LCordi+indlæg+-+Optimering+af+virksomheders+kapitalstruktur+8+april (1)

8/12/2019 LCordi+indlg+-+Optimering+af+virksomheders+kapitalstruktur+8+april (1)

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Carlsberg GroupCapital Structure & Financial Policy

Presentation for The Danish Society of Financial Analysts

8th

April 2014

Lars Cordi, VP & Group Treasurer


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1. Group development

2. Ambition

3. Ownership structure

4. Financial policy

5. Importance of investment grade

6. Cash is king


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3

This is Carlsberg Group today

No. 1in Northern & EasternEurope and fourth largestbrewer in the world

500different beerbrands

40 000employees onthree continents

36 000 000 000bottles of beer sold in 2013

150Markets aroundthe world

Presentation for The Danish Society of Financial Analysts - 8th April 2014


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4

The Carlsberg Group has undergone big changesin recent years

1990

OPERATIONS INDenmark, UK and Malawi. Minorityownerships in Finland, Italy and Malaysia

Carlsberg is an international beer brand but mainly

through export and licensed brewing

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures



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MALAWI

5

The journey to becoming an internationalcompany begins few leading positions globally

ACQUISITIONSSweden, Finland, Italy, Portugal,Lithuania, Poland, Croatia, Turkey,Nepal, Sri Lanka and Vietnam

1999

+ 50% ownership

0-50% ownership

Joint ventures



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MALAWI

6

Merger with Orkla (Norway) and joint venture in BBH

ACQUISITIONSNorway, Sweden, Switzerland, Poland,Turkey

JOINT VENTURES

BBH (Russia, Ukraine, Belarus and Balticcountries) is a joint venture betweenCarlsberg Breweries (owned byCarlsberg and Orkla) and UK brewerScottish & Newcastle

2001

+ 50% ownership

0-50% ownership

Joint ventures



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Acquisition of Scottish & Newcastle gives majorityownership of BBH, France, Greece and more

ACQUISITIONSBBH (Russia, Ukraine, Belarus,Kazakhstan, Uzbekistan, Balticcountries), France, Greece, India,Western China

DIVESTMENTS

Turkey, South Korea

The biggest acquisition by a Scandinavian company

2008

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures



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Carlsberg Group today the worlds fourth largestinternational brewer

ACQUISITIONSIncreased shareholding in ChongqingBrewery Company in China to 60%

2013

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures



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Our three regions at a glance

Western Europe

% of totalbeer volume

% of EBIT

Eastern Europe Asia

2013

2013

Group

Presentation for The Danish Society of Financial Analysts - 8th April 2014 10

41 35 24

47 36 17(2009: 43%) (2009: 44%) (2009: 13%)

(2009: 41%) (2009: 52%) (2009: 7%)


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2. Ambition


4. Financial policy


6. Cash is king


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We want to be a significant player in the marketswhere we choose to compete

We want to balance our presence in both mature and growth markets

Most of the western world is fully consolidated and major local playerare owned by the big four international brewers

Worlds top-4 brewers



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2. Ambition


4. Financial policy


6. Cash is king


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Group ownership structure

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CarlsbergFoundation

Freefloat

Carlsberg A/SListed on Nasdaq OMX

Copenhagen

CarlsbergBreweries A/S

Operating companies

30% of capital75% of votes

70% of capital25% of votes

100%

20%

34%20%

26% Denmark

USA

UK

Other

Note: Excluding The Carlsberg Foundation

Geographical break-down of shareholders



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Carlsberg Foundation Charter

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+ New dividend policyMin. 25% of retained earnings to be phased in over two years

1970

200751% of capital

201351% of votes25% of capital

51% of votesNo condition on capital



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2. Ambition


4. Financial policy


6. Cash is king


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Funding structure

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Carlsberg A/SListed on Nasdaq OMX

Copenhagen

CarlsbergBreweries A/S

Operatingcompanies

72%

18%

4%5% 1%

Bonds

Non-current bank borrowing

Mortgages

Current bank borrowings

Other, current and non-current

Funding sourcesConservative funding policy

Main funding sources arebonds and long-term bankfacilities

A new EUR 2,510m multi-currency facility due February

2019 with options to extendadditional 2 years was signedDecember 2013

5 bonds issued under 5bnEMTN program

Centralized funding at the level of Carlsberg Breweries A/S



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2. Ambition


4. Financial policy


6. Cash is king


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Investment grade issuers have priority access tofinancial markets during volatile times

21

The Collapseof Lehman

Brother

TheSovereignDebt Crisisin Europe

PeripheralEuropean

DebtConcerns

Source: Dealogic, Bloomberg, BNP Paribas

Over all supply decreases as investors becomes more picky in volatile times

The IG market is by far more resilient, is open longer and never totally shuts down evenwhen volatility strike whereas the red Sub-IG (includes Non-rated) areas vanishes orsignificantly decrease during the same periods

IG corporates will have greater access to bigger pools of liquidity at all times, but morespecifically (and perhaps importantly) when liquidity freeze up

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Sub-IG Corporate EUR IG Corporate EUR

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90VIX Index (RHS)

Quarterly Issuance Volumes in Relation to the VIX Volatility Index since 2008



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Investment grade issuers benefit from morestable funding costs during volatile times

Presentation for The Danish Society of Financial Analysts - 8th April 2014 22

Enron Default ,Dotcom Bubble and9/11 attack

LehmanBrothercollapseand debtcrisis

PeripheralEuropeanDebtConcerns21%

Source: Merrill Lynch Index, BNP Parisbas

0

5

10

15

20

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1999 2001 2003 2005 2007 2009 2011 2013

European BBB index European HY BB index

The costs differential between European BBB and BB High Yield Corporates since 1999

The historical cost of funding between BBB and BB rated issuers shows that the BBB cost ismuch less volatile compared to BB

Even though the funding cost rise for BBB corporates at distressed times, it remains lowcompared to the significant spikes BB corporates experience

On a note separate to cost, there is of course other benefits of staying IG such as less

covenants, longer maturities available etc.


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2. Ambition


4. Financial policy


6. Cash is king


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Strong focus on working capital management toimprove financial flexibility

0%

2%

4%

6%

8%

10%

12%

2006 2007 2008 2009 2010 2011 2012 2013

ATWC/net revenue

24Presentation for The Danish Society of Financial Analysts - 8th April 2014

Group wide initiative toreduce average tradeworking capital

Dedicated work streamsand initiatives forinventories,accounts payableand accountsreceivables


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