E-Malt.com News article: 3679

Denmark: The Danish Brewery Group A/S (Bryggerigruppen) announced on November 18 a slight rise in net profit for the first tree quarters of this year. Bryggerigruppen reported a consolidated profit before tax of DKK 172.0 million (compared to DKK 154.5 million for the same period of 2003). Company’s net revenue for the first nine months 2004 was up by 6.8% to DKK 2,145.5 million. The period January-September 2004 for Bryggerigruppen was characterised by: considerable marketing expenses relating to strategic initiatives under the V8 Next Plan; bad summer weather in large parts of Europe; increased competition and pressure on prices in Northern Europe. The brewery has increasing its market shares in Italy, Denmark and Lithuania in the reported period. Company posted an EBIT of DKK 202.9 million compared to DKK 176.2 million in 2003. Free cash flow amounting to DKK 100.4 million compared to DKK 193.6 million for the same period of 2003 primarily due to increased packaging investments. Bryggerigruppen reported unchanged expectations for the full year, i.e. a profit before tax in the amount of DKK 235-265 million.

In Q3 2004, the Group’s beer, malt and soft drinks sales amounted to 1.5 million hectolitres, which is a 28.7% increase over Q3 2003. Adjusted for volumes from SIA ”Cido Partikas Grupa”, which was not included in the consolidated financial statements in 2003, the increase was 9.5%. In addition to the increase attributable to Cido, the sales increase in Q3 is primarily attributable to developments in Denmark, Germany and Lithuania.

For the year to date, The Danish Brewery Group’s sales aggregated 3.5 million hectolitres, which is a 13.6% increase over the same period of last year. Some 7 percentage points of the increase is attributable to Cido, which is included in the consolidated financial statements as of 1 July 2004, whereas the remaining part of the increase is again primarily attributable to Denmark, Germany and Lithuania.

Movements in sales and distribution expenses for 2004 to date were affected by considerable increases in marketing expenses over 2003. The increases are due to the realisation of the V8Next Strategic and Action Plan and its initiatives relating to e.g. the launch of Royal Pilsner and Royal Classic as well as the relaunch of Kalnapilis in Lithuania. These initiatives form the basis of realising the long-term objectives of the Group. Furthermore, the increase in sales and distribution expenses is due to higher than expected non-recurring expenses relating to the restructuring of the Group’s Danish storage structure, which took place in early 2004. In that respect, disposal of assets, provision for unused leasehold premises, etc affect the financial statements for the year to date negatively by some DKK 8 million.

The group’s products are marketed on some 65 markets, with a focus on the Nordic and Baltic countries, Italy and Germany, and has subsidiaries in Latvia, Lithuania, Sweden, France, Portugal, Germany, Poland and the US.

In Denmark Bryggerigruppen’s sales and revenue increased as compared to the first 9 months of 2003 and particularly the Group’s market shares on beer increased significantly. In Italy sales increased slightly in a declining market that was affected by bad weather in the summer of 2004 and an anticipated duty increase at 1 January 2004, which reduced sales early in the year. Developments in Germany were satisfactory in the period in spite of continued significant decline in canned beer sales. In Q3 The Danish Brewery Group introduced Faxe in both returnable bottles (glass) and PET (non-returnable plastic containers).

In Q3 developments in Eastern Europe were primarily influenced by the acquisition of SIA ”Cido Partikas Grupa” at 1 June 2004, which increased sales by some 200,000 hectolitres. In Lithuania sales of Kalnapilio-Tauro Grupé products continued increasing in Q3 primarily driven by the relaunch of the Kalnapilis brand. Sales and revenue in Poland showed an increase in Q3 over the same period of last year, which could indicate future strengthening of developments.

The significant net revenue increase of some 69% for the year to date is primarily due to the distribution company Impec Holding SAS not being included in the financial statements for 2003 until as of Q4 2003. Developments in the Caribbean and North American were satisfactory, whereas Africa saw a minor decline.

The expectation for the Group’s profit before tax for 2004 remains unchanged at DKK 235-265 million. Both operating margin and return on invested capital (ROIC) are estimated at some 10%, whereas free cash flow (before acquisitions) is now expected to amount to some DKK 175 million due to, among other things, increased investments in new packaging in Denmark and Germany.



21 November, 2004