Carlsberg warns of further price rises as inflation continues to bite

Carlsberg’s chief executive said the brewer was still experiencing rises in input costs and would need to keep raising prices to cover the increases, as the company reported weaker than expected full-year earnings.

The Danish group reported 2023 revenue growth of 4.7 per cent to DKr73.59bn ($10.6bn) on Wednesday, a fraction higher than analysts’ estimates, but said sales volumes remained negative as a result of weaker consumer demand and “sticky” cost inflation.

Operating profits grew 5.2 per cent on an organic basis, below consensus estimates of 5.8 per cent, and fell 3.2 per cent on a reported basis to DKr11.1bn.

“We’re not seeing any let-up in the overall cost picture of the business,” said chief executive Jacob Aarup-Andersen. “We don’t see the same inflationary levels we saw last year but the absolute cost is still going up. Pricing will have to go up to cover overall cost increases.”

Revenues per hectolitre of drinks sold were up 10 per cent on a like-for-like basis for the full year, driven by price increases.

Despite these cost pressures Carlsberg still raised its long-term revenue growth target from a range of 3 to 5 per cent to 4 to 6 per cent, after announcing a refreshed strategy, which includes prioritising its non-alcoholic beer category and driving growth in Asia.

Consumers squeezed by the cost of living crisis had hoped that price rises would stabilise as the cost of raw materials and other production costs such as fuel came down from record highs after Russia’s invasion of Ukraine. However, they have remained stubbornly high, with rises only slowing down rather than going into reverse.

Aarup, who took over as chief executive last September, said that while the prices of some commodities such as aluminium for cans and barley had decreased, those for sugar and glass were “coming up”.

Approximately 25 per cent of Carlsberg’s total cost of goods sold were related to raw materials and commodities. Indirect costs related to products and services, meanwhile, were affected by “a lot of sticky inflation”, he said.