baltics to ensure future profitability.
Operating profit growth was 17%, reflecting an organic development of -4% and
growth from acquisitions of +21%. Adjusting the organic growth for non-recurring
income in 2007 (the discontinued legacy payments on the former Punch Taverns
contract in the United Kingdom and the gain from sale of real estate in Poland
in 2007), underlying operating profit in the region is growing on a year to date
basis.
In the third quarter, the toughening market environment in the United Kingdom,
especially in the on-trade, contributed to the organic decrease in operating
results. The market development in the United Kingdom more than explains the
slight decline in organic beer volumes in the third quarter in Northern and
Western Europe. United Kingdom was the only market in the third quarter with net
revenues below last year. Operating results in the third quarter was thus
impacted by the market and negative channel development in the United Kingdom,
by the termination of the legacy payments end last year in the United Kingdom,
by the slow down of the economies across the Baltics and, to a certain extent,
to additional "one-off" costs in Denmark, primarily related to external sourcing
during the transfer of production equipment from the production site in Valby to
the brewery in Fredericia. This all had a negative impact on results and organic
operating profit decreased by 8%.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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EASTERN EUROPE
DKK million Q3 Q3 Change 9 mths 9 mths Change
2008 2007 (%) 2008 2007 (%) 2007
Beer sales (million 15.5 8.5 83 35.9 21.8 64 27.7
hl)
Net revenue 6,661 3,069 117 14,521 7,592 91 9,658
Operating profit 1,637 806 103 3,310 1,789 85 2,134
Operating margin 24.6 26.3 -1.7 22.8 23.6 -0.8 22.1
Following the first half year volume growth of 2.4%, the Russian beer market
growth was expected to accelerate in the second half of the year. However, in
the last part of August and all of September, the weather has been unseasonably
rainy and cold compared to last year, with average temperatures in most regions
2-4 degrees centigrade below last year. This has significantly affected outdoor
consumption and summer promotion programmes, leading to a sharp decline in
volumes, and reducing third quarter market development to c. -1%. For the first
nine months of the year market growth has been 1%. Despite the slowing market
growth, the premiumisation trend vs, last year continues as Russian consumers
trade up to more premium products such as Baltika and Tuborg. However, higher
than average price increases in the low-priced segments of the market combined
with higher duties have adversely affected demand.
The poor weather in the region in the key third quarter sales period has also
significantly reduced overall growth levels in the other Eastern European
countries. However, beer markets in these countries have still grown in the
first nine months of the year with +2% in Ukraine; +3% in Kazakhstan, +4% in
Uzbekistan and +10% in Belarus.
The Russian business achieved a market share of 38.0% (37.7% in the first nine
months of 2007). Third quarter volume market share has been flat, but more
importantly gains were made with respect to value market share. Year-to-date
development was driven by strong development for the Baltika brand (especially
Baltika 7 and Baltika Cooler) which, despite moderate market growth, achieved a
volume increase of 16%, and similarly positive development for the Tuborg brand,
with growth of 24%, whilst the now wholly owned premium brand Kronenbourg grew
by 42%.
Although the growth in the Ukraine in the first nine months of the year has
slowed, mainly impacted by the poor weather and flooding, the business is still
performing extremely well driven by last year's relaunch of Slavutich, the
positive development in the Baltika brand and the much improved business model.
Total beer volume increased by 22% in the first nine months compared with the
same period of 2007, leading to a significant volume market share gain of 3.5
percentage points to 23.9%. In both Kazakhstan and Uzbekistan the businesses
continue to win market shares and market shares are now at 47.6% (up 4.2%
against last year) and 33.6% (first year in business)
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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which already now makes Sarbast the no. 1 brand and Carlsberg Uzbekistan the no.
1 brewer in Uzbekistan.
Total beer volumes in the Eastern European business climbed to 35.9m hl equal to
a growth of 65%. Organic volume growth amounted to 7%. Third quarter organic
volume development was flat following a sharp decline in Ukraine.
Net revenue climbed to DKK 14,521m against DKK 7,592m in the first nine months
of 2007. Acquisitions contributed with net revenue of DKK 5,786m in the period.
Organic growth was 15% (22% in local currencies) driven by strong value focus
(mix and price) and volume growth. Growth in net revenue can be attributed to
the strong performance of the Baltika and Tuborg brands. Price increases
contributed c. 11% and mix a further c. 4%, whilst exchange rate movements
impacted reported net revenue negatively by c. 7%.
Higher net revenue per hl was driven by price increases and mix improvement,
reflecting the ongoing strong focus on balancing volume and value growth. In
2008, more focus has been on value than on volume to offset the negative impact
on total cost of sales from higher costs for key inputs like malt, hops and
glass bottles.
Capacity expansion projects were to a large extent finalized in the first half
of 2008, including investments in the green field brewery in Novosibirsk in
Russia, which started production in the spring. Total production capacity in
Russia is now c. 50m hl, leaving Carlsberg's Russian operations well positioned
to capture further growth in the market without significant additional
investments in capacity across Eastern Europe.
Operating profit was DKK 3,310m against DKK 1,789m in the first nine months of
2007. Organic growth was 13% (19% in local currencies) driven by continuously
strong results in Russia. Operating margin for the nine month period was 22.8%
against 23.6% last year. This includes amortisations on additional value from
purchase price allocation (PPA) of the S&N transaction (with no impact on
cash-flow) amounting to DKK -199m. Excluding this, the profit margin would have
been 24.2% against 23.6% last year (in the third quarter 26.4% against 26.3% in
the same period last year).
Due to the above mentioned weather impact on beer consumption in the region,
organic net revenue development (in local currencies) moderated to 13% in the
third quarter. As consumers also traded up in the third quarter, Carlsberg's
value focus enabled it to increase organic operating profit (in local
currencies) by a healthy 15%.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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ASIA
DKK million Q3 Q3 Change 9 mths 9 mths Change
2008 2007 (%) 2008 2007 (%) 2007
Beer sales (million 3.1 2.7 14 8.8 7.7 14 9.9
hl)
Net revenue 932 746 25 2,571 2,177 18 2,886
Operating profit 145 107 36 386 290 33 366
Operating margin 15.6 14.3 1.3 15.0 13.3 1.7 12.7
Beer volumes grew in most markets across the region, continuing the positive
trend from previous quarters. Although economic growth has slowed slightly in
mainland China, beer volumes are still growing at double digits and markets are
significantly up in both Cambodia and Laos. In Vietnam, market volumes are down
8%, affected by poor weather in the beginning of the year, as well as high
inflation negatively impacting the economy.
In the first nine months of the year beer volumes rose by 14% to 8.8m hl.
Organic volume growth amounted to 13%. Reflecting general market trends, the
Chinese business contributed significantly with organic volume growth of 14%.
Malaysia also contributed to the positive performance following last year's
changes to the business model which has successfully repositioned the business.
Net revenue increased by 18% to DKK 2,571m (DKK 2,177m in the first nine months
of 2007). The increase in net revenue calculated in local currencies was an even
stronger 23%. In general net revenue per hl is positively affected by price
increases and by more Carlsberg Chill sales in China, but fast growth in
low-priced countries and adverse foreign exchange movements have reduced average
sales prices.
Operating profit was DKK 386m, an increase of 33% (DKK 290m in the first nine
months of 2007); on an organic basis, in local currencies, it increased 40%. The
positive development was in particular driven by improvements in Malaysia, but
positive contributions also came from China, Singapore, and Cambodia.
Development in the third quarter was overall in line with year-to-date
performance with organic growth (local currencies) in net revenue of 27% and in
operating profit of 38%.
CENTRAL COSTS (NOT ALLOCATED)
Central costs totalled DKK 619m against DKK 565m in the first nine months of
2007. These costs are incurred for ongoing support of the Group's overall
operations and development and not least driving Excellence Programmes,
including in particular costs of running the headquarter, costs incurred in
connection with business development projects, and costs for central marketing,
including sponsorships. The increase to last year of DKK 53m are primarily
related to phasing of project costs in 2007 and an
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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upgraded headquarter organisation. The Euro 2008 related costs have also been a
driver compared to last year.
OTHER ACTIVITIES
In addition to beverage activities, Carlsberg has interests within sale of real
estate, primarily at its former brewery sites, and the operation of the
Carlsberg Research Centre. These activities generated operating profit of DKK
395m against DKK 167m in the first nine months of 2007.
Monetising the value of redundant assets, including brewery sites which are no
longer used in operations, remains an important focus to provide additional
capital to the rest of the Group and enhance return on invested capital. The
planning process for Valby is coming close to an end with zoning and planning
expected to be finalized before year end. On the Tuborg area, Carlsberg will
this year have sales proceeds of more than DKK 1bn and gain on sales of some DKK
450m.
COMMENTS ON THE FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The present interim report has been prepared in accordance with IAS 34 Interim
Financial Reporting, as adopted by the EU, and additional Danish regulations
governing presentation of interim reports by listed companies.
The interim report has been prepared using the same accounting policies as the
Annual Report for 2007.
In 2008, EU has adopted "Amendments to IAS 39 and IFRS 7: Reclassification of
Financial Assets" effective 1 July 2008. The adoption of this standard has not
affected recognition and measurement.
Since the Interim Results as at 30 June 2008, a new segmentation format for
reporting the Group's results has been applied. The new segmentation reflects
the structure used for internal control and monitoring of the Group's strategic
and financial targets.
Acquisition of S&N
The total preliminary cash acquisition price (i.e. following deduction of
acquired debt; equity value) of the acquisition of the activities of S&N is DKK
52,108m including costs. Enterprise value is still expected to be approximately
DKK 57bn. The total acquisition price depends on net interest-bearing debt in
S&N on 28 April 2008, which has not yet been finalised and agreed with the
consortium partner. This means the acquisition price will be amended at a later
stage.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
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Assets, liabilities and contingent liabilities in the acquired entities are to
be measured at fair value on the acquisition date (28 April 2008). Work on this
has proceeded as planned throughout the quarter but has not yet been fully
completed for any of the acquired entities. The combined opening balance sheet
recognised in the interim report at 30 September 2008 is therefore not final
and, in accordance with IFRS, will be amended in subsequent accounting periods.
Most significant changes are expected to relate to intangible assets and
property, plant and equipment.
The negative impact on the income statement, among other things as a result of
increased amortisation of fair value adjustments, is on par with the estimates
made in the prospectus (approximately DKK 220m for the period May to September).
INCOME STATEMENT
In the first nine months of the year, Carlsberg generated net revenue of DKK
45,420m (DKK 33,932m in the first nine months of 2007). DKK 9,257m of the total
revenue increase of DKK 11,488m were derived from acquired activities. Organic
growth in revenue was 7% compared with the same period of 2007 (9% in local
currencies). The development was driven by positive contributions from all
geographic segments. Beer sales represented DKK 36,290m of total revenue (DKK
25,103m in the first nine months of 2007), equivalent to 80% (74% in the first
nine months of 2007).
Gross profit was DKK 22,016m (DKK 17,173m in the first nine months of 2007),
with acquired activities representing DKK 4,299m of this. Organic growth was DKK
544m (+3%). Volume growth in addition to price rises and a more profitable
product mix for beer, which more than compensated for higher prices on key
inputs, ensured an increase in gross profit. The gross margin was 48.5%, which
was 2.1 percentage points lower than in the same period of 2007.
Sales and distribution costs amounted to DKK 13,211m, an increase of DKK 2,350m
compared to the same period in 2007. Acquired activities represented DKK 2,004m
and organic development DKK 346m (+3%) including the effect of higher fuel
costs. Administrative expenses rose by DKK 484m to DKK 2,818m, with acquired
activities representing DKK 456m and organic development DKK 28m (+1%). This
development continues to reflect an increased level of activity on the growth
markets on the one hand and a focus on adjusting the cost base on the other.
Other operating income, net, was DKK 537m against DKK 290m in the same period of
2007. This development can primarily be attributed to gains on the sale of real
estate.
Share of profit after tax in associated companies totalled DKK 68m against DKK
66m in 2007.
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COMPANY ANNOUNCEMENT 36/2008
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Operating profit before special items was DKK 6,592 against DKK 4,334m in the
first nine months of 2007. Beverage activities generated a profit of DKK 6,197m
against DKK 4,167m in the first nine months of 2007. Acquired activities
represented DKK 1,821m of the total increase on beverage activities of DKK
2,030m and organic development DKK 209m (+5%). This positive development was
attributable to higher profits in Eastern Europe and Asia. Finally, the profit
contribution from other activities, including sale of real estate, was DKK 395m
against DKK 167m in the first nine months of 2007.
Special items, net, were DKK -297m against DKK -184m in the first nine months of
2007, and mainly comprise restructuring costs and redundancies in connection
with the Excellence programmes and special items in Türk Tuborg.
Net financial items were DKK -2,175m against DKK -773m in the first nine months
of 2007. Net interest was DKK -1,723m against DKK -805m in the same period of
2007, and is mainly attributable to the higher level of debt due to the
acquisition of the activities of S&N, as well as higher interest rates. Other
net financial items were DKK - 452m (DKK +32m in the first nine months of 2007).
This change is particularly related to one-off costs in connection with the
establishment of the financing of the S&N transaction (approximately DKK 250m)
and to the fact that part of the premium on currency options acquired to hedge
exposure to GBP in connection with the acquisition of part of S&N's activities
has been charged to the income statement (DKK -110m).
Tax totalled DKK 1,210m against DKK 865m last year. The higher tax rate (29.4%)
in the first nine months of 2008 is primarily due to the effect of tax withheld
on dividends received.
Consolidated profit was DKK 2,910m against DKK 2,512m in the same period of
2007. Minority interests' share of this was DKK 403m against DKK 252m in the
first nine months of 2007, reflecting the continued progress in Russia and
Malaysia on the one hand and the fact that minorities in BBH have been
recognised at 100% since 1 May on the other hand.
Carlsberg's share of profit was DKK 2,507m against DKK 2,260m in the same period
of 2007.
BALANCE SHEET
At 30 September 2008, Carlsberg had total assets of DKK 153,357m against DKK
61,257m at 30 September 2007. The increase primarily relates to the acquisition
of the activities of S&N as well as to the revaluation of the originally owned
50% of BBH to market value.
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COMPANY ANNOUNCEMENT 36/2008
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Assets
Intangible assets totalled DKK 88,629m against DKK 21,249m at 30 September 2007.
The total increase of DKK 67,380m includes an addition of DKK 51,947m from the
S&N transaction and DKK 14,381m from revaluation of the existing ownership share
of the BBH Group. Acquired brands were DKK 16,854m.
Property, plant and equipment totalled DKK 35,479m (DKK 21,700m at 30 September
2007). The total increase of DKK 13,779m includes an addition of DKK 11,909m
from the S&N transaction. The remainder of the increase primarily reflects
particularly high capital expenditure due to capacity expansions in the growth
markets and investments in connection with capacity efficiency projects in
Denmark and Italy. These investments are in line with previously adopted plans.
Financial assets amounted to DKK 5,630m (DKK 3,066m at 30 September 2007),
primarily as a result of investments in Chongqing Brewery, an increase in
financial receivables mainly due to increase in long term trade loans from the
S&N transaction, prepayment on acquisition of shares in Habeco, and deferred tax
assets.
Current assets totalled DKK 22,571m against DKK 15,181m at 30 September 2007, an
increase of DKK 7,390m. Through the S&N transaction, current assets at the value
of DKK 6,860m were acquired.
Liabilities
Total equity was DKK 66,847m, of which DKK 5,034m can be attributed to minority
interests and DKK 61,813m to shareholders in Carlsberg A/S. The increase in
equity compared to 30 September 2007 of DKK 46,310m is due partly to the share
issue, which generated net proceeds of approximately DKK 30bn for Carlsberg, and
partly to equity adjustments of approximately DKK 13bn regarding value
adjustment to fair value of the already owned net assets in BBH prior to the
acquisition. Costs directly set off against equity at the capital increase
amount to DKK 686m.
Equity before minority interests has also been affected by profit for the period
(DKK 2,507m), foreign exchange, value adjustments and other adjustments (DKK
-493m), and tax on changes in equity (DKK 229m). Dividends to shareholders and
minority interests reduced equity by DKK -458m.
Value adjustments mainly concern currency options concluded to hedge the
exposure to GBP related to the S&N transaction. The currency options were
settled in April 2008, after which forward contracts were concluded for the
purchase of GBP 5.5bn at a total weighted average exchange rate (DKK/GBP) of
945.79, also to hedge the exposure to GBP related to the S&N transaction. Value
adjustment of the effective part of the hedging element of both currency options
and forward contracts has been recognised in equity.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 14 of 32
Total liabilities were DKK 86,510m (DKK 40,720m at 30 September 2007). The total
increase of DKK 45,790m primarily relates to the S&N transaction. Current
liabilities were DKK 27,101m (DKK 15,227m at 30 September 2007).
CASH FLOW AND INTEREST-BEARING DEBT
Cash flow from operating activities was DKK 4,233m against DKK 3,009m in the
first nine months of 2007. Operating profit before depreciation and amortisation
was DKK 9,231m against DKK 6,439m in the same period of 2007. The change in
working capital was DKK -881m (DKK -1,244m in the first nine months of 2007).
Working capital includes a positive contribution from the contract concluded
with The Coca-Cola Company, whereas a generally higher level of activity
including the activities acquired from S&N adds to working capital requirements.
In spite of the significantly higher activity level change in working capital in
the third quarter was DKK -212m versus DKK -572m last year. Paid net interest
etc. amounted to DKK -2,206m against DKK -826m for the same period of 2007,
which mainly reflects higher financing costs due to the S&N transaction.
Cash flow from investing activities was DKK -55,863m against DKK -3,107m in the
first nine months of 2007. This marked increase is essentially attributed to the
S&N transaction, representing DKK 50,830m. Also operational investments have
increased by DKK 1,103m, which can largely be attributed to capacity expansions
and brewery constructions in Eastern Europe (Russia, the Ukraine and Uzbekistan)
as well as capacity efficiency projects in Denmark and Italy related to brewery
closures. It should be noted that investments in former BBH are included at 50%
for the first four months of the year and at 100% for subsequent months.
Consequently, free cash flow was DKK -51,630 against DKK -98m in the first nine
months of 2007. Cash flow directly related to the S&N acquisition is included
with the above DKK -50,830m, whilst free cash flow excluding S&N was DKK -800m.
Net interest-bearing debt was DKK 46,323m at 30 September 2008 against DKK
19,726m at year-end 2007. This development essentially reflects increased
borrowing related to the S&N transaction less the cash contribution from the
capital increase.
FINANCING
At 30 September 2008, the net financial debt amounts to DKK 47.7bn. The
difference of DKK 1.4bn to the net interest bearing debt is other interest
bearing assets. The net financial debt includes DKK 4.3bn in cash and cash
equivalent.
Of the net financial debt of DKK 47.7bn, DKK 43.6bn (91%) is long term, i.e.
with maturity more than one year from 30 September 2008, and consists primarily
of facilities in DKK and EUR.
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 15 of 32
Committed credit facilities are more than sufficient to refinance maturing short
term debt.
Approximately 65% is fixed interest (fixed-interest period exceeding one year).
The additional annual interest expense if interest rates increase by 1%-point is
approx. DKK 165m (and vice versa should the interest rate be reduced with
1%-point).
EARNINGS EXPECTATIONS
Based on business development in the first nine months of the year and estimates
for the remaining part of the year Carlsberg expects organic growth of c. 7%
(previously expected to be c. 10%) in net revenue for 2008. Combined with net
revenue from the acquired activities, this is expected to result in total net
revenue of DKK 61bn (previously expected to be DKK 62-63bn). Operating profit
from the brewing activities is expected to grow organically to around DKK 5.4bn,
an increase of c. 8% (previously expected to increase c. 12%). Including a
contribution of DKK 300m from other activities and inclusive of acquired
activities, operating profit for the current year is expected to be c. DKK 7.9bn
(previously expected to be c. DKK 8.1bn). The reduction in expected operating
profit is solely driven by the development in Northern and Western Europe. The
expected operating profit from Eastern Europe is in line with the plan/budget
for the year.
On-going restructuring throughout Northern and Western Europe, including
significant initiatives in France, the UK and the Baltics, together with net
loss related to sale of Türk Tuborg increase the amount of special items
(costs), thus leading to expected net profit of DKK 2.6-2.7bn (previously
expected to top DKK 3.0bn). This expected net profit includes all one-off items,
including those from the S&N transaction: Financial fees and hedging costs on
the acquisition facilities (approx. DKK 360m), effects of the purchase price
allocation (approx. DKK 325m) to the profit and loss statement and special items
(approx. 600m). Average number of shares for 2008 is expected to be around 118.7
million.
Based on the current economic turmoil impacting consumer and customer sentiment
across the geographies, Carlsberg expects a tougher business climate in the
short term. However, Carlsberg still expects to achieve the previously stated
financial targets which are to improve the operating margin to 14-16% in
Northern and Western Europe and to 23-25% in Eastern Europe in the medium term.
FINANCIAL CALENDAR FOR THE FINANCIAL YEAR 2008 - 2009
The financial year follows the calendar year, and the following schedule has
been set:
18 February 2009 Financial Statement as at 31 December 2008
3 March 2009 Annual report for 2008
12 March 2009 Annual General Meeting
6 May 2009 Interim results for Q1 2009
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 16 of 32
5 August 2009 Interim results for Q2 2009
4 November 2009 Interim results for Q3 2009
Carlsberg's communication with investors, analysts and the press is subject to
special restrictions during a four-week period prior to the publication of
quarterly and annual financial statements.
RELATED PARTY TRANSACTIONS
The Carlsberg Foundation participated in the rights issue in June 2008. The
Carlsberg Foundation's ownership interest is now 30.3%. Apart from this, the
only transactions have been with the Carlsberg Foundation concerning grants to
the Carlsberg Laboratory and dividends paid for 2007.
DISCLAIMER
The forward-looking statements, including forecasts on sales and earnings
performance, reflect management's current expectations based on information
available at the date of this document, and are subject to risks and
uncertainty. Such statements are made on the basis of assumptions and
expectations which the Company believes to be reasonable at this time, but which
may prove to be erroneous. Many factors, some of which will be beyond
management's control, may cause actual developments to differ materially from
the expectations expressed. Such factors include, but are not limited to,
economic and political uncertainty (including developments in interest rates and
exchange rates), financial and regulatory developments, changes in demand for
the Group's products, competition from other breweries, the availability and
pricing of raw materials and packaging materials, price reductions resulting
from market-driven price reductions, market acceptance of new products, launches
of rival products, stipulation of market values in the opening balance of the
acquired companies and other unforeseen factors. Should one or more of these
risks or uncertainties materialise, or should any underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated.
Carlsberg assumes no obligation to update or revise such forward-looking
statements or to update the reasons for which actual results could differ
materially from those anticipated in such forward-looking statements except when
required by law.
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 17 of 32
MANAGEMENT STATEMENT
The Board of Directors and the Executive Board have today discussed and approved
the interim report of the Carlsberg Group for the period 1 January - 30
September 2008.
The interim report, which has not been audited or reviewed by the Company's
auditor, has been prepared in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU, and additional Danish interim reporting
requirements for listed companies.
In our opinion, the interim report gives a true and fair view of the Carlsberg
Group's assets, liabilities and financial position at 30 September 2008, and of
the results of the Carlsberg Group's operations and cash flow for the period 1
January - 30 September 2008.
Further, in our opinion the management's review (p. 1-16) gives a true and fair
review of the development in the Group's operations and financial matters, the
result of the Carlsberg Group for the period and the financial position as a
whole, and describes the significant risks and uncertainties pertaining to the
Group.
Copenhagen, 5 November 2008
Executive Board of Carlsberg A/S
Jørgen Buhl Rasmussen Jørn P. Jensen
Board of Directors of Carlsberg A/S
Povl Krogsgaard-Larsen Jens Bigum Hans Andersen
Chairman Deputy Chairman
Flemming Besenbacher Hanne Buch-Larsen Henning Dyremose
Niels Kærgård Axel Michelsen Erik Dedenroth Olsen
Bent Ole Petersen Jess Søderberg Per Øhrgaard
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 18 of 32
FINANCIAL STATEMENT
Income statement
Statement of recognised income and expenses
Balance sheet
Changes in equity
Cash flow statement
Note 1 Segment reporting by region (beverages)
Note 2 Segment reporting by activity
Note 3 Segment reporting by quarter
Note 4 Special items
Note 5 Borrowings and facilities
Note 6 Net interest-bearing debt
Note 7 Acquisition of entities
This statement is available in Danish and English. In the event of any
discrepancy between the two versions, the Danish version shall prevail.
Carlsberg is one of the leading brewery groups in the world, with a large
portfolio of beer and soft drinks brands. Its flagship brand - Carlsberg - is
one of the fastest-growing and best-known beer brands in the world. More than
40,000 people work for Carlsberg in 48 countries, and its products are sold in
more than 150 markets. In 2007 Carlsberg sold more than 115 million hectolitres
of beer, which is about 95 million bottles of beer a day. Find out more at
www.carlsberggroup.com.
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 19 of 32
INCOME STATEMENT
DKK million Q3 Q3 9 mths 9 mths
2007
2008 2007 2008 2007
Net revenue 18,443 12,430 45,420 33,932
44,750
Cost of sales -9,570 -6,015 -23,404 -16,759
-22,423
Gross profit 8,873 6,415 22,016 17,173
22,327
Sales and distribution expenses -4,953 -3,787 -13,211 -10,861
-14,528
Administrative expenses -1,065 -736 -2,818 -2,334
-3,123
Other operating income, 167 158 537 290
485
Share of profit after tax, associates 32 28 68 66
101
Operating profit 3,054 2,078 6,592 4,334
5,262
Special items, net -169 -42 -297 -184
-427
Operating profit 2,885 2,036 6,295 4,150
4,835
Financial income 76 151 1,179 459
651
Financial expenses -969 -428 -3,354 -1,232
-1,852
Profit before tax 1,992 1,759 4,120 3,377
3,634
Corporation tax -583 -461 -1,210 -865
-1,038
Consolidated profit 1,409 1,298 2,910 2,512
2,596
Attributable to:
Minority interests 188 120 403 252
299
Shareholders in Carlsberg A/S 1,221 1,178 2,507 2,260
2,297
Earnings per share* 8.0 12.4 23.3 23.7
24.1
Earnings per share, diluted* 8.0 12.3 23.3 23.6
24.0
* Adjusted for bonus factor from right issue in June 2008 in accordance with IAS
33, excl. number of shares period- end
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 20 of 32
STATEMENT OF RECOGNISED INCOME AND EXPENSE
Fair value Shareholders
9 mths
in
2008
DKK million Curren- adjust- Retained Carlsberg A/S
Minority Total
y
transl- ment earnings total
interests
tion
Profit for the period - - 2,507 2,507
403 2,910
Foreign exchange adjustments:
Foreign entities 446 - - 446
49 495
Value adjustments:
Hedging instruments -903 48 - -855
- -855
Securities, transferred to
income
statement on disposal - -20 - -20
-5 -25
Retirement - - -86 -86
- -86
Other adjustments:
Revaluation of net investment
in
acquired subsidiaries 1 - - 11,575 11,575
1,391 12,966
Share-based payment - 16 16
- 16
Other - 6 6
1 7
Tax on changes in equity 215 -7 21 229
- 229
Net amount recognised
directly
equity -242 21 11,532 11,311
1,436 12,747
Total recognised income and
expenses -242 21 14,039 13,818
1,839 15,657
Fair value Shareholders
9 mths
2007
DKK million Curren- adjust- Retained Carlsberg A/S
Minority Total
y
transl- ment earnings total
interests
tion
Profit for the period - - 2,260 2,260
252 2,512
Foreign exchange adjustments:
Foreign entities -536 - - -536
-45 -581
Value adjustments:
Hedging instruments 15 314 - 329
- 329
Securities - 18 - 18
-1 17
Retirement - - -31 -31
- -31
Other adjustments:
-
Share-based payment - - 14 14
- 14
Other - - -2 -2
2 -
Tax on changes in equity -78 -8 8 -78
- -78
Net amount recognised -599 324 -11 -286
-44 -330
directly
equity
Total recognised income and -599 324 2,249 1,974
208 2,182
expenses
1 The acquired companies identifiable net assets are measured at fair value at
acquisition date. Fair value adjustment of net assets relating to the 50% of BBH
owned by Carlsberg prior to the Acquisition is recognised as a revaluation
directly in equity. Based on the preliminary assessment of fair value the
revaluation is DKK 12,966 million.
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 21 of 32
BALANCE SHEET
DKK million 30
Sept. 30 Sept. 31 Dec
2008
2007 2007
Assets
Intangible assets
88,629 21,249 21,205
Property, plant and equipment
35,479 21,700 22,109
Financial assets
5,630 3,066 2,965
Total non-current
129,738 46,015 46,279
Inventories and trade receivables
14,188 10,343 10,159
Other receivables etc.
4,067 2,308 2,499
Cash and cash equivalents
4,316 2,530 2,249
Total current assets
22,571 15,181 14,907
Assets held for sale
1,048 61 34
Total assets
153,357 61,257 61,220
Equity and liabilities
Equity, shareholders in Carlsberg A/S
61,813 19,038 18,621
Minority interests
5,034 1,499 1,323
Total equity
66,847 20,537 19,944
Borrowings
43,550 20,550 19,385
Deferred tax, retirement benefit obligations etc.
14,488 4,943 4,680
Total non-current
58,038 25,493 24,065
Borrowings
8,455 3,031 3,869
Trade payables
7,730 5,283 5,833
Other current liabilities
10,916 6,913 7,509
Total current liabilities
27,101 15,227 17,211
Liabilities associated with assets held for sale
1,371 - -
Total equity and liabilities
153,357 61,257 61,220
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 22 of 32
CHANGES IN EQUITY
9 mths 2008
Shareholders in Carlsberg A/S
DKK million Share Currency Fair Retained Total Total
Minority Total
value
capital transla- adjustm- earnings reserves
capital interests Equity
ion nts and
reserves
Equity at 1 1,526 -170 67 17,198 17,095 18,621 1,323
19,944
January 2008
Total recognised - -242 21 14,039 13,818 13,818 1,839
15,657
income and
expenses
for the period
Capital increase 1,525 - - 28,301 28,301 29,826
15 29,841
Acquisition/disp- - - - 3 3
3 - 3
sal of
Dividends paid to - - - -458 -458 -458
-231 -689
shareholders
Acquisition of - - - 3 3 3 2,088
2,091
minority
interests and
entities
Total changes in 1,525 -242 21 41,888 41,667 43,192 3,711
46,903
equity
Equity at 30 Sep 3,051 -412 88 59,086 58,762 61,813 5,034
66,847
2008
9 mths 2007
Shareholders in Carlsberg A/S
DKK million Share Curren- Fair Retained Total Total
Minority Total
y value
capital transl- adjustm- earnings reserves
capital interests Equity
tion nts and
reserves
Equity at 1 January 1,526 351 -20 15,740 16,071 17,597
1,390 18,987
2007
Total recognised - -599 324 2,249 1,974 1,974
208 2,182
income and expenses
for the period
Acquisition/disposal - - - -75 -75 -75
- -75
of treasury shares
Dividends paid to - - - -458 -458 -458
-211 -669
shareholders
Acquisition of - - - - - -
112 112
minority interests
and entities
Total changes in - -599 324 1,716 1,441 1,441
109 1,550
equity
Equity at 30 Sep 20071,526 -248 304 17,456 17,512 19,038
1,499 20,537
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 23 of 32
CASH FLOW
DKK Q3 Q3 Q3 Q3 Q3 Q3
9 mths 9 2007
mil-
mths
ion
2008 2008 2008 2008 2008 2007
2008 2007
Ope- items items items items 2,078
6,592 4,334 5,262
ati-
g
pro-
it
Adj- amortisat- amortisati- amortisati-
amortisation and 719 2,639 2,105 2,872
stm- on and n and n and
nt
for
dep-
eci-
tio-
,
im-
ai-
me-
t
Ope- before before before before depreciation, 2,797
9,231 6,439 8,134
ati- depreciat- depreciati- depreciati-
g on, n, n,
pro-
it
im-
ai-
me-
t
Adjustment for other non-cash items -121
-289 -265 -403
Cha- -212 -212 -212 -212 -212 -572
-881 -1,2- -230
ge
4
in
wor-
ing
cap-
tal1
Res- -95 -95 -95 -95 -95 -52
-291 -232 -379
ruc-
uri-
g
cos-
s
paid
Int- -12 -12 -12 -12 -12 107
189 186 187
rest
etc.
rec-
ived
Int- -905 -905 -905 -905 -905 -474
-2,395 -1,0- -1,507
rest
2
Cor- -620 -620 -620 -620 -620 -319
-1,331 -863 -965
ora-
ion
tax
paid
Cash flow from operating activities 1,366
4,233 3,009 4,837
Acq- property, property, property, property, plant and -1,138
-4,280 -3,4- -4,929
isi- plant and plant and plant and equipment and
4
ion equipment equipment and equipment and
of and
in-
an-
ib-
e
as-
ets
Disposal of property, plant and equipment and 14
119 254 351
in-
an-
ib-
e
as-
ets
Cha- -92 -92 -92 -92 -92 -23
-184 -62 -143
ge
in
tra-
e
loa-
s
Tot- -1,3- -1,3- -1,3- -1,3-
-1,358 -1,147 -4,345 -3,2- -4,721
l 8 8 8 8
2
ope-
ati-
nal
inv-
stm-
nts
Aqu- of of of of entities, -1
-51,253 -143 -179
sit- entities, entities, entities,
on
and
dis-
osal
Acq- -22 -22 -22 -22 -22 -2
-970 -27 -43
isi-
ion
of
Dis- - - - - - 7
36 54 37
osal
of
fin-
nci-
l
Cha- 209 209 209 209 209 2
90 212 -86
ge
in
fin-
nci-
l
Div- -9 -9 -9 -9 -9 21
14 76 127
den-
s
rec-
ived
Tot- -247 -247 -247 -247 -247 27
-52,083 172 -144
l
fin-
nci-
l
Oth- in in in in property, plant -296
-707 -662 -667
r property, property, property, and equipment
inv- plant and plant and plant and
stm- equipment equipment equipment
nts
Disposal of other property, plant and equipment 413
1,272 625 605
Tot- 107 107 107 107 107 117
565 -37 -62
l
oth-
r
act-
vit-
es3
Cash flow from investing activities -1,003
-55,863 -3,1- -4,927
7
Free 652 652 652 652 652 363
-51,630 -98 -90
cash
flow
Sha- -16 -16 -16 -16 -16 -35
29,371 -533 -508
eho-
ders
in
Car-
sbe-
g
A/S
Min- 26 26 26 26 26 -2
-419 -235 -451
rity
int-
res-
s
Ext- -1,3- -1,3- -1,3- -1,3-
-1,322 15 23,875 717 775
rnal2 2 2 2
fin-
nci-
g4
Cash flow from financing activities -22
52,827 -51 -184
Net -660 -660 -660 -660 -660 341
1,197 -149 -274
cash
flow
Cash and cash equivalents at beginning of period Currency 1,193
1,351 1,708 1,708
translation adjustments
38 38 38 38 38 -38
29 -63 -83
Cash and cash equivalents at period-end5 1,496
2,577 1,496 1,351
1Includes DKK Includes DKK Includes DKK Includes DKK 1,065 million
received from the license
1,065 million 1,065 million 1,065 million agreement with The Coca-Cola
Company in June 2008.
received from received from received from acquired prior
the license the license the license
agreement agreement with agreement with
with The The Coca-Cola The Coca-Cola
Coca-Cola Company in Company in
Company in June 2008. June 2008.
June 2008. acquired prior acquired prior
acquired
prior
2 to the S&N to the S&N to the S&N to the S&N
Inc- acquisiti- acquisition acquisition acquisition
udesn
hed-
ing
ins-
rum-
nts
3Ot- cover real cover real cover real cover real estate separate
from activities,includ-
er estate and estate and estate and and assets under beverage
ng
ac- assets assets assets construction,
costs
iv- under under under
ti- construct- constructi- constructi-
s on, n, n,
of
con-
tru-
tion
con-
ract
s.
4 Includes financing of the acquisition of activities from S&N and repayment af
elements hereof
following the completion of the capital increase. 5 Cash and cash equivalent
net of bank overdrafts
www.carlsberggroup.com
COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 24 of 32
NOTE 1
Segment reporting by region (beverages)
DKK Q3 Q3 9 mths 9 mths
mil-
ion
2008 2007 2008 2007 2007
Beer sales (pro rata, million
hl)
Northern- and Western Europe 15.4 12.2 38.9 33.7 44.4
Eastern Europe 15.5 8.5 35.9 21.8 27.7
Asia 3.1 2.7 8.8 7.7 9.9
Tot- 34.0 23.4 83.6 63.2
82.0
l
Net revenue (DKK million)
Northern- and Western Europe 10,8- 8,624 28,213
24,09932,087
4
Eastern Europe 6,661 3,069 14,521 7,5929,658
Asia 932 746 2,571 2,1772,886
Not 46 -9 115 64 119
all-
cat-
d
Beverages, total 18,4- 12,430 45,420
33,93244,750
3
Operating profit before depreciation, amortisation and special
items (EBITDA - DKK million) Northern- and Western Europe
- 2,001 1,672 4,728 4,1035,365
-
-
-
1
Eastern Europe 2,012 953 4,140 2,2112,727
Asia 192 148 515 406 530
Not -220 -103 -557 -459 -765
all-
cat-
d
Beverages, total 3,985 2,670 8,826 6,2617,857
Operating profit before
special items (EBIT - DKK
million) Northern- and
Western Europe
- 1,401 1,179 3,106 2,6523,383
-
-
-
1
Eastern Europe 1,637 806 3,310 1,7892,134
Asia 145 107 386 290 366
Not -243 -138 -605 -564 -882
all-
cat-
d
Beverages, total 2,940 1,954 6,197 4,1675,001
Ope- margin (%) margin (%)
ati-
g
pro-
it
Northern- and Western Europe 13.0 13.7 11.0 11.0 10.5
Eastern Europe 24.6 26.3 22.8 23.6 22.1
Asia 15.6 14.3 15.0 13.3 12.7
Not allocated……………
Beverages, total 15.9 15.7 13.6 12.3 11.2
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 25 of 32
NOTE 2
Segment reporting by activity
DKK million Q3 Q3
2008 2007
Beverages Other Total Beverages Other
Total
Q3 activities Q3 Q3 activities
Q3
Net revenue 18,443 - 18,443 12,430 -
12,430
Operating profit 2,940 114 3,054 1,954 124
2,078
Special items, net -169 - -169 -42 -
-42
Financial items, net -918 25 -893 -216 -61
-277
Profit before tax 1,853 139 1,992 1,696 63
1,759
Corporation tax -548 -35 -583 -444 -17
-461
Consolidated profit 1,305 104 1,409 1,252 46
1,298
Attributable to:
Minority interests 187 1 188 120 -
120
Shareholders in Carlsberg A/S 1,118 103 1,221 1,132 46
1,178
DKK million 9 mths 9 mths
2008 2007
Beverages Other Total Beverages Other
Total
activities activities
Net revenue 45,420 - 45,420 33,932 -
33,932
Operating profit 6,197 395 6,592 4,167 167
4,334
Special items, net -297 - -297 -184 -
-184
Financial items, net -2,142 -33 -2,175 -588 -185
-773
Profit before tax 3,758 362 4,120 3,395 -18
3,377
Corporation tax -1,140 -70 -1,210 -842 -23
-865
Consolidated profit 2,618 292 2,910 2,553 -41
2,512
Attributable to:
Minority interests 402 1 403 250 2
252
Shareholders in Carlsberg A/S 2,216 291 2,507 2,303 -43
2,260
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 26 of 32
NOTE 3
Segment reporting by quarter
DKK Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q3
million
2006 2007 2007 2007 2007 2008 2008
2008
Net
revenue
Northern and Western Euro pe 7,977 6,434 9,041 8,624 7,988 6,633 10,776
10,804
Eastern Europe 1,662 1,693 2,830 3,069 2,066 1,972 5,888
6,661
Asia 652 704 727 746 709 811 828
932
Not allocated -6 32 41 -9 55 20 49
46
Beverages, total 10,285 8,863 12,639 12,430 10,818 9,436 17,541
18,443
Other activities - - - - - - -
-
Total 10,285 8,863 12,639 12,430 10,818 9,436 17,541
18,443
Operating profit before items
special
Northern and Western Euro pe 517 242 1,231 1,179 731 135 1,570
1,401
Eastern Europe 281 287 696 806 345 285 1,388
1,637
Asia 27 89 94 107 76 124 117
145
Not allocated -296 -215 -211 -138 -318 -163 -199
-243
Beverages, total 529 403 1,810 1,954 834 381 2,876
2,940
Other activities -15 -1 44 124 94 7 274
114
Total 514 402 1,854 2,078 928 388 3,150
3,054
Special net -401 -31 -111 -42 -243 -37 -91
-169
items,
Financial items, net -229 -253 -243 -277 -428 -470 -812
-893
Profit before tax -116 118 1,500 1,759 257 -119 2,247
1,992
Corporation tax 60 -32 -372 -461 -173 32 -659
-583
Consolidated profit -56 86 1,128 1,298 84 -87 1,588
1,409
Attributable to:
Minority interests 24 41 91 120 47 42 173
188
Sharehold- in Carlsberg -80 45 1,037 1,178 37 -129
1,415 1,221
rs A/S
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 27 of 32
NOTE 4
Special items
DKK million 9 mths 9 mths 2007
2008 2007
Special items, income - - -
Special items, costs
Impairments and special items, Türk Tuborg -97 - -100
Impairment losses and expenses relating to withdrawal from
the market for discount soft drinks in Denmark (2007:
reversal of provision)
- - 7
Termination benefits -
-
d
-
-
-
-
-
-
-
-
-
t
-
f
-
-
-
-
-
-
-
-
-
-
t
with new production structure -25 - 14
Termination benefits -
-
d
-
-
-
-
-
-
-
-
-
t
-
f
-
-
-
-
-
-
-
-
-
-
t
with new production structure -30 - -3
Termination benefits - -44 -109 -190
-
-
.
-
n
-
-
-
-
-
-
-
-
-
n
-
-
-
h
Termination benefits -
-
d
-
-
-
-
-
-
-
-
,
-
-
-
-
-
-
-
-
-
-
-
-
t
Center in Poland -12 -14 -29
Restructuring, - -31 -18 -67
-
-
-
-
-
-
-
g
-
-
-
-
-
a
Costs in connection with - -26 -26
Restructuring, - -9 -
-
-
-
-
-
s
Integration cost -25 - -
Other restructuring costs -24 -17 -33
Total -297 -184 -427
Special items, net -297 -184 -427
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 28 of 32
NOTE 5 (PAGE 1 OF 2)
Debt and credit facilities
30 Sept. 2008 30 Sept. 2007
DKK million DKK million
Non-current borrowings:
Issued bonds 4,227 7,278
Bank borrowings 36,520 12,122
Other 2,803 1,151
Total 43,550 20,551
Current borrowings:
Total 8,455 3,031
Total non-current and current borrowings 52,005 23,582
Cash and cash equivalents -4,316
Net financial debt 47,689
Other interest bearing assets -1,366
Net interest bearing debt 46,323
All borrowings are measured at amortised cost. However, fixed-rate borrowings
swapped to floating rates are measured at fair value. The carrying amount of
these borrowings is DKK 365m
30
Sept.
2008
Time to maturity for DKK
non-current borrowings:
million
1-2 years 2-3 years 3-4 years 4-5 years > 5 years
Total
Issued bonds - - 2,337 1,890 -
4,227
Bank borrowings 4,619 12,606 506 18,043 746
36,520
Other 832 - - - 1,971
2,803
Total 5,451 12,606 2,843 19,933 2,717
43,550
Interest risk at 30 Net Interest*
2008
September: financial
DKK Million Debt * Floating Fixed Floating %
Fixed %
EUR 31,771 9,401 22,370 30%
70%
DKK 7,448 4,476 2,972 60%
40%
PLN 2,231 673 1,558 30%
70%
USD 1,900 1,900 - 100%
0%
CHF 1,821 402 1,419 22%
78%
RUB 1,337 -200 1,537 -15%
115%
Other currencies 1,181 -165 1,346 -14%
114%
Total 47,689 16,487 31,202 35%
65%
* After swaps
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 29 of 32
NOTE 5 (PAGE 2 OF 2)
Debt and credit facilities
Commited credit facilities* 30 Sept. 2008
DKK million
Less than 1 year 8,455
1 to 2 years 5,839
2 to 3 years 13,956
3 to 4 years 2,843
4 to 5 years 26,617
More than 5 years 2,717
Total 60,427
Short term 8,455
Long term 51,972
* Defined as short term borrowings and long term committed credit facilities
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 30 of 32
NOTE 6
Net interest bearing debt
DKK million Q3 Q3 9 mths 9 mths 2007
2008 2007 2008 2007
Net interest-bearing debt is calculated as follows:
Non-current borrowings 43,550 20,550 19,385
Current borrowings 8,455 3,031 3,869
Gross interest-bearing 52,005 23,581 23,254
debt
Cash and cash -4,316 -2,530 -2,249
equivalents
Loans to associates -3 -56 -28
On-trade loans -2,327 -1,646 -1,627
less non-interest-bearing 1,375 847 821
portion
Other receivables -2,276 -977 -1,391
less non-interest-bearing 1,865 916 946
portion
Net interest-bearingdebt 46,323 20,135 19,726
Changes in net interest-bearing debt:
Net interest-bearing debt at beginning 47,409 20,530 19,726 19,229
19,229
of period
Cash flow from operating activities -2,150 -1,366 -4,233 -3,009
-4,837
Cash flow from investing activities 1,498 1,003 55,863 3,107
4,927
Dividend to shareholders and minority -25 8 689 669
685
interests
Acquisition of minority interests 1 -3 203 26
69
Acquisition/disposal of treasury 5 35 -3 75
74
shares
Acquisition of entities, net -433 - 3,986 66
54
Capital increase 11 - -29,826 -
-
Change in interest-bearing lending 18 -5 410 136
-209
Effects of currency translation 384 -44 54 -147
-325
Other -395 -23 -546 -11
59
Total change -1,086 -395 26,597 906
497
Net interest-bearing end of period 46,323 20,135 46,323 20,135
19,726
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 31 of 32
NOTE 7
Acquisition of entities
DKK million
Acquired
ownership Acquisition
Name of acquired entities
interest date Main activity Cost
Activities from S&N, including1: - 28 April 2008 - 52,108
- Baltic Beverages Holding (BBH) AB 50.0% 28 April 2008 Brewery -
- Brasseries Kronenbourg 100.0% 28 April 2008 Brewery -
- Mythos Brewery 100.0% 28 April 2008 Brewery -
- Other 18-100,0% 28 April 2008 Brewery -
Baku-Castel Brewery1: 100.0% 25 August 2008 Brewery 455
52,563
Activities from S&N Baku-Castel Brewery Total
-
-
-
-
-
-
-
g
Carrying Market Carrying Market- Market
-
-
-
-
t
-
-
-
-
r
amount prior value at amount prior value at- value at
o
to acquisitionacquisition to acquisitionacquisition- acquisition
-
-
-
-
-
-
-
-
-
n
354 17,049 268 268- 17,317
-
2
7,205 9,656 90 90- 9,746
-
-
-
5
1,217 2,202 - -- 2,202
-
-
-
7
1,893 1,942 23 23- 1,965
-
-
-
6
4,431 3,547 35 35- 3,582
-
-
-
6
1,340 1,371 32 32- 1,403
-
-
-
2
- 187 - -- 187
- 910 -1,125 - -- -1,125
-
-
0
-292 -4,746 - -- -4,746
-
-
2
-6,175 -5,586 - -- -5,586
-
-
-
-
5
-77 -93 - -- -93
-
7
-4,772 -4,772 -68 -68- -4,840
-
-
-
-
0
- -394 - -- -394
4,214 19,238 380 380- 19,618
-
-
-
4
- 639 -2,028 - -- -2,028
-
-
9
3,575 17,210 380 380- 17,590
-
-
-
5
34,898 75 34,973
52,108 455 52,563
-1,371 -32 -1,403
93 - 93
50,830 423 51,253
51,948 455 52,403
160 - 160
52,108 455 52,563
1:Allocation of purchase price has not been completed
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COMPANY ANNOUNCEMENT 36/2008
5 November 2008
Page 32 of 32
The calculation of the fair value of the acquired assets, liabilities and
contingent liabilities is still ongoing and has not yet been completed for any
of the companies. Therefore, adjustments to all items in the opening balance
sheet will be made. Furthermore, the cost price will be adjusted as it relates
to the statement of the net interest-bearing debt of S&N at 28 April 2008 which
has not yet been completed and agreed by the consortium. Changes in the opening
balance sheet and in the cost price will be made in accordance with IFRS
standards.
The acquisition of the activities from S&N increases the operating capacity of
the Carlsberg Group and its longterm growth opportunities. The acquisition is a
natural step for Carlsberg and in line with the strategy of obtaining full
control of key operating activities. The acquisition includes the remaining 50%
of BBH, which holds activities in Russia, Ukraine, Baltics, Kazakhstan,
Uzbekistan and Belarus. Furthermore, 100% of Brasseries Kronenbourg and other
French activites as well as Mythos, Greece and 17.5% of the associated company
Chongqing, China, and a 50% share in the joint venture Vinataba in Vietnam have
been acquired.
The acquisition will entail the following key benefits:
• full control of BBH, eliminating uncertainty regarding the long-term control
of the asset and
substantially increasing the Carlsberg Group's long-term growth profile;
• unification of BBH ownership, enabling the Carlsberg Group to maximize the
potential of its
key Carlsberg and Tuborg brands in the BBH markets;
• significant exposure to growth markets;
• the acquisition of the French and Greek businesses complement the Carlsberg
Group's
existing portfolio of leading European market positions, providing increased
capacity and an opportunity to achieve synergies through the implementation of
the Carlsberg Group's Excellence Programmes;
• increased sales volumes will allow the Carlsberg Group to generate significant
synergy
benefits based on reductions in overheads, implementation of best brewing
practices and purchasing savings; and
• the acquisition reinforces the Carlsberg Group's long-standing and growing
Asian presence
through the acquisition of S&N's positions in the attractive Chinese and
Vietnamese markets.
The preliminary calculation of goodwill represents a significant value due to
the substantial synergies expected in the acquired companies, staff competencies
as well as the positive growth expectations for BBH. The synergies can i.a. be
related to cost savings from the Supply and Excellence programmes. Furthermore,
goodwill will reflect synergies from increased sales through the presence in a
larger part of Europe and Asia, the possibility of launching global and/or
regional brands throughout the new Group, sysnergies from research and
development as well as improved utilisation of the work force and its know-how.
The activities acquired contribute positively to operating profit before special
items by approximately DKK 1,825m and to the period's net profit by
approximately DKK 1,320m. The estimated results for the period January -
September, if the acquisition had been completed at 1 January 2008, has not been
calculated, as this is not possible due to significant differences in the
accounting principles used by some of the companies acquired, where the effect
of this prior to the acquisition cannot be calculated.
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