Carlsberg announces new CEO; Russian market puts pressure on full year results
Cees ‘t Hart has been CEO of Royal FrieslandCampina since 2008, leading the integration of Friesland Foods and Campina and re-engineering the company’s business model. In this period revenues grew from €8.2bn to €11.4bn.
Prior to this, Cees ‘t Hart spent 25 years with Unilever, with his last position as a member of the Europe Executive Board.
The appointment comes as troubles in the Russian and Eastern European market put pressure on Carlsberg’s FY2014 results (which were also announced this morning).
Group beer volumes declined by 3% over the year, attributed to weak Russian and Ukrainian beer markets (The Russian beer market declined by an estimated 7%).
But the group vows to maintain a strong business in Russia, saying it will exploit long-term opportunities in the country.
Organic net revenue grew 2% to 64.5bn DKK ($9.85bn).
Group operating profit for the year grew by 1%, with strong performances in Western Europe and Asia more than offsetting the profit decline in Eastern Europe.
The good news: Asia
Asia has become ‘an important growth driver’ for the Carlsberg Group – now accounting for 20% of operating profit - and the company says it will continue to invest in brands, breweries, and infrastructure in the region.
Thanks to acquisitions, beer volumes grew by 24% (mainly due to increased ownership in Chongqing Brewery Group as of December 2013, and the Chongqing Eastern Assets acquisition last November). Net revenue was up 38% to 12.5bn DKK ($1.9bn) over the year.
The Carlsberg brand grew by 12% in its premium markets in Asia, with good results in India (driven by Carlsberg Elephant) and China (driven by Carlsberg Chill and Carlsberg Light).
Looking ahead, Carlsberg predicts Asian growth will continue at a similar rate into 2015.
The bad news: Eastern Europe
Regional beer volumes in Eastern Europe were down 11%, which Carlsberg attributes to an “uncertain and challenging macro-environment, as well as increasing inflation during the year which reduced consumer purchasing power and impacted the beer category negatively.”
Organic net revenue declined by 3% and operating profit declined by 12%. A negative currency impact affected operating profit, the group said.
The Russian beer market declined 7% in FY2014 (and 9% in the latest quarter).
While Carlsberg has taken actions to reduce cost – such as announcing the closure of its Krasnoyarsk and Chelyabinsk breweries last month – it maintains the Russian market retails long-term growth opportunities and pledges to maintain a strong business in the country.
