Company Reports

No-moat Carlsberg reported revenue growth of 4.4%, broadly in line with our estimates and company-compiled consensus. Results were driven by volume growth and revenue per hectoliter growth, partially offset by negative currency effects. The outlook for 2024 remains unchanged, with organic operating profit growth expected to be between 1% and 5%. Management plans to increase the marketing investment for the full year by more than 10% to support its long-term growth initiatives while keeping the overall ratio of selling, general, and administrative expenses flat as a percentage of revenue. Due to the group's strong financial position, the company also announced a new quarterly buyback program amounting to DKK 1 billion, running from April 30 to Aug. 9. The share price remained broadly stable at the time of writing. We make no change to our DKK 970 fair value estimate.

Carlsberg has a reasonably strong namesake brand and a portfolio of superpremium brands that position it well for ongoing premiumisation. It has strong positions in a cluster of generally small markets, notably Scandinavia and western China, but is a second-tier player in other larger markets such as the UK, Germany and Vietnam.

Carlsberg has a reasonably strong namesake brand and a portfolio of superpremium brands that position it well for ongoing premiumisation. It has strong positions in a cluster of generally small markets, notably Scandinavia and western China, but is a second-tier player in other larger markets such as the U.K., Germany and Vietnam.

Carlsberg modestly beat our expectations for fourth-quarter revenue, and this trickled down the income statement to deliver full-year 2023 adjusted earnings per share of DKK 51.1, marginally above our forecast. Guidance for 2024 is slightly below our estimates amid increased investment and continued uncertainty in China. More significantly, however, management unveiled a new strategic plan, Accelerate SAIL, which includes improved medium-term revenue growth forecasts of 4% to 6%, up from the previous guidance of 3% to 5%. For now, we are retaining our steady state revenue growth estimate of 4% but will review whether we believe premiumization and footprint expansion will unlock faster growth. We are retaining our DKK 870 fair value estimate and no-moat rating.

Carlsberg reported a broadly in-line third-quarter trading update, but we are lowering our fair value estimate to DKK 870 per share from DKK 970 due to the value destruction created by the loss of the company's Russian business. Carlsberg had been attempting to find a buyer for Baltika Breweries in order to comply with sanctions against Russia, but we now believe it will not receive any compensation for these assets, and we assign a zero value to them. The market appears to have anticipated this development, and we believe the stock is fairly valued.

Carlsberg has a reasonably strong namesake brand and a portfolio of superpremium brands that position it well for ongoing premiumisation. It has strong positions in a cluster of generally small markets, notably the Nordics and western China, but is a second-tier player in other larger markets such as the U.K., Germany and Vietnam.

Jacob Aarup-Andersen has assumed his role as CEO of Carlsberg, slightly earlier than expected, replacing Cees 't Hart after eight successful years. This has no effect on our DKK 970 fair value estimate, our no-moat rating, or our view that the shares are fairly valued.

Not for the first time in recent quarters, Carlsberg posted revenue growth marginally above our estimates in the first quarter of 2023, driven by implementation of price increases. Although volume was slightly weaker than our forecast, consumers appear to remain willing to accept higher prices, and revenue growth was very strong. Management raised the lower end of its full-year guidance, but with stiffening currency headwinds offsetting the revenue upside in the quarter, we make no change to our DKK 970 fair value estimate, despite minor tweaks to our near-term forecasts.

Carlsberg has a reasonably strong namesake brand and a portfolio of superpremium brands that position it well for ongoing premiumisation. It has strong positions in a cluster of generally small markets, notably the Nordics and western China, but is a second-tier player in other larger markets such as the U.K., Germany and Vietnam.

Carlsberg reported few surprises in its fourth-quarter and full-year 2022 results, with volume and revenue growth bang in line with our estimates, but operating profit was slightly weaker than we had anticipated. Guidance for 2023 implies a fairly wide range of operating profit development, from a 5% decline to 5% growth, but this is consistent with our existing forecast of low-single-digit growth. Although this represents a material slowdown in growth, following several years of impressive financial performance, it is to be expected in light of the pressures on consumer spending from inflation and rising interest rates. We reiterate our DKK 970 fair value estimate, and with the market value of the company having fluctuated considerably over the last 12 months, the stock now appears fairly valued. We think there is more valuation upside to Anheuser Busch InBev.

Carlsberg reported a fairly robust third-quarter trading update, with both volume and price/mix positive contributors to growth that was marginally better than our forecasts. Management raised guidance for the rest of the year as a result. The upside to the third-quarter volume puts our estimate squarely in the middle of management's new guidance for 10%-12% organic operating profit growth, and we make no changes to our estimates for the rest of the year. We also retain our DKK 970 fair value estimate and no-moat rating. multiple revenue growth drivers combining to beat our forecasts. Carlsberg's stock has retreated from its frothy valuation in recent months, and now appears to offer modest upside to the current market value. However, we prefer AB InBev, which we believe is a higher quality business due to its high market shares and because it has more exposure to valuation levers including any weakening of the U.S. dollar.

Carlsberg reported strong first-half results, with multiple revenue growth drivers combining to beat our forecasts. The margin performance was particularly impressive, with growth and operating leverage driving a comfortable beat to our forecasts and prompting management to raise full-year guidance. These results will probably stand out among Carlsberg's peer group for the ability to expand margins in this environment of rampant inflation. We are raising our fair value estimate to DKK 970 per share from DKK 910 to reflect the stronger-than-expected price/mix, as we suspect this may be able to continue. Nevertheless, after a strong run-up in the stock since March, we now believe Carlsberg is fairly valued.

Until recently, Carlsberg had underperformed its close peers. Although it has a very strong competitive positioning in its native Denmark and other Scandinavian markets, in other major developed markets it is a second-tier player and has suffered shelf space loss, including the high-profile removal of the flagship brand from Tesco's shelves in 2015. In addition, Carlsberg's second-largest market, Russia, has been undergoing volume declines since 2012 due to a decadelong government clampdown on the availability and affordability of beer and a shrinking drinking age population. Returns on invested capital were regularly below the cost of capital, and the low-teens operating margin was below that of the firm's largest competitors.

Carlsberg reported strong first-quarter sales, particularly in Western Europe. We have slightly raised our near-term revenue growth assumptions for the region, but this has no impact on our DKK 910 fair value estimate, and our full-year forecasts remain comfortably within the company's updated guidance. Following the market's initial over-reaction to the impact of events in Eastern Europe to Carlsberg, we now believe the shares are fairly valued.

Until recently, Carlsberg had underperformed its close peers. Although it has a very strong competitive positioning in its native Denmark and other Scandanavian markets, in other major developed markets it is a second-tier player and has suffered shelf space loss, including the high profile removal of the flagship brand from Tesco's shelves in 2015. In addition, Carlsberg's second-largest market, Russia, has been undergoing volume declines since 2012 due to a decade-long government clampdown on the availability and affordability of beer, and a shrinking drinking age population. Returns on invested capital were regularly below the cost of capital, and the low-teens operating margin was below that of its largest competitors.

We are again lowering our fair value estimate for Carlsberg to DKK 910 from DKK 945 in light of the decision to exit Russia, but we are leaving other valuations across our European fast-moving consumer goods, or FMCG, coverage intact. Several companies have announced, over the last 24 hours, various exit strategies to dispose of their Russian assets. We expect this to destroy value for those companies that hitherto operated in Russia, but because it is a relatively low-margin market, write-downs in most cases are likely be limited to low single digits as a percentage of market capitalization.

We are lowering our net revenue and gross margin estimates for the European beverage companies under our coverage to reflect the expected impact of the conflict in Ukraine. The impact on our valuations is minimal, however, and the only fair value estimate we are lowering is that of Carlsberg, from DKK 965 to DKK 945. Following the impositions of sanctions, most of the beverage manufacturers have temporarily ceased exporting products to Russia, and although this has made headlines, exports into Russia represent a small segment of the market.

Until recently, Carlsberg had underperformed its close peers. Although it has a very strong competitive positioning in its native Denmark and other Scandanavian markets, in other major developed markets it is a second-tier player and has suffered shelf space loss, including the high profile removal of the flagship brand from Tesco's shelves in 2015. In addition, Carlsberg's second-largest market, Russia, has been undergoing volume declines since 2012 due to a decade-long government clampdown on the availability and affordability of beer, and a shrinking drinking age population. Returns on invested capital were regularly below the cost of capital, and the low-teens operating margin was below that of its largest competitors.

Carlsberg reported decent fourth-quarter and full-year 2021 figures. Volume was marginally ahead of our forecasts, margins held up well in spite of inflation in raw material costs, and the balance sheet ended the year healthier than it began. Management also released a new five-year strategic plan, which contained few surprises, but expectations of continued margin expansion are pleasing. Although medium-term financial guidance is broadly in line with our existing forecasts, we are raising our fair value estimate to DKK 965 from DKK 895 due to the time value of money and to slightly higher growth estimates in roughly equal measure.

Until recently, Carlsberg had underperformed its close peers. Although it has a very strong competitive positioning in its native Denmark and other Scandanavian markets, in other major developed markets it is a second-tier player and has suffered shelf space loss, including the high profile removal of the flagship brand from Tesco's shelves in 2015. In addition, Carlsberg's second-largest market, Russia, has been undergoing volume declines since 2012 due to a decade-long government clampdown on the availability and affordability of beer, and a shrinking drinking age population. Returns on invested capital were regularly below the cost of capital, and the low-teens operating margin was below that of its largest competitors.