2015 carlsberg ir corporate presentation
DESCRIPTION
sustainability reportTRANSCRIPT
2015 IR Presentation
Content
2
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
The Carlsberg Group
3
No. 1 in Eastern Europe
140 beer brands
122.8 m.hl. of beer sold in 2014
No. 4 largest international brewer
No. 2 in Western Europe
+11% EBIT growth (CAGR) from 2005 to 2014
+11% EPS growth (CAGR) from 2005 to 2014
Group ownership structure
4
Carlsberg Foundation
Free float
Carlsberg A/S Listed on Nasdaq OMX
Copenhagen
Carlsberg Breweries A/S
Operating companies
30% of capital 75% of votes
70% of capital 25% of votes
100%
4
Founded in 1847 on a passion for beer, science and art
5
1847 JC Jacobsen founds the Carlsberg Brewery on a hill outside of Copenhagen
1882 JC’s son Carl Jacobsen builds his own brewery next to his father’s and calls it ”New Carlsberg”.
1868 Carlsberg has international ambitions from the beginning and exports its first barrel of beer to Scotland in 1868
1904 The famous Carlsberg logo is designed by architect Thorvald Bindesbøll. This logo is still used today.
JC Jacobsen has great ambitions for his brewery and to make sure his beer is brewed to the highest scientific standards he establishes the Carlsberg Laboratory.
Carl Jacobsen has a great passion for art and architecture and creates many spectacular buildings for his brewery. One of these is the impressive Elephant Gate welcoming visitors to his brewery.
The transformation of Carlsberg
6
2000 2010
● Establishment of Carlsberg Breweries
● Structure ● Operations
● Acquisition of 100% of Carlsberg Breweries
● Excellence programs
● S&N acquisition & integration ● Accelerate efficiencies and
execute synergies ● Drive revenue growth
● The FMCG journey ● Value management ● Brand portfolio activation and scoping ● Challenge driven and focused innovation process ● Business process standardisation ● Integrated supply chain ● Centralisation and integration ● Increased CSR focus ● Consolidation and expansion of Asian footprint
2005 2015 …
Three regions
Western Europe
% of total beer volume
% of EBIT
Eastern Europe Asia
2014
2014
Group
7
41 31 28
51 28 21
Content
8
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
The Carlsberg Group Stand
Thirst for Great
Great people. Great brands. Great moments.
Founded on the motto, Semper Ardens – Always Burning – we never settle, but always thirst for the better.
We are stronger together because we share best practices, ideas, and successes. We brand as many, but stand as one.
With the courage to dare, to try, to take risks, we constantly raise the bar. We don’t stop at brewing great beer. We brew a greater future – for our consumers and customers, our communities and our people.
This passion will continue to burn and forever keep us thirsty.
9
The Carlsberg Group business model
• Our business model is designed to support sustainable, long-term value growth of our business
• It supports our ambition to deliver sustainable value growth and em-braces our core product, our ways of working and our market presence
10
11
Winning Behaviours – guiding the way we work
Together we are stronger We respect and welcome differences in culture, people and brands, at the same time recognizing that working closely together and actively sharing best practices across functions, countries and regions is what it takes to grow and win.
We want to win We always strive for winning solutions and are willing to take bold steps to reach our goals. Whether big or small in the market place, we behave as entrepreneurs/underdogs – fast, proactive and action oriented in decision making as well as in execution.
Our consumers and customers are at the heart of every decision we make We put ourselves in the shoes of our consumers and customers and have a detailed in-sight into their needs and preferences. We base our strategies and plans on this insight and continuously evaluate the ways we work to improve their experience of our brands, our services and our people.
We are engaged with society We are socially and environmentally responsible and believe it makes business sense to be so. We make a positive contribution to the societies in which we operate and the communities in which we live. We listen to and engage with our stakeholders and always strive for responsible use of natural resources.
We are each empowered to make a difference We take ownership of challenges and problems, individually and in teams, and have the autonomy to deliver outstanding results. We do not let fear of failure overcome the desire to succeed and learn from our mistakes. We work in an environment where good ideas and passion to deliver are recognized and rewarded.
The Carlsberg Group strategy wheel
12 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
Measuring our performance
13
• We measure our financial performance and progress towards our strategic priorities using a number of KPIs – KPIs are integrated in
incentive schemes throughout the organisation to align the performance of the Group
• Selected financial KPIs are shown here
Strategic focus area: Consumers, brands & innovation
At Carlsberg, the consumer is at the heart of every decision we make. We always think about consumers in the context of needs, occasions, brands and innovations, and we are on a journey to continuously sharpen up our approach to these areas. We are fast at identifying local best practices and scaling them across relevant markets.
14
Three priorities: • Iconise Carlsberg • A winning portfolio of international
and local power brands • Consumer-relevant innovation
Strategic focus area: Customers
The Carlsberg Group fully recognises the critical importance of superior execution at the point of sale. Growing the beer category in both volume and value terms can only be achieved in close collaboration with our customers, not least in times of regulatory restrictions in several of our markets.
15
Two priorities: • Win with our customers • Excel at point-of-sale execution
Strategic focus area: People
In order for us to achieve our goals and execute faster and better than our competitors, we count on our skilled employees having a high level of engagement, drive and ambition, and we provide them with the necessary tools for personal and professional development.
16
Three priorities: • High performance culture • Develop, recruit and retain best-in-
class people • Empowerment and engagement
Strategic focus area: Effectiveness & efficiency
Producing products of consistently high quality at the right price is critical for creating a competitive advantage within the beer industry. We therefore engage in value-adding activities to get the most out of our resources. Over the past decade, we have come a long way on this journey, but the bar is set high and we still have a lot more to do.
17
Three priorities: • An efficient consumer- and
customer-focused organisation • Maximise return on investments • The Carlsberg way of working
Strategic focus area: Society & reputation
The long-term success of the Carlsberg Group is dependent on what we do, what we say and how we behave when we interact with our stakeholders. We recognise the importance of actively building a strong, sustainable corporate brand position for the Carlsberg Group while ensuring that our people are well prepared to manage any potential crises and issues in a sensitive, responsible manner.
18
Three priorities: • Raise our reputation as a responsible
global brewer • Integrate CSR across the value chain • Enhance the image of the beer
category
1,2
Content
19
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
20
A Group of more than 500 different brands
Carlsberg brand portfolio
21
Flag
ship
In
tern
atio
nal
Prem
ium
Lo
cal
Prem
ium
Beer category
Adjacent categories
Carlsberg
International Premium Brands
Local “Power Brands”
Note: Selection from Carlsberg Group portfolio of 500 brands
22 22
Beer is core – but we are looking at adjacent categories
CIDERS BREWED BEVERAGES
WATER SOFT DRINKS
OTHERS ENERGY DRINKS
of total volume 2014
15% of total volume 2015
Leveraging production and distribution capacities
85%
BEER
Innovation – a key component of Carlsberg Group strategy
• Innovation is a key priority and important to grow the beer category
• Integration of research, development and commercial innovation capabilities drive an ambitious innovation agenda
• Simple operating model leveraging the full organisation to deliver a winning innovation pipeline to capture future growth opportunities
• A healthy innovation mix incorporating best of local and global
23
Drive competitive advantage
Best of Global
Best of Local
Best of Regional
Content
24
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Net revenue and operating profit
3,518
4,046
5,262
7,978
9,390
10,249 9,816 9,793 9,844
9,230
0
2,000
4,000
6,000
8,000
10,000
12,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Operating profit
25
38.0 41.1
44.8
59.9 59.4 60.1
63.6 66.5 66.6
64.5
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Net revenue
Operating profit and EBITDA margins
0%
5%
10%
15%
20%
25%
30%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EBIT margin
Carlsberg Group Western Europe
Eastern Europe Asia
26
0%
5%
10%
15%
20%
25%
30%
35%
40%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EBITDA margin
Carlsberg Group Western Europe
Eastern Europe Asia
Reported and adjusted EPS
11.7
19.9
24.3
22.1 23.6
35.1 33.8
36.8 35.9
28.9
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK Reported EPS
27
27.3
35.6 34.1
36.1 37.8
36.0
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014
DKK Adjusted EPS
Average trade working capital and free cash flow
-6%
-4%
-2%
0%
2%
4%
6%
2009 2010 2011 2012 2013 2014
ATWC/net revenue
2.1
1.4
0.1
2.6
10.7
7.4
4.2
4.8
2.8
1.9
0
2
4
6
8
10
12
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Free operating cash flow
28
Dividend per share and pay-out ratio
4.0
4.8 4.8
3.5 3.5
5.0
5.5
6.0
8.0
9.0
0%
5%
10%
15%
20%
25%
30%
35%
0
1
2
3
4
5
6
7
8
9
10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pay-out ratio DKK
29
Content
30
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
2015 earnings expectations and assumptions
• Western European beer markets flattish • Eastern European markets declining in volume, but growing
in value • Asian beer market volume growth • Declining cost of goods sold per hl • Slightly growing A&P to revenue
• Negative impact of the weaker Russian rouble on operating profit
• C. DKK 0.9bn translation effect at YTD avg. EUR/RUB c. 75 • Sensitivity: +/-10% EUR/RUB vs. YTD average impacts
operating profit by c. DKK +/- 200m • All-in cost of debt at around 4% • 28% tax rate • Capital expenditures at around DKK 4bn (index ~90 to depr.) • Net debt/EBITDA planned to be less than 2.5x by end-2015
31
Earnings expectations
Operating profit Mid- to high-single-digit organic growth
Content
32
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Western Europe
FINLAND Sinebrychoff • No. 1 • Market share: 51% • Breweries: 1
DENMARK Carlsberg Danmark • No. 1 • Market share: 54% • Breweries: 1
GERMANY (Northern) Carlsberg Deutschland • No. 1 • Market share: 16% • Breweries: 2
SWEDEN Carlsberg Sverige • No. 1 • Market share: 33% • Breweries: 1
NORWAY Ringnes • No. 1 • Market share: 54% • Breweries: 2
BALTIC STATES Saku Aldaris Svyturys-Utenos Alus • No. 1-2 • Market share: 28-41% • Breweries: 3
POLAND Carlsberg Polska • No. 3 • Market share: 19% • Breweries: 3
SWITZERLAND Feldschlösschen • No. 1 • Market share: 42% • Breweries: 1
ITALY Carlsberg Italia • No. 4 • Market share: 7% • Breweries: 1
PORTUGAL Unicer • No. 1 • Market share: 48% • Breweries: 1
UK Carlsberg UK • No. 4 • Market share: 14% • Breweries: 1
SOUTH EAST EUROPE Carlsberg Serbia Carlsberg Croatia Carlsberg Bulgaria Carlsberg Greece • No. 2-3 • Market share: 15-26% • Breweries: 5
FRANCE Kronenbourg • No. 1 • Market share: 29% • Breweries: 1
33
Western Europe – Region characteristics
• Mature markets with strong tradition of beer consumption in many markets
• Well-established retail structures – Shift from on-trade to off-trade
• Flat to slightly declining markets. However, in 2014 beer category dynamics improved slightly driven by – Innovations – Specialty/craft beers – Improved category perception
• Market value growth
• Front-end initiatives include – Value management – In-store execution – Driving international and local premium brands
• Efficiency initiatives include – On-going simplification – Standardisation – Centralisation throughout the value chain
34
Western Europe – 2014 headlines
• Improving market share for fourth year in a row – Estimated +20bp market share growth
• Invest to drive profitable volume and value growth – Growth in innovations/speciality/craft – Roll-out and embedding sales tools – Focus on pockets of growth
• Implementation of the business standardisation and supply chain integration project (BSP11) roll-out in additional four countries
• +60bp operating profit margin growth to 14.5%
35 1 See next slide
Supply chain integration and business standardisation (BSP1)
• Implementation of BSP1 in Western Europe during 2013 - 2016
• 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
• Markets on BSP1 by October 2014: Sweden, Norway, UK, Finland, Poland and Switzerland
36
Western Europe – key facts
• 49m hl beer
• 14,400 employees
• 23 breweries
• Operating margin target: – Improve the margin by an average of
50bp or more per year for at least the next five years (from 13.9% in 2012)
37
DKK bn 2013 2014 Organic growth
Beer volumes (m hl) 49.0 50.0 +2%
Other beverages (m hl) 14.9 15.8 +6%
Total volumes (m hl) 63.9 65.8 +3%
Net revenue 37.4 37.8 +1%
EBITDA 6.9 7.1 +4%
EBIT 5.2 5.5 +7%
Poland
UK
France
South East Europe
Germany Nordic countries
Others
Pro-rata beer volumes
Western Europe – profitability and returns
0%
3%
6%
9%
12%
15%
18%
0
1
2
3
4
5
6
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn EBIT and EBIT margin (rhs)
38
0%
3%
6%
9%
12%
15%
18%
21%
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Invested capital and ROIC (rhs)
Note: The calculation of invested capital was changed in 2014 (2013 numbers restated), after which goodwill and trademarks related to the acquisition in 2004 of Orkla’s 40% in Carlsberg Breweries have been allocated to the relevant beverage segments (previously in non-bev. segment)
Denmark & Sweden
Carlsberg Danmark • Market position: No. 1 • Market share: 51% • 1 brewery • Key brands: Tuborg, Carlsberg, Somersby
• Per capita consumption: 80 litres • On-trade share of total market, approx.: 27%
Carlsberg Sverige • Market position: No. 1 • Market share: 33% • 1 brewery • Key brands: Pripps, Falcon, Carlsberg, Somersby
• Per capita consumption: 60litres • On-trade share of total market, approx.: 21%
39
Norway & Finland
Ringnes (Norway) • Market position: No. 1 • Market share: 54% • 2 breweries • Key brands: Ringnes, Tuborg, Carlsberg
• Per capita consumption: 47 litres • On-trade share of total market, approx.: 20% Sinebrychoff (Finland) • Market position: No. 1 • Market share: 51% • 1 brewery • Key brands: Karhu, Koff, Nikolai, Carlsberg
• Per capita consumption: 84 litres • On-trade share of total market, approx.: 15%
40
Germany & Poland
Carlsberg Polska • Market position: No. 3 • Market share: 19% • 3 breweries • Key brands: Okocim, Harnas, Carlsberg, Somersby
• Per capita consumption: 96 litres • On-trade share of total market, approx.: 11%
Carlsberg Deutschland • Market position: No. 1 (Northern Germany) • Market share: 16% (Northern Germany) • 2 breweries • Key brands: Holsten, Astra, Dückstein, Carlsberg
• Per capita consumption: 107 litres • On-trade share of total market, approx.: 22%
41
UK & France
Carlsberg UK • Market position: No. 4 • Market share: 14% • 1 brewery • Key brands: Carlsberg, Tuborg, Somersby, Tetley
• Per capita consumption: 70 litres • On-trade share of total market, approx.: 51% Kronenbourg (France) • Market position: No. 1 • Market share: 29% • 1 brewery • Key brands: 1664, Kronenbourg, Grimbergen, Carlsberg,
Kanterbrau
• Per capita consumption: 29 litres • On-trade share of total market: 22%
42
Switzerland & Italy
Feldschlösschen (Switzerland) • Market position: No. 1 • Market share: 42% • 1 breweries • Key brands: Feldschlösschen, Cardinal, Carlsberg
• Per capita consumption: 57 litres • On-trade share of total market: 42% Carlsberg Italia • Market position: No. 4 • Market share: 7% • 1 breweries • Key brands: Birra Poretti, Bock, Carlsberg
• Per capita consumption: 27 litres • On-trade share of total market: 38%
43
Baltics & South East Europe
Baltics (Estonia, Latvia, Lithuania)
• Market position: No. 1-2 • Market share: 28-41% • 3 breweries • Key brands: Aldaris, Svyturys, Utenos, Saku, Carlsberg
• Per capita consumption: 72-96 litres • On-trade share of total market, approx.: 4-8% South East Europe (Bulgaria, Croatia, Serbia, Greece) • Market position: No. 2-3 • Market share: 15-26% • 5 breweries • Key brands: Pan, Pirinsko, Shumensko, Lav, Mythos,
Carlsberg, Tuborg, Somersby
• Per capita consumption: 37-71 litres • On-trade share of total market, approx.: 17-56%
44
Portugal
Unicer (Portugal) • Market position: No. 1 • Market share: 48% • 1 breweries • Ownership share: 44% • Key brands: Super Bock, Carlsberg
• Per capita consumption: 47 litres • On-trade share of total market, approx.: 56%
45
Content
46
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Eastern Europe
RUSSIA Baltika • No. 1 • Market share: 38% • Breweries: 8
BELARUS Olivaria • No. 1 • Market share: 32% • Breweries: 1
AZERBAIJAN Baltika-Baku • No. 1 • Market share: 72% • Breweries: 1
UKRAINE Carlsberg Ukraine • No. 2 • Market share: 28% • Breweries: 3
KAZAKHSTAN Derbes • No. 2 • Market share: 21% • Breweries: 1
47
Eastern Europe – Region characteristics
• Russia - the main market in the region
• Regional beer market value growth
• Beer market decline in recent years driven by – Challenged macroeconomy – Unavoidable, significant price increases due to
excise tax and COGS increases – Changed regulation in Russia
• Retail landscape in developing phase – Modern trade growing – Traditional trade still dominant
• Main focus – Continue to strength our Russian business – Secure value growth through
– value management – driving our international and local premium
brands – innovation – superior commercial execution
48
Eastern Europe – 2014 headlines
• Positive market share development in most markets
• Russian beer market decline of ~7%
• Strong price/mix of +9% driven by – Price increases – Small mix improvement – Launch of slightly smaller pack sizes in Russia
• 12% organic operating profit decline; 28% reported operating profit decline – Strong price/mix and efficiency improvements
more than offset by lower volumes, higher COGS, higher logistic costs and write-off on obsolete stocks
– Significant negative currency impact
49
Eastern Europe – key facts
• 38m hl of beer
• 11,500 employees
• 14 breweries
50
DKK bn 2013 2014 Organic growth
Beer volumes (m hl) 42.4 37.8 -11%
Other beverages (m hl) 1.7 1.7 +1%
Total volumes (m hl) 44.1 39.5 -10%
Net revenue 17.7 14.1 -3%
EBITDA 5.6 4.2 -7%
EBIT 4.1 3.0 -12%
Russia
Ukraine
Others
Pro-rata beer volumes
Eastern Europe – profitability and returns
0%
5%
10%
15%
20%
25%
30%
0
1
2
3
4
5
6
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn EBIT and EBIT margin (rhs)
51
0%
5%
10%
15%
20%
25%
30%
0
12
24
36
48
60
72
2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Invested capital and ROIC (rhs)
Note: The calculation of invested capital was changed in 2014 (2013 numbers restated), after which goodwill and trademarks related to the acquisition in 2004 of Orkla’s 40% in Carlsberg Breweries have been allocated to the relevant beverage segments (previously in non-bev. segment)
Russia
Baltika • Market position: No. 1 • Market share: 38% • 8 breweries • Key brands: Baltika 3, Baltika 7, Bolshaya Kruzhka, Baltika
Cooler, Zatecky Gus, Tuborg, Carlsberg, Holsten
• Per capita consumption: 55 litres • On-trade share of total market: 10%
52
31%
33%
35%
37%
39%
41%
Russian volume market share
Russian brand portfolio
53
Super premium Tuborg
Premium Baltika 7
Mainstream Baltika 3
Lower mainstream Arsenalnoe
Discount Bolshaya Kruzhka
Non-beer brands
Largest brand
Russian beer market dynamics
54
0
17
34
51
68
85
102
119
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
m hl
Russian beer market
0
90
180
270
360
450
540
630
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
RUB bn
Russian beer market, consumer value
Ukraine
Carlsberg Ukraine • Market position: No. 2 • Market share: 28% • 3 breweries • Key brands: Lvivske, Slavutich, Carlsberg, Baltika
• Per capita consumption: 52 litres • On-trade share of total market: 10%
55
Belarus & Kazakhstan
Olivaria (Belarus) • Market position: No. 1 • Market share: 32% • 1 brewery • Key brands: Alivaria, Carlsberg, Holsten
• Per capita consumption: 51 litres • On-trade share of total market: 4% Carlsberg Kazakhstan • Market position: No. 2 • Market share: 21% • 1 brewery • Key brands: Derbes, Irbis, Carlsberg, Tuborg • Per capita consumption: 27 litres • On-trade share of total market: 11%
56
Content
57
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
58
Asia
CHINA (Western) • No. 1 • Market share: ~55% • Breweries: 44
MALAYSIA Carlsberg Brewery Malaysia Berhad • No. 2 • Market share: 44% • Breweries: 1
VIETNAM SEAB Hue Brewery Habeco Vung Tau • No. 2 • Market share: 33% • Breweries1: 6
NEPAL Gorkha Brewery • No. 1 • Market share: 72% • Breweries: 1
CAMBODIA Cambrew • No. 1 • Market share: 56% • Breweries: 1
LAOS Lao Brewery Co. • No. 1 • Market share: 98% • Breweries: 2
SINGAPORE Carlsberg Singapore • No. 2 • Market share: 20%
HONG KONG Carlsberg Hong Kong Ltd • No. 1 • Market share: 26%
INDIA South Asia Breweries • No. 3 • Market share: 11% • Breweries: 6
MALAWI Carlsberg Malawi • No. 1 • Breweries: 1
SRI LANKA Lion Brewery Ceylon • No. 1 • Breweries: 1
1Excl. Habeco
Asia – Region characteristics
• Portfolio of mature and growing beer markets
• Beer market growth driven by – Expanding populations – Urbanisation – Rising disposable income levels – Growing economies – Relatively low per capita consumption
• Varying competitive intensity contested by local as well as major international brewers
• International presence mostly through joint ventures with local partners or equity stakes
59
Asia – 2014 headlines
• Market volume growth in most markets
• All markets growing in value
• Market share gains in most markets – Doubling of the Tuborg brand – +12% Carlsberg brand growth in premium
markets – Rejuvenation of local power brands – Strengthening of sales capabilities
• Strong price/mix of +5%
• Increasing focus on efficiency improvements
• Margin decline due to consolidation effect from Chongqing Brewery Company
60
Asia – key facts
• 35m hl of beer
• 21,600 employees
• 63 breweries
61
DKK bn 2012 2014 Organic growth
Beer volumes (m hl) 28.3 35.0 +0%
Other beverages (m hl) 3.1 3.5 +12%
Total volumes (m hl) 31.4 38.5 +1%
Net revenue 9.1 12.5 +11%
EBITDA 2.5 3.2 +13%
EBIT 1.9 2.2 +8%
China
Indochina
India
Malaysia Others
Pro-rata beer volumes
Asia – profitability and returns
0%
5%
10%
15%
20%
25%
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn EBIT and EBIT margin (rhs)
62
0%
3%
6%
9%
12%
15%
0
4
8
12
16
20
24
28
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK bn Invested capital and ROIC (rhs)
China and Hong Kong
China (8 brewery groups) • Market position, western China: No. 1 (national: no. 5) • Market share, western China: ~55% (national: 5%) • 44 breweries through fully or partly owned businesses • Ownership share: 50-100% • Key brands: Shancheng, Chongqing, Wusu, Dali, Huang He,
Xixia, Carlsberg, Tuborg
• Per capita consumption: 32 litres • On-trade share of total market: 46% Carlsberg Hong Kong • Market position: No. 1 • Market share: 26% • 0 breweries • Ownership share: 100% • Key brands: Carlsberg
• Per capita consumption: 24 litres • On-trade share of total market: 29%
63
China
64
Wusu Xinjiang Beer Group Ownership share 65%
Ningxia Group Ownership share 70%
Lanzhou Group Ownership share 50%
Chongqing Brewery Company Ownership share 60%
Qinghai Huang He Brewery Ownership share 50%
Lhasa Brewery Ownership share 50%
Yunnan Group Ownership share 100%
Guangdong Ownership share 99%
Chongqing Beer Group AM Ownership share 100%
Malaysia and Singapore
Carlsberg Malaysia • Market position: No. 2 • Market share: 44% • 1 brewery • Ownership share: 51% • Key brands: Carlsberg
• Per capita consumption: 6 litres • On-trade share of total market: 77% Carlsberg Singapore • Market position: No. 2 • Market share: 20% • 0 brewery • Ownership share: 51% • Key brands: Carlsberg
• Per capita consumption: 22 litres • On-trade share of total market: 75%
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Vietnam and Laos
Vietnam (4 brewery groups) • Market position: No. 2 • Market share: 33% • 6 breweries (excl. Habeco) • Ownership share: 17-100% • Key brands: Huda, Halida, Festival, Thang Long, Carlsberg
• Per capita consumption: 33 litres • On-trade share of total market: 49% Lao Brewery (Laos) • Market position: No. 1 • Market share: 98% • 2 breweries • Ownership share: 61% • Key brands: Beer Lao, Carlsberg
• Per capita consumption: 38 litres • On-trade share of total market: 44%
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Cambodia
Cambrew (Cambodia) • Market position: No. 1 • Market share: 56% • 1 brewery • Ownership share: 50% • Key brands: Angkor Beer, Carlsberg
• Per capita consumption: 33 litres • On-trade share of total market: 39%
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India and Nepal
Carlsberg India • Market position: No. 3 (no. 2 in seven states) • Market share: 11% • 6 breweries • Ownership share: 100% • Key brands: Tuborg, Carlsberg, Palone
• Per capita consumption: 2 litres • On-trade share of total market: 16% Gorkha Brewery (Nepal) • Market position: No. 1 • Market share: 72% • 1 brewery • Ownership share: 90% • Key brands: Gorkha, Tuborg
• Per capita consumption: 2 litres • On-trade share of total market: 81%
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Content
69
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Financial policy
• Committed to maintaining investment grade credit rating
• Centralised funding and risk management at the level of Carlsberg Breweries A/S
• Diversified sources of funding and smooth maturity profile
• Ample capital resources available at all times
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Commitment to Investment Grade
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• Rated by Fitch and Moody’s since January 2006
• Long Term Issuer Rating: BBB
• Outlook: Stable
• Date: 21-02-2011
“Fitch Ratings expects that Carlsberg Breweries A/S’s credit profile will remain commensurate with a ‘BBB’ rating, despite macroeconomic and geopolitical issues in eastern Europe, which in 2013 accounted for 40% of Group EBITDA excluding central costs. Fitch believes the increasing importance of Asian markets and the resilience of western Europe, which in 2013 accounted for 51% of group EBITDA, will help to reduce Carlsberg’s reliance on Russia over the medium to long term.” (30-10-2014)
• Rating: Baa2
• Outlook: Negative
• Date: 09-01-2015
“Carlsberg's Baa2 long-term ratings are supported by the company's (1) scale as the fourth world's largest brewers, with leading positions in some of its key European and Asian markets, including Russia; (2) increasing geographic diversification; and (3) solid cash flow supporting net debt reduction, albeit at a slower pace than we previously expected, given the persistently challenging trading conditions in the European and Russian beer markets.” (09-01-2015)
Diversified sources of funding
• Conservative funding policy
– Main funding sources are bonds and long-term bank facilities
– In May 2014, Carlsberg issued a EUR 1bn EMTN bond with a coupon of 2.5% and a tenor of 10 years, replacing a maturing bond with a coupon of 6%
– Carlsberg maintains a EUR 5bn EMTN programme (EUR 1.1bn un-utilised)
– DKK 10.5bn of a EUR 2,510m credit facility was un-utilised at year-end. The facility expires February 2020 with an option to extend for 1 year
– No financial covenants
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71%
20%
4% 4% 1%
Funding sources
BondsNon-current bank borrowingMortgagesCurrent bank borrowingsOther, current and non-current
Ample capital resources
0
5
10
15
20
25
1-2 years 2-3 years 3-4 years 4-5 years > 5 years
Time to maturity, non-current borrowings
0
12
24
36
48
60
2015 2016 2017 2018 2019->
Committed credit facilities and net financial debt, end Dec. 2014
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• Interest rate risk – 69% of net financial debt carries a fixed interest rate – Average duration is 3.8 years – EUR and DKK accounts for 78% of net financial debt
Content
74
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Focus of CSR strategy - Environment, Packaging and Responsible Drinking
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Carlsberg Group Strategy
Responsible Drinking
CSR COMMUNICATION
CSR MANAGEMENT
Policy implementation
Local implementation
Reporting
Focus areas Enablers
Support
Environmental efficiency
(Water, Energy, CO2) Sustainable packaging
Environmental efficiency
29.2 29.1 28.0 29.4
0
10
20
30
40
2011 2012 2013 2014
kWh/hl Energy efficiency
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8.8 7.3 7.1 7.3
0
3
6
9
12
2011 2012 2013 2014
CO2 kg/hl CO2 Emissions
3.3 3.3 3.3 3.4
0
1
2
3
4
2011 2012 2013 2014
hl/hl Water use
2016 targets:
• 5-10% reduction in relative energy consumption over 3 years1
• 5-10% reduction in relative water consumption over 3 years1
• 5-10% reduction in relative CO2 emissions over 3 years1
1 Allowing for adjustments of 2014 baseline when relevant.
Four approaches to sustainable packaging
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REDUCE weight or change to packaging with lower environmental impact.
Increase REUSE of packaging materials, with the main focus on glass bottles.
Encourage consumers to RECYCLE packaging and increase the amount of recycled content in new packaging.
RETHINK packaging and waste
• Launched at the Economic Forum in Davos in 2014
• A collaboration platform where Carlsberg and partners work together to create a zero-waste, beneficial society by using the Cradle-to-Cradle® perspective when developing and marketing new products
• Products will be analysed from a Cradle-to-Cradle® perspective, and optimised for re-entry as valuable resources into biological or technical cycles
• The initiative supports the Circular Economy by improving quality and purity of packaging
The Carlsberg Circular Community will drive collaboration throughout the value chain
78 Cradle to Cradle® Design Framework, created by Professor Michael Braungart and Mr. William McDonough with their companies EPEA Internationale Umweltforschung GmbH and MBDC, LLC.
Thirst for beer …
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Goes well with food
Is based on natural ingredients and offers health benefits when consumed in moderation
Makes a significant contribution to society
BEER…
Carlsberg encourages responsible consumption to prevent misuse of our products
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DRINK DRIVING
UNDER-AGE DRINKING
BINGE DRINKING
MODERATE CONSUMPTION
Promoting responsible drinking on many different levels • Across the Group: Marketing Communication Policy
• Nationally: through local brewers associations
• Regionally: through Brewers of Europe
• Globally: through Global Brewers Initiative (GBI) in collaboration with other major brewers
GROWING RESPONSIBLY KEY AREAS
Partnering with stakeholders
• Signatory of the UN Global Compact – The UN Global Compact promotes organisational integration
of environmental, social and governance issues.
• Signatory of the CEO Water Mandate – Taking part in the CEO water mandate helps us identify new
ways to use our water resources more efficiently.
• Caring for Climate platform – The Caring for Climate initiative provides us with a
framework to advance solutions for climate change.
• Partnering with UNIDO – In partnership with UNIDO, Carlsberg Group and Baltika
Breweries have committed to invest RUB 1bn in environmental projects over the next five years.
• CEO commitment to reduce harmful use of alcohol – Collective commitment among 13 CEOs of wine, beer and
spirits producers to 10 targeted actions in support of WHO strategy to reduce harmful use of alcohol.
• BIER – Beverage Industry Environmental Roundtable (BIER) consists
of leading beverage companies working together on a variety of environmental stewardship initiatives.
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Content
82
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Carlsberg shares and ownership
Carlsberg A Carlsberg B
No. of shares 33,699,252 118,857,554
Currency DKK DKK
Stock market NASDAQ OMX Copenhagen
NASDAQ OMX Copenhagen
ISIN DK001018167-6 DK001018175-9
Symbol CARL A CARL B
Reuters CARLa.CO CARLb.CO
Bloomberg CARLA DC CARLB DC
Votes per share 20 2
Par value 20 20
Company Ownership
The Carlsberg Foundation 30% of capital 75% of votes
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Geography Ownership
Denmark 13%
USA 39%
UK 14%
Other 34%
Key share data Major shareholders
Geographical break-down of shareholders, free float1
1 Excluding The Carlsberg Foundation
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
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Content
85
Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
Find out more …
• … about our heritage …
• … about our corporate governance ...
• … about our strategy …
• … about our brands …
• … about our csr …
• … about the Carlsberg share and ADRs …
• … download our 2014 annual report …
• … download quarterly financial data in excel …
• … about the Carlsberg Foundation …
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Content
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Group overview & history
Our Stand, strategy & KPIs
Our brands
Financial performance
2015 Outlook
Our regions • Western Europe • Eastern Europe • Asia
Financial policy & leverage
CSR
Share data
Find out more …
Disclaimer
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 forward-looking 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.
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