Top story

Carlsberg has increased organic sales 4% to DKK 31.2bn (£3.6bn) in the first half despite volumes declining and the UK market still proving tough.

Total volumes fell 1% as the brewer sold less beer in the UK, Finland and Poland, Eastern Europe decreased in the second quarter and the Chinese market continued to decline in China.

However, a 5% rise in prices and a good mix in the majority of its markets offset the volume slump and pushed net revenue per hectolitre by 5%.

Currency movements hit reported sales in the half (-4%), with significant impact from the Eastern European, Chinese, British and Norwegian currencies.

Reported operating profit fell 4% to DKK 3.4bn (£405m) as a result of a translation impact of -11% and a net acquisition impact of -1%, missing analyst expectations.

CEO Cees ‘t Hart said: “The Carlsberg Group delivered a good set of results in line with our expectations. Most notably, we achieved a solid top-line and profit development as well as a strong improvement in cashflow. With the satisfactory execution of our plans so far, we maintain our full-year outlook for organic growth in operating profit.

“We’re satisfied with the progress on our key priorities for 2016, including the delivery of the benefits from Funding the Journey and the implementation of SAIL’22. Funding the Journey is getting a good momentum throughout the organisation and the priorities in SAIL’22 have received very positive feedback from our employees across markets and functions. We’re now in the process of operationalising the strategy and developing tangible action plans for 2017.”

The UK market was flat for the first half year as Carlsberg volumes declined and it lost market share. However, net revenue in Western Europe grew organically by 2% to DKK 18.9bn, driven by a healthy price/mix of 3%.

Hart added that he expected growth to slow down in the second half from 8% in the first six months to 1%. Carlsberg gave full-year guidance of low-single-digit percentage organic growth in operating profit maintained. But the brewer warned that currencies would hit profits harder than expected as it raised its headwind forecast from DKK 550m to DKK 600m.

Morning update

Glanbia (GLB) has reported a “strong” first-half performance driven by its performance nutrition division but the dairy market remained challenging. Revenues in the six months to 2 July nudged up 0.2% to €1.4bn (£1.2bn), driven by a rise of more than €50m in the performance nutrition business to more than €500m – a rise of 12%. Dairy sales 3.3% to €356.9m despite a 1.1% rise in volumes as prices declined 4.9%. Earnings before interest, tax and amortisation rose 13.7% in the half to €157.4m, with performance nutrition up 35% to €81.7m, nutritionals fell 4% to €58m and dairy Ireland was in line with expectations, up 1.1% to €17.7m

MD Siobhán Talbot said: “Glanbia delivered a strong performance in the first six months of 2016 driven by Glanbia performance nutrition. Sales of performance nutrition brands and value-added nutritional ingredients showed good growth in the first half of 2016 delivering on our vision to be a leading nutrition business.

“Global dairy markets remain weak and continue to be a challenge for parts of the business, however, the diversity of the Glanbia portfolio has enabled us to navigate this and we reiterate guidance for the full year of adjusted earnings per share growth of 8% to 10% on a constant currency basis.”

Carlsberg shares have slumped 4.3% to DKK 650 as it missed analyst profit expectations in the half. Glanbia had a more positive start with the stock up 1.4% to €17.74. The FTSE 100 continued yesterday’s downward trend, falling 0.2% so far to 6,881.34 points. Ocado has slumped 2.5% this morning to 273.4p and Tesco fell 1.3% to 155.7p.

Yesterday in the City

London’s leading stock slipped 0.7%, or 47 points, yesterday to 6,893.92 points as investors reacted to further Brexit jitters. Annual inflation in the UK nudged higher in July with the Office for National Statistics recording a rise of 0.6% in the 12-month Consumer Price Index. Inflation is set to climb further as the devaluation of sterling caused by Brexit pushes up import prices.

Elsewhere it was a fairly quiet day in the City with the summer holidays in full swing. Imperial Brands (IMB) edged up 0.7% to 4,144.5p ahead of this morning’s trading update.

Tesco (TSCO), Sainsbury’s (SBRY) and Britvic (BVIC) all managed to keep their heads just above water on a day when the majority of stocks were in the red.

Marks & Spencer (MKS) was hardest hit, falling 2.8% to 338.9p, with Ocado (OCDO) coming back down 2.1% to 282.5p.

WH Smith (SMWH) and B&M European Value Retail (BME) also fell 1.9% to 1,569p and 1.7% to 273.8p respectively.