Carlsberg Reports Mixed Results With Soft Q2 But FY Guidance Upgrade

Baa1/NR/BBB+[N] EUR spreads up to +2bp

Soft Q2 results accompanied by a FY guidance raise with management comments pointing to a stronger start in Q3 compared to Q2 though we note that the FY guidance still falls short of BBG consensus. Credit metrics broadly weaker with leverage up from FY23 and net cash flow lower due to payouts. Doesn’t look to be much in the way of new info on recent M&A.

• Q2 results look soft with organic sales +2% (vs. BBG consensus of +4.75%) driven by Western Europe -1.3%, Asia +1.9% and CEE/India +8.8% with poor European and Chinese weather weighing on the results as well as poor consumer sentiment in Asia.
• H1 operating profit was +4.7% organically (vs. consensus of +5.15%), and the reported margin fell from 16.6% to 16.3%, mainly due to higher sales and investments in marketing.
• H1 FCF was +59% YoY to DKK 6bn though this was mostly financial on the back of cash on deposit not meeting accounting definitions in 2023; OCF was -3.7% YoY to DKK 5.9bn, mostly explainable by WC changes. Net cash from continuing ops was DKK -2.7bn from DKK 3.5bn in H123 due to higher payouts and the EUR 1bn bond repayment only partially refinanced.
• Leverage of 1.65x is up from 1.47x at FY23 and 1.46x at H123 with NIBD rising from DKK 22.4bn to DKK 25.2bn on the back of buybacks and dividends.
• FY guidance raised; organic op profit +4-6% (previously 1-5%, BBG consensus of +6.9%) albeit with a translation impact of DKK -300mn from DKK -250mn.
• Doesn’t seem to be much in the way of new info on recent M&A; slide comments are a copy and paste from earlier presentations with nothing jumping out from the Q&A.