World: HSBC lowers Carlsberg to ‘hold’ following weaker-than-expected first-quarter results

Carlsberg downgraded its outlook for fiscal year 2025, prompting analysts at HSBC to lower its rating to “hold” from “buy” and reduce its target price to DKK910 from DKK940, in a note dated May 7, Investing.com reported.

The downgrade follows weaker-than-expected first-quarter results, primarily driven by underperformance in key markets such as Kazakhstan and Vietnam, alongside ongoing challenges in Asia.

In Q1, Carlsberg reported a 1.5% decline in organic sales, worse than the consensus estimate of a 0.8% decline.

Volumes fell 2.3%, compared to the expected 1.9% drop. The results were mainly affected by a tough comparison with last year’s inventory buildup in Kazakhstan and continued market share losses in Vietnam due to heightened competition. Weakness in Laos and Cambodia further contributed to the poor performance.

While there was growth in China, with a 1.5% revenue increase driven by premium products, Carlsberg’s outlook for the region remains cautious.

The company expects a 2% decline in the Chinese market for the year, a slight improvement over last year’s 5% drop.

In India, Carlsberg continued strong growth, but the broader Asian outlook remained weak. In Western Europe, Carlsberg saw a 2.9% volume decline, better than the consensus expectation of 4.2%.

The region’s performance was impacted by Easter phasing and the loss of the San Miguel license in the U.K., though Poland and Norway performed better than expected. France showed potential for improvement in Q2, driven by promotional activities.

The U.K. was affected by higher excise duties following the termination of the 1664 license.

Britvic, acquired in January 2025, also posted weaker-than-expected results. The segment saw a 5.3% decline in net sales, with volume down 4.1%, largely due to Carlsberg exiting unprofitable segments and Easter phasing.

Despite these setbacks, Carlsberg maintained its expectation for a GBP250 million EBIT contribution from Britvic this year.

HSBC revised its FY25 organic sales growth forecast down to 2.3% from 2.7%, citing weaker-than-expected performance in Asia and a smaller-than-expected contribution from Britvic. The bank also reduced its EPS estimates for FY25 and FY26.

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