Carlsberg's revenue and EPS have been stagnating for around 15 years now. In absolute terms, adjusted for inflation, both are actually down.
Last year, cash flow came under pressure from a record investment program—which, speaking of inflation, clearly illustrated its disastrous effects on a capital-intensive, business that lacks growth.
This year, the £4.1bn acquisition of Britvic is weighing on resources and doubling the company's debt ratio. However, there is no cause for concern about the dividend, which remains well covered.
Moreover, the first six months of the year show little sign of any change in trend. On an organic basis, volumes and sales fell another 1.7% and 0.3% respectively. On a reported basis, however, thanks to Britvic, volumes rose by 16%, while sales increased 18.2%.
The acquisition of this British company is a strategic move that should enable Carlsberg to diversify beyond the beer market, which is now in structural decline in both Europe and North America.
The brewer's EV currently stands at around 9x EBITDA. Note that Britvic, whose sales are six times lower, was acquired by the Danish company at 14x EBITDA.
