Carlsberg-As-Annual-Report-2019.Pdf
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ANNUAL REPORT 2019 CARLSBERG GROUP ANNUAL REPORT 2019 TO OUR SHAREHOLDERS 2 MANAGEMENT FINANCIAL REVIEW STATEMENTS TO OUR SHAREHOLDERS CONSOLIDATED FINANCIAL STATEMENTS Letter from the Chairman Statements ...........................................55 & the CEO ..................................................... 3 Notes ......................................................59 IN BRIEF PARENT COMPANY FINANCIAL Strategic priorities ...................................... 5 STATEMENTS Financial achievements ............................ 7 Statements ........................................ 123 Our regions ................................................... 8 Notes ................................................... 126 Our brands .................................................... 9 Key figures ................................................. 10 REPORTS Management statement ................ 133 RESULTS AND EXPECTATIONS Auditor’s report ................................ 134 Group ........................................................... 11 Western Europe ....................................... 13 Asia ............................................................... 16 Eastern Europe ......................................... 19 2020 earnings expectations ................ 21 CREATING VALUE Purpose and ambition ........................... 22 Business model ........................................ 23 Win in craft & speciality SAIL’22 in action ...................................... 24 SAIL’22 KPIs .............................................. 30 Front page: Our modern craft brewery Capital allocation .................................... 31 opened in 2018 in Klaipeda, Lithuania. In Risk management ................................... 32 addition to brewing a broad range of craft- style beers under the Svyturys and Raudonu GOVERNANCE Plytund (Red Brick) brands, the brewery Corporate governance ........................... 34 houses a gastrobar, shop and beer museum. Remuneration report ............................. 41 Since it opened, more than 120,000 people Supervisory Board................................... 47 have visited the brewery, which also hosts Executive Committee ............................. 50 music events and art performances. In July, Share information ................................... 52 the brewery hosts the biggest Lithuanian carlsberggroup.com @carlsberggroup beer festival, Brewmaster’s Day, featuring Forward-looking statements ............. 53 beer tastings, excursions, street-food stands, music and stand-up comedy, and attracting @carlsberggroup Carlsberg Group crowds of about 20,000. To our shareholders CARLSBERG GROUP ANNUAL REPORT 2019 TO OUR SHAREHOLDERS 3 LETTER FROM THE CHAIRMAN & THE CEO A YEAR OF GOOD PERFORMANCE 2019 was a good year that saw the highest ever cash returns to shareholders. Chairman Flemming Besenbacher 2019 was a year of good FINANCIAL HEALTH improvement of 100bp in our In line with our capital allocation the dividend to DKK 21 per share. performance, with organic Since the launch of SAIL’22 in early operating margin. ROIC improved principles, we have invested in our The Board will also propose that revenue growth, margin 2016, we have seen improved from 8.1% to 8.8%. business, reduced leverage to well 4.4m treasury shares be cancelled. expansion, strong cash flow financial performance, as evidenced below 2x net interest-bearing debt/ and a significant increase in by organic top- and bottom-line Our financial results are discussed on EBITDA and delivered on our STRATEGIC HEALTH cash returns to shareholders. growth, strong cash flow, a healthy pages 11-12. dividend policy of a payout ratio of SAIL’22 continues to define our balance sheet and reduced leverage. around 50%. Consequently, in strategic agenda, and we saw good The essence of our purpose is to This has enabled us to significantly During the year, we adjusted our February 2019 we launched a 12- execution of our strategic priorities in brew for a better today and increase the cash returns to earnings expectations twice. In month DKK 4.5bn share buy-back 2019. tomorrow. We are proud to be a shareholders. August, we increased the full-year programme. company with a purpose that reflects guidance from mid- to high-single- Enabled by the Funding the Journey our unique heritage and ambition for Organic revenue grew by 3.2%, the digit percentage organic growth, and The value of shares repurchased in benefits, since 2016 we have the future. result of 3% price/mix and 0.1% in October we further increased this fiscal 2019 amounted to DKK 4.1bn. invested in and strengthened our volume growth. These figures point to around 10%. The reasons for the Coupled with the dividend of DKK 18 core beer business, increased the Bringing our purpose to life through to our ability to premiumise our earnings adjustments were strong per share paid in March, the total attractiveness of our portfolio with the execution of SAIL’22 means that portfolio by offering attractive and results in Asia, particularly in China, cash amount returned to shareholders stronger craft & speciality brands we grow our business, create value desirable consumer propositions. The and solid Q3 figures in Western during 2019 was DKK 6.8bn. and alcohol-free brews, and for our shareholders and make a top-line growth was achieved Europe. improved internal capabilities, for positive contribution to the societies despite lapping a very hot 2018 On 4 February 2020, we initiated a example within supply chain, the in which we operate. Read more summer in Western Europe and In 2019, we acquired the remaining new share buy-back programme of commercial area, innovation and about our purpose on page 22. facing a difficult competitive situation 25% of Cambrew in Cambodia and DKK 5.0bn. Read more about the digital. in Russia. the remaining 1.2% of Carlsberg share buy-back programmes on We are pleased that we were able Ukraine, giving us full ownership of page 31. As shown on page 30, performance to report progress on the financial, The positive top line, combined with both these businesses. In addition, in 2019 against our SAIL’22 KPIs strategic and organisational health our continued focus on efficiencies we acquired a minority stake in the At the Annual General Meeting on was positive. We saw volume growth of the Carlsberg Group for 2019. and costs, led to organic operating Chinese craft brewery Jing-A 16 March 2020, the Supervisory of 16% in craft & speciality and 7% profit growth of 10.5% and an Brewing Co. Board will propose a 17% increase in in alcohol-free brews. Gross brand CARLSBERG GROUP ANNUAL REPORT 2019 TO OUR SHAREHOLDERS 4 We are pleased to report that our winning contribution from core beer was employee survey conducted in culture has taken solid root in our business. up 3%, and in Asia revenue grew 2019, which showed improved organically by 12.3% and operating organisational health as well as CEO Cees ’t Hart profit by 23.4%. employee engagement and satisfaction. The survey also We contributed positively towards revealed a high level of commitment the SAIL’22 financial KPIs of organic to the triple A concept (alignment, operating profit growth, improved accountability, action), which guides ROIC and optimal capital allocation. our behaviour and fosters a team- based performance culture. As part of our sustainability programme, Together Towards There has also been a significant ZERO, we have set clear targets for improvement in the quality and carbon, water, responsible drinking capability of our leaders. This is seen and health & safety. During the year, in a high level of internal recruitment we made progress on all of these. for vacant management positions at We are particularly pleased to report all levels. that since 2015, we have reduced carbon emissions at our breweries by THANK YOU 30%, with five of our sites now We would like to thank our carbon-neutral. shareholders for their support and trust. We also want to thank Our Sustainability Report contains everyone in the Carlsberg Group for a wealth of data and a qualitative their dedication, enthusiasm and overview of our achievements to continued delivery towards a date and our future plans. In the successful SAIL’22. 2019 report, we put special focus on our many partnerships, which are Finally, we would like to acknowledge crucial for achieving our ambitious the excellent relationships that we targets. In this Annual Report, you have with our customers and can find highlights of Together suppliers, and to express our Towards ZERO on pages 6 and gratitude to our consumers around 27-29. the world. ORGANISATIONAL HEALTH We are pleased to report that our Flemming Cees winning culture has taken solid root Besenbacher ’t Hart in our business. Important evidence Chairman CEO of this was provided by the CARLSBERG GROUP ANNUAL REPORT 2019 IN BRIEF 5 STRATEGIC PRIORITIES STEPPING UP ACCELERATING ON DIGITAL TOGETHER An important priority of SAIL’22 is to leverage READ MORE digital across our business. Our current focus is ABOUT OUR on step-changing the quality of our interface with STRATEGY AND KPIs ON our customers, especially in the on-trade, and PAGES 24-30 Our headline for 2019 was advanced analytics. On the first, examples include “Accelerating Together” and by rolling out our on-line ordering platform – Carl’s that continue the execution of Shop – digitalising DraughtMaster and developing SAIL’22, supporting organic top- apps to enhance the business of our on-trade line growth of 3.2% and operating customers. On analytics,