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Carlsberg predicts surge in demand similar to Jazz Age boom

Carlsberg is expecting a surge in demand this summer similar to a boom seen a century ago as more people are vaccinated and lockdowns lift, according to the Danish brewer’s chief executive.

Cees ‘t Hart told the Financial Times that although there was a “high uncertainty” about 2021 the world’s third-largest brewer expected a “normal summer” after a gradual reopening in the coming months.

“If vaccinations come through, we’re pretty optimistic because we see people want to go out. In the 1920s, after Spanish Flu and [the] first world war, there was a dramatic surge and you saw things like jazz clubs and ballroom dancing. After Covid, there will be for sure some bright side in our kind of business,” he added.

He stressed that pubs and brewers that survived Covid-19 would do “very well”. He said: “We will appreciate what it is to be free to go out to pubs and see friends. It will not just be a few weeks or a month; it will last a lot longer.”

Like rivals Anheuser-Busch InBev and Heineken, the Danish brewer suffered a difficult 2020. Its global sales to pubs, restaurants and hotels fell by 20 per cent owing to lockdowns and although revenues from shops increased, it was not enough to compensate.

Last week Carlsberg forecast a 3-10 per cent rise in underlying operating profits this year on the assumption that Europe has a difficult first quarter, that pubs and restaurants start reopening in the second quarter and that by the summer things are back to normal — and that China is normal throughout the year while the rest of Asia suffers more.

Hart conceded that if lockdowns were prolonged or there were problems with the rollout of vaccines in Europe then Carlsberg would be forced to revise its outlook. He added that at a time of lockdowns and slow pace of vaccinations in Europe “it is difficult to be too optimistic”.

Carlsberg managed to boost its operating profit margin, return on invested capital and dividend per share last year despite Covid, and signalled its confidence in its balance sheet by continuing its share buyback programme into the first quarter of 2021 and lifting its dividend.

“We’ve proven in 2020 that we’re a really resilient business. If you need to make your business resilient in a time of crisis it’s too late. We weathered the storm and we will come out of it well,” Hart said.

He added that Carlsberg’s priority was to invest in its own business, including through deals, but that it wanted “to give confidence to the market that we are committed to do buybacks when we don’t see decent M&A opportunities” as it said it would buy back DKr750m ($122m) of shares by the end of April.


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