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Carlsberg Warns That Higher Beer Prices Could Hit Sales

Carlsberg plans to raise beer prices to offset rising raw-material costs, potentially hitting beer sales this year, the Danish brewer announced on Friday.

The world’s third-largest brewer reported better-than-forecast fourth-quarter sales on Friday, but it expects organic growth in operating profit this year to fall short of last year’s level.

“The significantly higher input costs and continued impact from COVID-19 will pose challenges in 2022,” Cees ’t Hart, chief executive, said.

Costs per hectolitre rose by 10-12% last year, driven by higher commodity and transportation prices, ’t Hart said, adding that the company aims to offset the increased costs by raising prices, though this could have “a negative impact on beer consumption”.

Organic Operating Profit

Carlsberg expects organic operating profit to grow by 0-7% in 2022, compared to 12.5% last year.

“We’re looking into a different situation this year, and therefore we have a relatively broad range on our financial guidance,” the CEO said.

The company had noted on Thursday that it would look for growth beyond its core beer market over the next five years, to focus on categories such as cider, seltzer and alcohol-free beer, as well as premium brands such as 1664 Blanc and Grimbergen, which, it notes, generate higher profit margins.

Fourth-Quarter Sales 

Sales in the fourth quarter reached 15.2 billion Danish crowns ($2.34 billion), against the 14.7 billion crowns estimated by analysts in a company poll.

Carlsberg noted that it would propose a dividend of 24 crowns per share, or 3.4 billion crowns in total, up by 9% year on year.

The company also launched a one-billion-crown share buy-back programme, running until 22 April.

News by Reuters, edited by Donna Ahern, Checkout. For more drinks stories, click here. Click subscribe to sign up for the Checkout print edition.

 

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