Carlsberg has withdrawn a profitability target and will now look to widen its Western European operating margin by at least 50 basis points a year on average for the next five years. It will also look to deliver growth in adjusted earnings per share, excluding some items, of more than 10%.
In February 2010, the brewer said it was aiming to increase operating profit to 20% of sales in three to five years, but in a recent statement it said that this target had “proved difficult to use” and that “several events, both within and beyond our control, have and will continue to impact margins”.
In addition to these new targets, the company announced it will book about Kr300million ($54m) to Kr400m this year to standardise its supply chain in Western Europe. As part of that transformation, the company is aiming to centrally manage all of its procurement and logistics in the region.
CEO Joergen Buhl Rasmussen said this project “will be a key priority in 2013. It represents a step change in the way we run our business in Western Europe and will provide us with significant long-term benefits and competitive advantages”.
Many brewers sales have come under pressure particularly in Western Europe as a result of the economic downturn which has stunted consumer spending and have also witnessed volatile malt barley prices, a key brewing ingredient, as well as increased government regulation.
For example, in Russia where Carlsberg is the largest beer-maker, the government recently raised taxes and increased regulation on alcohol sales.
