Carlsberg
Morgan Stanley Global Consumer Conference 2013
Jørn P. Jensen, Deputy CEO and CFO

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

The Carlsberg Group in head-lines

No. 4

largest international brewer

500

beer brands

No. 1

in Eastern Europe

No. 2

in Western Europe

120,000,000 hl. of beer sold in 2012

+16%

EBIT growth (CAGR) from 2005 to 2012

+18%

EPS growth (CAGR) from 2005 to 2012

3

The transformation of Carlsberg

●
●
●
●
●
●
●
●

Value management
Brand portfolio activation and scoping
Step change innovations
Business process standardization
Next level group efficiency
Back-end centralization and integration
Winning people
Corporate Social Responsibility

● S&N acquisition & integration ● Accelerate efficiencies and execute synergies
● Drive revenue growth

● Structure
● Operations

● Acquisition of 100% of
Carlsberg Breweries
● Excellence programs

● Establishment of Carlsberg Breweries

2000

2005

2010

2015 …
4

Three regions
Western
Europe

Eastern
Europe

Asia

Group

2012

% of total beer volume

42

37

21

46

39

15

2012

% of EBIT

The Carlsberg Group strategy wheel

WINNING
BEHAVIOURS

We want to win

Together we are stronger We are each empowered to make a difference

Our consumers and customers are a the heart of every decision we make

We are engaged with society

6

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

A Group of more than 500 different brands

8

Clearly defined Carlsberg brand portfolio

Adjacent categories International
Premium

Carlsberg

International
Premium Brands

Local
Premium

Flagship

Beer category Local
`Power Brands ’
Note: Selection from Carlsberg Group portfolio of 500 brands

9

Beer is core – but we are looking at adjacent categories Leveraging production and distribution capacities

CIDERS

BREWED
BEVERAGES
BEER

WATER

SOFT DRINKS

86%

of total volume 2012

OTHERS

ENERGY DRINKS

14%

of total volume 2012
10

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

Net revenue and operating profit

Net revenue

DKK bn
70

66,5

Operating profit

DKK bn
12

63,6
59,9

60

59,4

60,1

10,2
9,8

10

50
44,8

9,8

2011

2012

9,4

8,0

8

41,1
40

38,0
6
5,3

30
4

4,0
3,5

20

2

10

0

0
2005

2006

2007

2008

2009

2010

2011

2012

2005

2006

2007

2008

2009

2010

12

Reported and adjusted EPS

Reported EPS

DKK
40

36,8
35,1

35

33,8

30

24,3

25

23,6
22,1

19,9

20

15
11,7
10

5

0
2005

2006

2007

2008

2009

2010

2011

2012

13

Strong focus on improving cash flow
Free operating cash flow

ATWC/net revenue
DKK bn

12%

6

10%

5

8%

4

6%

3

4,8

2,1
4%

2

2%

1

0

0%
2006

2012

2005

2012

14

Outlook and longer term financial targets
2013
Earnings expectations

DKK

Operating profit

Around DKK 10bn

40

Adjusted net profit*

Mid-single-digit percentage increase

Adjusted EPS

36,1
35

*2012 adj. net profit: DKK 5,504m (adjusted for after-tax impact of special items)

30
27,3
25

Longer term
Ambition

20

Western Europe

Improve the operating margin by an average of
50bp or more per year for at least the next five years Group

Deliver average growth in adjusted underlying earnings per share* of more than 10% p.a.

* Adjusted for special items after tax

15

10

5

0
2009

2012

15

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

Western Europe footprint
NORWAY
Ringnes
• No. 1
• Market share: 53%
• Breweries: 2
• Employees: 1,261

SWEDEN
Carlsberg Sverige
• No. 1
• Market share: 33%
• Breweries: 1
• Employees: 946

FRANCE
FINLAND
Sinebrychoff
• No. 1
• Market share: 53%
• Breweries: 1
• Employees: 827

Kronenbourg
• No. 1
• Market share: 29%
• Breweries: 1
• Employees: 1,508

POLAND
Carlsberg Polska
• No. 3
• Market share: 18%
• Breweries: 3
• Employees: 1,239

SWITZERLAND
UK
Carlsberg UK
• No. 4
• Market share: 15%
• Breweries: 1
• Employees: 1,665

Feldschlösschen
• No. 1
• Market share: 43%
• Breweries: 1
• Employees: 1,287

BALTIC STATES
Saku
Aldaris
Svyturys-Utenos Alus
• No. 1-2
• Market share: 33-40%
• Breweries: 1
• Employees: 1,004

DENMARK
Carlsberg Danmark
• No. 1
• Market share: 54%
• Breweries: 1
• Employees: 1,643

GERMANY
PORTUGAL
Unicer
• No. 1
• Market share: 48%
• Breweries: 2
• Employees: 661

(Northern)

Carlsberg Deutschland
• No. 1
• Market share: 18%
• Breweries: 2
• Employees: 581

SOUTH EAST EUROPE
Carlsberg Serbia
Carlsberg Croatia
Carlsberg Bulgaria
Carlsberg Greece
• No. 2-3
• Market share: 15-28%
• Breweries: 5
• Employees: 1,782

ITALY
Carlsberg Italia
• No. 4
• Market share: 7%
• Breweries: 1
• Employees: 328

Western Europe – key facts

• 50m hl beer

Pro-rata beer volumes

• 15,000 employees

• 24 breweries
France

Others

2011

2012

Organic growth Beer volumes (m hl)

49.7

50.3

1%

Other beverages (m hl)

15.1

14.5

-4%

Total volumes (m hl)

64.9

64.8

0%

Net revenue

36.9

37.7

1%

EBITDA

7.3

7.0

-5%

EBIT

5.4

5.1

-6%

UK

DKK bn

Poland

Nordic countries Balkan
Baltic
States

18

Western Europe – improving profitability and returns Invested capital and ROIC
(rhs)

EBIT and EBIT margin (rhs)
DKK bn

DKK bn

6

18%

5

15%

30

21%

18%

25

15%
4

12%

20
12%

3

9%

15
9%

2

6%

10

1

3%

5

0

0%

0

2005

2012

6%

3%

0%
2005

2012

19

Supply chain integration and business standardisation (BSP1)

• Implementation of BSP1 in Western Europe has started in 2013
• Centralising management of procurement, production, planning and logisitcs across
Western Europe enabled by
– Standardisation of processes and data, supported by a common SAP platform
– Full transparency across markets
Improved performance management across markets and breweries
•

BSP1 is one of the most important projects in recent years, being a key enabler for the transformation of the operating model in
Western Europe

20

Scope and benefits of BSP1

• BSP1 to be rolled out across Western Europe in 2013-2015
• Benefits of BSP1
– Improve capabilities
– Improve customer service and efficiency
– Increase speed
– Optimise asset utilisation
• Additional costs related to BSP1
– 2013: close to DKK 400m
– 2014: approx. DKK 400-500m
– 2015: approx. DKK 500m

21

Strong commercial execution driving market share growth Volume growth (y/y)

3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%

2010

2011

2012
WE market (estimated)

Q1 2013

Q2 2013

Q3 2013

Carlsberg

• Increased focus on commercial execution driving positive market share momenntum
– Implementation of Value Management tools
– Further roll-out of international premium brands
– Increased level of innovations
– Portfolio optimizations
– Increased focus on sales and marketing investments

22

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

Eastern Europe footprint

KAZAKHSTAN
Derbes
• No. 2
• Market share: 33%
• Breweries: 1
• Employees: 421

BELARUS
Olivaria
• No. 1
• Market share: 26%
• Breweries: 1
• Employees: 597

UZBEKISTAN
Carlsberg Uzbekistan
• Breweries: 1
• Employees: 300

UKRAINE
Carlsberg Ukraine
• No. 2
• Market share: 29%
• Breweries: 3
• Employees: 1,787

AZERBAIJAN
RUSSIA
Baltika
• No. 1
• Market share: 38%
• Breweries: 10
• Employees: 8,864

Baltika-Baku
• No. 1
• Market share: 69%
• Breweries: 1
• Employees: 239

Eastern Europe – key facts

• 45m hl of beer

Pro-rata beer volumes

• 12,000 employees
Others

• 17 breweries
Ukraine

2011

2012

Organic growth 47.7

44.7

-6%

1.9

1.8

-7%

Total volumes (m hl)

49.6

46.5

-6%

Net revenue

19.7

20.2

1%

EBITDA

5.8

5.9

-1%

EBIT

4.3

4.3

-3%

DKK bn
Beer volumes (m hl)
Other beverages (m hl)

Russia

25

Strong Eastern European profitability

DKK bn
6

EBIT and EBIT margin (rhs)
30%

5

25%

4

20%

3

15%

2

10%

1

5%

0

0%
2005

2006

2007

2008

2009

2010

2011

2012

26

Continuous value growth of Russian beer market

Russian beer market

Russian beer market, consumer value
RUB bn

m hl

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

0

2001

0

2000

90

2012

17

2011

180

2010

34

2009

270

2008

51

2007

360

2006

68

2005

450

2004

85

2003

540

2002

102

2001

630

2000

119

27

Russia

Baltika
• Market position: No. 1
• Market share: 38%
• 10 breweries
• Employees: 8,864
• Key brands: Baltika 3, Baltika 7, Bolshaya Kruzhka, Baltika
Cooler, Zatecky Gus, Arsenalnoe, Tuborg
Russian volume market share
40%

38%

36%

34%

32%

30%

28

Russian brand portfolio
Baltika
segment position Largest brand Super premium #1

Tuborg

Premium

#1

Baltika 7

Mainstream

#1

Baltika 3

Lower mainstream #1

Arsenalnoe

Discount

#1

Bolshaya
Kruzhka

Non-beer brands 29

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

Asia – strong regional foot-print

HONG KONG
Carlsberg Hong Kong Ltd
• No. 2
• Market share: 24%
• Employees: 200

CHINA
(Western)
• No. 1
• Market share: 50-55%
• Breweries: 40
• Employees: 6,625

VIETNAM
SEAB
Hue Brewery
Habeco
Vinataba
• No. 2
• Market share: 38%
• Breweries: 6
• Employees: 832

LAOS
Lao Brewery Co.
Lao Soft Drinks Co.
• No. 1
• Market share: 98%
• Breweries: 2
• Employees: 1,095

NEPAL

INDIA
South Asia Breweries
• No. 3
• Market share: 7%
• Breweries: 6
• Employees: 615

CAMBODIA

Gorkha Brewery
• No. 1
• Market share: 74%
• Breweries: 1
• Employees: 354

Cambrew
• No. 1
• Market share: 64%
• Breweries: 1
• Employees: 1,457

MALAWI
Carlsberg Malawi
• No. 1
• Breweries: 1

MALAYSIA
SRI LANKA
Lion Brewery Ceylon
• No. 1
• Breweries: 1

SINGAPORE
Carlsberg Singapore
• No. 2
• Market share: 20%
• Employees: 74

Carlsberg Brewery
Malaysia Berhad
• No. 2
• Market share: 44%
• Breweries: 1
• Employees: 687

31

Asia – key facts

• 25m hl of beer

Pro-rata beer volumes

• 13,500 employees

• 59 breweries

Malaysia

Others

India

2011

2012

Organic growth 21.3

25.4

10%

2.1

2.8

14%

23.5

28.2

10%

Net revenue

6.8

9.1

19%

EBITDA

1.6

2.2

15%

EBIT

1.3

1.7

12%

DKK bn
Beer volumes (m hl)
Other beverages (m hl)
Total volumes (m hl)

Indochina

China

32

Asia – profitability and returns

DKK bn
2,0

EBIT and EBIT margin (rhs)

DKK bn

Invested capital and ROIC (rhs)

20%

20

15%

1,6

16%

16

12%

1,2

12%

12

9%

0,8

8%

8

6%

0,4

4%

4

3%

0%

0

0,0
2005

2006

2007

2008

2009

2010

2011

2012

0%
2005

2006

2007

2008

2009

2010

2011

2012
33

Recent events –
Q3 announcement and dividend policy

• Q3 announcement
– Organic beer volume decline of 2%

– Market share gains in all three regions
– Organic revenue growth of 1%
– Price/mix of 2%
– Strong commercial execution

– Organic operating profit growth of 2%
– Tight cost control
– Continued efficiency improvements
– Adj. EPS growth of 5%

– 2013 outlook maintained
• New dividend policy
– Pay-out ratio of at least 25% from 2015

34

Q&A

TM

Content

Group overview & history
Our brands
Financial performance
Western Europe
Eastern Europe
Asia
Appendix

China
Wusu Xinjiang Beer Group
8 breweries
Ownership share
65%

Lhasa Brewery
1 brewery
Ownership share

Lanzhou Group
3 breweries
Ownership share

50%

Ningxia Group
1 brewery
Ownership share

70%

33%

Qinghai Huang He Brewery
1 breweries
Ownership share
50%

Yunnan Group
2 breweries
Ownership share

100%

* 12 breweries in the JV, Chongqing Jianiang Co. Ltd.

Chongqing
11+12 breweries*
Ownership share

29%

Guangdong
1 brewery – supplies
Carlsberg beer to all of
China and Hong Kong
Ownership share
99%

Page 37

37

Dividend per share and pay-out ratio

Pay-out ratio DKK
7

40%

6,0

6

35%

5,5
4,8

5

4

30%

5,0

4,8

25%

4,0
3,5

3,5

20%

3
15%
2
10%

1

5%

0

0%
2005

2006

2007

2008

2009

2010

2011

2012
38

Debt and financial leverage
Net interest-bearing debt

Net debt/EBITDA

DKK bn
45

5x

4x

44,2

35,7

36

3,8

32,7

32,5

32,5

2010

2011

2012

3,3
3x

2,7

27

2,7
2,4

2,3

2,4

2,4

20,8
19,2

2x

2006

2007

18

1x

19,7

9

0x

0
2005

2006

2007

2008

2009

2010

2011

2012

2005

2008

2009

39

Diversified sources of funding

• Conservative funding policy

Floating
14%

Other
13%

• Main funding sources are bonds and long-term bank facilities
• Bank funding
– EUR 1,749m committed bank facility due Oct. 2015
– EUR 800m committed bank facility due Dec. 2016
– No financial covenants

• EUR 5bn EMTN programme
– EUR 3.9bn utilised

Fixed;
86%

EUR
87%

Mortgage
4%

Other 2%

Banks 35%

– 3 bond issuances in 2012 at attractive terms

Bonds 59%

40

Capital resources

Time to maturity, non-current borrowings

DKK bn

Committed credit facilities and net financial debt, end Dec. 2012

DKK bn

15

60

12,7
12

9

48

36

8,1
7,4

6

24

5,4

3,1
3

12

0

0
1-2 years

2-3 years

3-4 years

4-5 years

> 5 years

2013

2014

2015

2016

2017

41

Carlsberg shares and ownership
Key share data

Major shareholders
Carlsberg A

Carlsberg B

Company

Ownership

33,699,252

118,857,554

The Carlsberg Foundation

30% of capital
75% of votes

DKK

DKK

Oppenheimer Inc

+5% of capital

NASDAQ OMX
Copenhagen

NASDAQ OMX
Copenhagen

DK001018167-6

DK001018175-9

Symbol

CARL A

CARL B

Reuters

CARLa.CO

Bloomberg

No. of shares
Currency
Stock market

ISIN

Note: In accordance with the Danish Securities Trading Act

Geographical break-down of shareholders
Geography

Ownership

CARLb.CO

Denmark

21%

CARLA DC

CARLB DC

USA

28%

Votes per share

20

2

UK

22%

Par value

20

20

Other

29%

Note: Excluding The Carlsberg Foundation

42

Carlsberg ADR program (Sponsored Level 1)

Symbol

CABGY

CUSIP

142795202

Exchange

OTC

Ratio

5 ADRs: 1 ORD

Depositary

BNY Mellon

Effective Date

26 February 2010

U.S. ISIN

US1427952023

Underlying SEDOL

4169219

Underlying ISIN

DK0010181759

43

Disclaimer

Forward-looking statements
This presentation contains forward-looking statements, including statements about the
Group’s sales, revenues, earnings, spending, margins, cash flow, inventory, products, actions, plans, strategies, objectives and guidance with respect to the Group's future operating results. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe", "anticipate", "expect", "estimate", "intend", "plan",
"project", "will be", "will continue", "will result", "could", "may", "might", or any variations of such words or other words with similar meanings. Any such statements are subject to risks and uncertainties that could cause the Group's actual results to differ materially from the results discussed in such forward-looking statements. Prospective information is based on management’s then current expectations or forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying such expectations or forecasts, may change. The Group assumes no obligation to update any such forwardlooking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.
Some important risk factors that could cause the Group's actual results to differ materially from those expressed in its forward-looking statements include, but are not limited to: economic and political uncertainty (including interest rates and exchange rates), financial and regulatory developments, demand for the Group's products, increasing industry consolidation, competition from other breweries, the availability and pricing of raw materials and packaging materials, cost of energy, production and distribution related issues, information technology failures, breach or unexpected termination of contracts, price reductions resulting from market driven price reductions, market acceptance of new products, changes in consumer preferences, launches of rival products, stipulation of market value in the opening balance sheet of acquired entities, litigation, environmental issues and other unforeseen factors. New risk factors can arise, and it may not be possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on the Group's business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Accordingly, forward-looking statements should not be relied on as a prediction of actual results.

44