Danish beer brewer Carlsberg is banking on most Covid-19 restrictions being lifted in the coming months to buoy its earnings in its peak summer season after the pandemic bruised its 2020 results.
The world's third-biggest brewer after Heineken and Anheuser Busch said today it expected operating profit to grow between 3% to 10% in 2021.
This comes after it reported fourth-quarter sales that were slightly below expectations.
Its "on-trade" business, which covers sales in bars, restaurants and nightclubs, dropped by more than 20% last year due to lockdown curbs. Off-trade sales in stores grew by mid-single digit percentages.
Chief executive Cees 't Hart said the first quarter of this year would continue to be challenging for its on-trade business.
But he said the company expected a gradual improvement in the second quarter and for most restrictions to be lifted by summer.
"While the pandemic is not yet behind us and we don't know how long it will remain a challenge in 2021, we believe that Carlsberg will emerge even stronger from the crisis," the CEO said.
"The guidance we provide is broader than usual, reflecting these uncertainties," he added.
Sales in the fourth quarter came in at 12.5 billion Danish crowns ($2.01 billion), just below the 13.1 billion estimated by analysts in a Refinitiv poll.
Overall for 2020, beer sales suffered during the pandemic and Carlsberg saw its annual organic revenue decline by 8.4% to its lowest since 2007, while volumes shed 3.8%.
But annual operating profit declined by just 3.1% to 9.7 billion crowns - above analysts' forecast of 9.42 billion - mainly driven by Western Europe, its biggest market, with both Asia and Eastern Europe seeing growth.
Carlsberg said it would propose a dividend of 22 crowns per share, a 5% increase, and would launch a 750 million share buyback programme running until April 23.
"The sooner Covid-19 restrictions are lifted, the better it is for Carlsberg," Jyske Bank analyst Henrik Hallengreen Laustsen told Reuters. Laustsen considered the company's guidance "broad and slightly conservative, as expected".
Carlsberg also said it cut travel, entertainment and marketing costs in 2020. Its operating margin rose to 16.6%, up from 15.9% in 2019.
Hart said advertising costs this year could return "more or less" to the levels of 2019.
