Carlsberg Expects Moderate Profit Growth As Drinkers Spend Less

(Bloomberg) -- Carlsberg A/S expects moderate operating profit this year as some consumers pull back on drinking beer and it spends more on marketing to focus on faster-growing markets.

The maker of Tuborg and its namesake beer said it expects operating profit to grow between 1% and 5% this year amid a continued “uncertain” environment even as inflation pressures ease. This is lower than analysts were expecting.

The company said organic sales grew 9.2% in 2023, with organic operating profit up 5.2%. Organic sales were slightly higher than analysts were expecting.

Like other major brewers, the Danish company is grappling with high inflation that has forced consumers to rein in spending. Premium beer is suffering as drinkers spend less on pricier products.

Chief Executive Officer Jacob Aarup-Andersen, the former Goldman Sachs banker who took over the top job last year, has vowed to spend more on marketing and continue raising prices to offset higher input costs and lower volumes as consumers drink less premium beer or switch to cheaper brands.

Sales in Asia haven’t recovered as strongly as expected coming out of the pandemic, with consumers remaining cautious amid persistent inflation.

The Copenhagen-based brewer is also challenged with making up for the income lost from its former operations in Russia, called Baltika, that were seized by the government last year after Carlsberg said it had struck a deal to sell the business.

Carlsberg reported an annual net loss for 2023 of 40.78 billion Danish kroner ($5.9 billion) because of Russia and currency losses.

The financial results come after the company raised its long-term growth targets, citing faster growth in Asia and rising demand for premium and no-alcohol beer driving the gains.

Carlsberg is the first of the major European brewers including Heineken N/V and Anheuser-Busch InBev SA to report annual financial results this month. 

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