(Bloomberg) -- Carlsberg A/S increased its profit growth outlook for the year as cost controls helped the Danish brewer to offset weaker consumer demand.
Organic operating profit will rise between 4% and 6% this year, up from previous guidance of between 1% and 5%, the Tuborg maker said Tuesday.
Tighter cost controls helped counter a smaller-than-expected 1.4% rise in volumes in the first half of the year, which also lagged analyst estimates. The performance was dragged down by western Europe, which experienced bad weather and sluggish demand in China.
Carlsberg shares rose 2.8% in early trading in Copenhagen, having fallen 5% so far this year through Tuesday’s close.
Consumer companies are grappling with shoppers reaching their spending limits and cutting back, after a period of high inflation left them feeling the pinch.
Carlsberg Chief Executive Jacob Aarup-Andersen told Bloomberg Television Wednesday that while consumer sentiment in western Europe was stabilizing, it remains very subdued in China. “On the ground, we are not seeing an improvement in the Chinese consumer,” he said. “I don’t see the Chinese consumer turning around the corner.”
Economic growth in the world’s second-largest economy has slowed following a property downturn, which has hit consumer multinationals hard. Carlsberg’s China volumes missed estimates due to bad weather and weak consumer sentiment, Citi analyst Simon Hales said in a note.
Aarup-Andersen has vowed to spend more on marketing to lure stretched consumers back. He’s also pledged to keep raising prices to offset higher costs and lower volumes, as consumers drink less premium beer or switch to cheaper brands.
Carlsberg’s chief is looking to diversify away from alcoholic beer as sales slow. Customers are instead drinking alcohol-free beer, soft drinks and alternatives such as hard seltzer. As part of the shift, Carlsberg agreed in July to buy UK soft drink producer Britvic Plc for £3.3 billion ($4.2 billion).
--With assistance from Guy Johnson, Tom Mackenzie, Eleanor Harmsworth and Alastair Reed.
(Updates with shares and analyst comment.)
©2024 Bloomberg L.P.
