February 19, 2014 / 7:37 AM / 4 years ago

UPDATE 2-Carlsberg sees higher 2014 profit after strong year end

* Q4 EBIT 2.32 bln DKK ($428 mln) vs 2.18 bln seen in poll

* Sales in western Europe and Asia stronger than expected

* Sales in eastern Europe weaker than analysts expected

* Raises dividend by 33 percent to 8.00 crowns per share

* Shares up 6 pct, best performer among European blue chips (Updates with shares, further analyst comment)

By Teis Jensen and Philip Blenkinsop

COPENHAGEN, Feb 19 (Reuters) - Carlsberg forecast profit growth in the year ahead after strength in western Europe and Asia offset sluggish sales in Russia to drive earnings higher than expected in the fourth quarter.

The Danish brewer, the world’s fourth largest, said on Wednesday its operating profit would grow by a high single-digit percentage on a like-for-like basis in 2014 after an 11 percent expansion in 2013.

The maker of Baltika, Tuborg and Kronenbourg 1664 said beer sales would fall slightly in western Europe markets and by a low single digit percentage in Russia, but Asian markets should continue to prosper.

Carlsberg shares rose as much as 6.8 percent to 583.00 crowns and were the strongest performers in the FTSEurofirst 300 index of leading European stocks.

Trevor Stirling, beverage analyst at Bernstein Research, said the figures for western Europe and Asia were better than expected and Russia, while weak, was no worse than foreseen.

“It’s a decent set of numbers and a forecast of high single digit organic EBIT, it looks pretty reasonable... Probably the consensus was looking more like mid single-digits,” he said.

Jyske Bank said in a note to clients that it would need to revise up its forecasts and could change its ‘reduce’ rating given the shares’ recent decline.

Carlsberg said that on a reported basis operating profit and net profit adjusted for special items would grow by a mid single-digit percentage.

Overall, fourth-quarter operating profit before special items grew by 7.9 percent to 2.32 billion Danish crowns ($427.5 million), higher than 2.18 billion expected by analysts in the poll.

For 2013, Carlsberg proposed a 33 percent increase in its dividend to 8 crowns per share, more than the 7.02 crowns expected in the poll.

The company said it expected a further increase in its payout in the next year as it pushes towards a promised payout ratio of at least 25 percent, up from 21 percent for 2013.


Carlsberg, the market leader in Russia, has suffered from a slowing of the economy there and a law banning the sale of alcohol from street kiosks, which together led to an 8 percent slump in the Russian beer market last year.

Carlsberg’s net revenue fell 11 percent in eastern Europe in the fourth quarter, a larger drop than expected, although cost control left operating profit slightly higher than the average market forecast.

World number three Heineken cut its outlook at the nine-month mark due to a sharp slide in central and eastern Europe.

Last week the Dutch brewer announced it had taken a 102 million euro impairment to reflect a weaker medium-term outlook for Russia, but forecast a return to revenue growth with expansion in other emerging markets.

For Carlsberg, eastern Europe makes up a little over a quarter of revenue. Europe as a whole represents 85 percent.

Over the past few years, the Danish brewer has pushed deeper into Asia, with a leading market share in Nepal, Laos and Sri Lanka, but a far smaller share of the much larger markets of India and China.

In 2013, Carlsberg started building two Asian breweries, in China and Myanmar and took control of China’s Chongqing Brewery.

Global brewers have pushed deeper into emerging markets in search of sales growth lacking in the more mature markets of western Europe and North America, where revenues only grow from raising prices and shifting consumers to more expensive beers.

Sector leader Anheuser-Busch InBev reports full-year results next Wednesday.

$1 = 5.4264 Danish crowns Additional reporting by Ole Mikkelsen,; editing by Tom Pfeiffer and Gareth Jones

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