PRESENTATION DEBT INVESTORS Carlsberg Group 30 August 2017 2 - PowerPoint PPT Presentation

PRESENTATION DEBT INVESTORS Carlsberg Group 30 August 2017

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CONTENT Group overview SAIL’22 & Funding the Journey Key financial highlights Group financing & key EURO bond terms Appendix 3

Group overview 4

The Carlsberg Group – 2016 24 24 c. 108b c. 108bn markets with DKK # 1 or 2 positions market cap 1 74% 62.6bn 62.6bn volumes sold in DKK # 1 or 2 markets net revenue 2 No. 1 No. 8.6bn 8.6bn in Eastern Europe DKK free cash flow 2 No. 2 No. 21.9bn 1.9bn DKK in Western Europe net debt 3 1.57x 1.5 7x No. 1-2 No. in seven Asian net debt/EBITDA 3 markets 1 25/8/17 2 FY 2016 3 30/6/17 5

Three regions – a more balanced portfolio WESTERN EUROPE EASTERN EUROPE ASIA Share of net revenue (2009 and 2016) 31% 7% 16% 24% 62% 60% Share of operating profit (2009 and 2016) 42% 2% 52% 18% 6% 6% 28% 54% 6

The Group has a strong portfolio of core beer brands … Share of Share of beer beer volume net revenue • Mainstream lager is among the alcohol categories with the highest market penetration and frequency of consumption • Represents our largest volume and profit pool INTERNATIONAL LOCAL POWER BRANDS BRANDS 7

… and attractive craft & speciality brands and alcoholic-free brews Share of Share of beer beer volume net revenue • Craft & speciality and alcohol-free brews are growing rapidly in many markets • Craft & speciality driven by consumer desire for premium brands with varied tastes and beer styles • Alcohol-free brews driven by the rising interest in healthier choices CRAFT & ALCOHOL-FREE SPECIALITY BREWS 8

SAIL’22 & Funding the Journey 9

Our new strategy – SAIL’22 – was launched in March 2016, guided by our ambition to be … SU SUCCE CESSFUL SFUL • … by driving sustainable top- and bottom-line growth • KPIs Market share • • Gross profit after logistics % Operating profit • PR PROFES OFESSIONAL SIONAL • … by excelling with our customers in insights, management and service • KPIs Customer satisfaction scores • ATTRA TRACTI TIVE VE • … by d elivering value for our shareholders, employees and society • KPIs • Operating profit • ROIC Free cash flow • 10

SAIL’22 defines clear priorities with a focus on core and growth opportunities to deliver shareholder value STRENGTHEN POSITION DELIVER VALUE THE CORE FOR GROWTH FOR SHAREHOLDERS Leverage our strongholds Win in growing categories Organic growth in operating profit Excel in execution Target big cities ROIC improvement Funding the Journey Grow in Asia Optimal capital allocation Team-based performance CREATE A Contribute to a better society WINNING CULTURE Compass (applying our codes and policies) 11

SAIL’22 sets clear targets for capital allocation 1. Organic growth in operating profit 2. ROIC improvement 3. Optimal capital allocation 1 : 1. Invest in to our business to drive long-term value creation 2. NIBD/EBITDA < 2.0x 3. Dividend pay-out ratio of 50% 4. Excess cash to be redistributed through buy-backs and/or extraordinary dividends 5. Deviating from the above only if value-enhancing acquisition opportunities arise 1 In prioritised order 12

SAIL’22 includes an ambitious sustainability strategy with industry-leading targets: Together Towards ZERO 2030 2022 • 50% reduction on in carbon bon emission ons at our breweries • 0% carbon bon emissions s at our breweries • 100% electricity from renewab able sources at our breweries • 30% reduction on in beer-in-hand carbon • Eliminat ate use of coal at our breweries footprint and 1 carbon footprint • 15% reduction on in beer-in in-han • 100% low climate impact cooling ng • Partner with 30 suppl pliers to reduce shared carbon footprint 50% reduction on in water usage at our 25% reduction on in water usage at our breweries • • breweries Expl plor ore going g below 2.0hl/hl at all high risk breweries • Partner to safeguard guard shared d water resources in high-risk areas • Partner to safeguard guard shared d water • resources in high-risk areas • 100% of our markets improv ove on • 100% availab ability of alcohol ol free beer (AFB) respon onsi sibl ble drinking g year on year • 100% respon onsi sibl ble drinking g messagi ging g through packaging and brand activations • 100% of our markets run partnersh ships ps to suppor ort respon onsi sibl ble consum umpt ption on • Zero accidents Reduction on in accide dent rate year on year • 13

Status of Funding the Journey and SAIL’22 as at 30 June 2017 FUNDING THE JOURNEY • On track to deliver the expected net benefits of DKK 1.5-2.0bn by 2018 • A large proportion to be delivered in 2017 • As planned, approx. 50% of the total net benefits will be reinvested in the priorities of SAIL’22 while the other approx. 50% will improve earnings • Funding the Journey governance structure and processes being incorporated into daily routines and standard business operations SAIL’22 • Investment in and execution of SAIL’22 priorities on-going • Strengthen core business • Drive future top-line growth • Craft & speciality growth of +25% • Alcohol-free beer growth in Western Europe of +13% • Launch of Together Towards ZERO with industry-leading ambitions 14

Funding the Journey was launched in November 2015, targeting net benefits of DKK 1.5-2.0bn by 2018 Elements of Funding the Journey • Optimise balance between market share and profits by improving the mix of brands, channels and promotional activities VALUE E MANA NAGEM EMENT ENT • Embedding the right sales and pricing tools across markets • Price/mix in 2016: 3% • Efficiency improvements within procurement, production, warehousing and logistics BSP1 1 an important tool to realise efficiencies • SUPPL PLY CHAIN IN EFFICIE ICIENC NCY • Complexity reduction Net SKU 2 reduction by end-2016: 1,200 • • Simplification of processes and functions • Operating cost management OPERATING ING EXPENS PENSE EFFICIE ICIENC NCY • Outsourcing of shared services • Total white-collar headcount reduction by end-2016: 2,280 • Russia: Production restructuring and brand impairment • China: Impairment of Eastern Assets and local brands in addition to further network restructuring RIGHT HT-SIZ IZING ING OF BUSINE INESSES ES • UK: Business restructuring • Several disposals, such as Danish Malting Group, Carlsberg Malawi, Carlsberg Uzbekistan, United Romanian Breweries and Nordic Getränke 1 Business Standardisation Programme 15 2 Stock Keeping Units

Key financial highlights 16

Strong H1 2017 results – well on track to deliver on key priorities for the year GROWING BALANCING TOP-& BOTTOM-LINE OUR GOLDEN TRIANGLE Net revenue +2% (organic) Operating profit +15% (organic) Net profit +23% VOLUMES GROSS MARGIN organic pro rata growth IMPROVING -2% +110bp CASH FLOW Free operating cash flow +37% REDUCING LEVERAGE Net debt/EBITDA 1.57x OPERATING PROFIT organic growth +15% 17

A clear target of SAIL’22 is to reduce net debt and financial leverage – H1 2017 results delivered accordingly DKKbn 3.0x 40.0 Continued reduction of financial leverage 2.5x 35.0 • In line with SAIL’22 capital allocation priorities (target: 2.0x 30.0 < 2.0x) • NIBD reduced by DKK 3.7bn since year-end 2016 1.5x 25.0 • NIBD/EBITDA down to 1.57x driven by: • Earnings growth 1.0x 20.0 • Working capital improvement • Disposals 0.5x 15.0 0.0x 10.0 H1 2015 FY 2015 H1 2016 FY 2016 H1 2017 Net debt/EBITDA Interest-bearing debt, net (rhs) 18

2017 outlook 2017 FINANCIAL EXPECTATIONS • Mid-single-digit percentage organic operating profit growth • Financial leverage reduction Other assumptions • A translation impact on operating profit of around DKK +50m based on the spot rate on 14 August (previously DKK +300m) • Financial expenses, excluding currency losses or gains and fair value adjustments, of around DKK 1bn (previously DKK 1.0-1.1bn) • Effective tax rate just below 30%. • Capital expenditures of approximately DKK 4bn 19

Net revenue and operating profit Net reven enue ue Operat ating ing profit fit DKK bn bn DKK bn bn 70 12 66.5 66.6 65.4 64.5 63.6 62.6 59.9 60.1 10.249 59.4 60 9.816 9.793 9.844 10 9.390 9.230 8.457 8.245 50 7.978 44.8 8 41.1 40 6 5.262 30 4.046 4 20 2 10 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20

Operating and EBITDA margins Operat ating ing margin gin EBITD ITDA margin gin 30% 40% 35% 25% 30% 20% 25% 15% 20% 15% 10% 10% 5% 5% 0% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Carlsberg Group Western Europe Carlsberg Group Western Europe Eastern Europe Asia Eastern Europe Asia 21

Average trade working capital and free cash flow Av. . trad ade workin king capita ital/ne /net reven enue ue Free e cash sh flow DKK bn bn 12 4.0% 10.5 2.0% 10 0.0% 8.6 -2.0% 8 7.5 -4.0% 5.9 5.9 6 5.2 -6.0% 3.9 -8.0% 4 -10.0% 2 -12.0% 0.7 0.1 -14.0% 0 2009 2010 2011 2012 2013 2014 2015 2016 H1 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 2017 22

Group financing & proposed transaction key terms 23