Investors interested in Beverages - Alcohol stocks are likely familiar with Carlsberg AS (CABGY) and Brown-Forman B (BF.B) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision tr ...

Core Viewpoint - The article highlights the significant impact of U.S. tariffs on the global alcohol industry, leading to job losses and financial strain for companies, including the closure of the historic Barrels Factory in Kentucky, which will result in 210 employees losing their jobs [2][3]. Group 1: Impact of Tariffs on Companies - The closure of the Barrels Factory is part of a broader strategy by Brown-Forman to cut costs, with an expected annual savings of at least $70 million and potential asset recovery exceeding $30 million [2]. - Brown-Forman's global workforce reduction plan includes laying off over 540 employees, indicating a significant shift in operational strategy due to tariff pressures [3]. - The global alcohol industry is experiencing a downturn, with many companies facing stagnant or declining sales, prompting them to adjust their strategies in response to tariff uncertainties [3][4]. Group 2: Market Dynamics and Trade - The U.S. is a major market for imported alcoholic beverages, with projected imports of distilled spirits at $11.42 billion, beer at $6.7 billion, and wine at nearly $6.8 billion in 2024 [6]. - Major international companies like Diageo and Pernod Ricard are adjusting their performance forecasts due to tariff uncertainties, with Diageo canceling mid-term guidance and others lowering expectations [6]. - The article notes that the previous tariff disputes led to a significant drop in U.S. whiskey exports to the EU, with exports declining by over 20% [10]. Group 3: Consumer Behavior and Industry Challenges - The article discusses the adverse effects of tariffs on consumer prices, particularly for European wines, which could see price increases of nearly 30% due to added tariffs [13]. - The U.S. alcohol market is facing its first decline in nearly 30 years, with a 2% drop in sales in 2023, affecting various categories except for tequila, American whiskey, and ready-to-drink cocktails [18]. - Smaller distilleries in the U.S. are particularly vulnerable, with nearly 50 whiskey distilleries filing for bankruptcy in 2023 due to liquidity crises and debt pressures [19]. Group 4: Global Trends and Regional Variations - The article highlights that the global alcohol market is experiencing a significant shift, with the U.S. market showing a decline while Australian wine exports to China are rebounding after tariff removals [20][21]. - European alcohol producers are also struggling, with the Scottish whiskey industry facing export declines and some distilleries halting production in response to reduced demand [20]. - The overall sentiment in the alcohol industry is one of caution, with many producers and consumers adopting a wait-and-see approach due to the uncertainties created by tariffs and economic conditions [23].

The Consumer Staples group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has Carlsberg AS (CABGY) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.Carlsberg AS is a member of the Consumer Staples sector. This group includes 177 individual stocks and currently holds a Zacks Sector Rank of #8. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Ran ...

Core Viewpoint - Carlsberg AS (CABGY) is currently viewed as a more attractive investment option compared to Brown-Forman B (BF.B) for value investors, based on various financial metrics and earnings outlooks [1][3][7]. Valuation Metrics - CABGY has a forward P/E ratio of 14.63, while BF.B has a forward P/E of 17.35, indicating that CABGY is potentially undervalued [5]. - The PEG ratio for CABGY is 1.43, compared to BF.B's PEG ratio of 5.42, suggesting that CABGY offers better value relative to its expected earnings growth [5]. - CABGY's P/B ratio is 3.66, while BF.B's P/B ratio is 3.89, further supporting the notion that CABGY is more attractively valued [6]. Earnings Outlook - CABGY holds a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, whereas BF.B has a Zacks Rank of 3 (Hold), suggesting a less favorable outlook [3][7]. - The stronger estimate revision activity for CABGY implies a more optimistic earnings outlook compared to BF.B [7].

Group 1 - Carlsberg and Chongqing Jiawei are involved in a legal dispute over a multi-billion contract, with Chongqing Beer required to pay 353 million yuan to Chongqing Jiawei as per a court ruling [3][10] - The core of the conflict revolves around a 20-year Product Distribution Framework Agreement signed in 2009, which Carlsberg claims is detrimental to Chongqing Beer's interests [8][10] - Chongqing Jiawei accuses Carlsberg of financial manipulation that led to Chongqing Beer incurring significant losses in 2015, alleging that Carlsberg's actions included asset write-downs that misrepresented the company's financial health [10][11] Group 2 - Danhua Technology has been ordered to rectify governance and internal control issues by the Inner Mongolia Securities Regulatory Bureau, which found that the company lacked proper documentation and updated internal control systems [2] - The company is currently undergoing corrective measures and has committed to submitting a written report to the regulatory authority within 30 days [2] Group 3 - The ESG risk monitoring report indicates that 517 A-share listed companies were reported in sensitive information by state media, with a slight increase in reported issues compared to the previous week [1] - The reported sensitive information primarily concerns internal management, risk management, cooperation disputes, brand management, and product quality, focusing on social and governance dimensions [1]

Financial Data and Key Metrics Changes - The company delivered solid profit development and cash flow, upgrading the earnings outlook in August and achieving results at the top end of the increased guidance range [3][7] - Gross margin improved by 120 basis points to 45.8%, while operating profit grew organically by 6% [74][76] - Reported net profit was DKK 9.1 billion, positively impacted by the divestment of the Russian business, leading to a capital gain of DKK 2.3 billion [79] Business Line Data and Key Metrics Changes - Beer volumes grew slightly by 0.2% organically, with solid growth in CEE&I offsetting declines in Western Europe and Asia [46] - Other beverage volumes grew organically by 1.6%, driven mainly by carbonated soft drinks in Sweden, Finland, and Laos [46] - The premium portfolio grew by 2%, with international premium brands seeing strong growth, including Carlsberg and Tuborg [47] Market Data and Key Metrics Changes - In Western Europe, volumes declined by 1.1%, primarily due to challenges in France and Switzerland [51] - The CEE&I region saw strong results with volumes growing by 4% and revenue per hectoliter increasing by 4% [64] - In Asia, volumes declined by 1%, mainly due to a soft second half in China, while non-beer volumes grew slightly due to good performance in Laos [57] Company Strategy and Development Direction - The company launched the "Accelerate SAIL" strategy, aiming for long-term top-line growth of 4% to 6% CAGR and a recovery of gross margins [9][34] - The acquisition of Britvic is expected to transform the business, increasing exposure to the growing carbonated soft drinks category and enhancing profitability [12][16] - The company remains committed to reducing leverage to below 2.5% by the end of 2027, despite the increase in leverage due to acquisitions [84] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complexity of the Indian market but sees it as a significant growth driver due to favorable demographics and increasing beer consumption [35][42] - The company expects a relatively stable consumer environment in 2025, with organic operating profit growth projected at 1% to 5% [88][89] - Management emphasized the importance of integrating Britvic to deliver promised synergies and accelerate growth [99] Other Important Information - The company returned DKK 5.6 billion to shareholders in 2024 [4] - The acquisition of Britvic is expected to provide cost synergies of GBP 100 million by 2029, with GBP 80 million expected by 2027 [25][31] - The company plans to increase CapEx in India to ensure sufficient capacity for the 2026 season [43] Q&A Session Summary Question: What are the expectations for the integration of Britvic? - Management expressed confidence in the integration process, highlighting the positive initial assessment of Britvic and the motivation of its workforce [10][16] Question: How does the company plan to address the challenges in the Indian market? - Management acknowledged the complexities of operating in India but emphasized the long-term growth potential and plans to increase investments in CapEx and marketing [36][42]

Group 1 - Carlsberg reported fourth-quarter sales of 15.72 billion Danish kroner ($2.18 billion), slightly below the analyst estimate of 15.79 billion Danish kroner [2] - Full-year sales reached 75.01 billion Danish kroner, reflecting a year-on-year increase of 1.9% and aligning closely with the anticipated 74.91 billion Danish kroner [2] - For 2025, Carlsberg forecasts organic operating profit growth of 1% to 5%, factoring in a negative impact of 2% to 3% from the loss of the San Miguel beer brand in the U.K. [3] Group 2 - The company anticipates a translation impact of approximately 150 million Danish kroner for the full year based on currency spot rates as of February 5 [3] - Carlsberg expects a "relatively stable consumer environment" moving forward, but acknowledges uncertainty regarding consumer sentiment in Asia and Europe [3] - The Danish brewer's Russian subsidiaries have been seized amid the ongoing process of selling its Russian operations [1]

Group 1 - Carlsberg has been a weak performer in the market since the last analysis, despite its business holding up relatively well for most of the previous year [1] - Sentiment towards the alcohol sector has been negative, impacting the overall performance of companies like Carlsberg [1] Group 2 - The company is viewed favorably for a long-term, buy-and-hold investment strategy, particularly for stocks that can sustainably generate high-quality earnings [1]

Group 1 - Carlsberg A/S is one of the world's largest beer producers, based in Denmark [1] - The company is relatively unknown in the American market, indicating potential for growth and expansion [1] - The focus of the analysis is on uncovering undervalued opportunities and exploring unique business models within the Nordic market [1]

Financial Data and Key Metrics - Organic revenue growth of 1.3% for Q3 and 3% year-to-date, driven by a 2% increase in revenue per hectoliter and a slight volume decline of 0.2% [6] - Year-to-date volumes grew by 0.8%, despite challenging consumer environments and weather impacts in Europe and Asia [7] - Reported revenue grew by 0.9% to DKK 20.5 billion, despite currency headwinds [8] Business Line Performance - Total premium beer portfolio grew by 3% year-to-date, with double-digit growth in most markets excluding China, France, and the UK [9] - Alcohol-free brews grew by 6%, with strong performance in Western Europe and CEE&I [11] - Beyond Beer category grew by 10%, driven by products like Garage and Wind Flower Snow Moon [11] - Soft drinks volumes grew by 4%, supported by Pepsi and Coca-Cola businesses in various markets [12] Regional Performance - **Western Europe**: Flat organic volume and revenue growth, impacted by challenging conditions in France and the UK [17] - Nordics saw 6% volume growth and 8% revenue growth, driven by premium and alcohol-free brews [19] - France faced a tough year with weak consumer demand and weather impacts [20] - UK performance was impacted by supply chain disruptions, but recovery is underway [21] - **Asia**: Organic revenue declined by 3.3%, with a 5.2% volume decline, particularly in China and Laos [24] - China volumes declined by 6%, outperforming the market decline of 7% [25] - Vietnam saw low single-digit volume growth and market share improvement [26] - Laos faced mid-single-digit volume decline due to weather and inflation [27] - **CEE&I**: Organic revenue grew by 9.8%, driven by 5.2% volume growth and 4% revenue per hectoliter increase [29] - India saw low-teens volume growth, with Carlsberg brand growing over 40% [30] - Ukraine delivered mid-teens volume growth across premium and Beyond Beer categories [31] Strategic Direction and Industry Competition - The Britvic acquisition is progressing, with expected closure in Q1 2025 [5][13] - Expansion of the PepsiCo partnership in Kazakhstan and Kyrgyzstan, with a new bottling facility investment of EUR 100 million [14][15] - Increased marketing investments to support long-term growth priorities [12] Management Commentary on Operating Environment and Future Outlook - Management remains cautious about the Chinese market for the second half of the year, with no significant improvement expected in Q4 [25][69] - The company maintains its full-year earnings guidance, expecting organic operating profit growth between 4% and 6% [32][33] - Management does not see structural changes in the European market, attributing current softness to cyclical factors [40][41] Other Important Information - The company expects a currency impact on operating profit of DKK -300 million, based on spot rates [34] - Marketing investments are expected to increase by high single digits, with a focus on cost management [33] Q&A Session Summary Question: Subdued volume growth in Europe and pricing environment [38] - Management believes the softness in Europe is cyclical, driven by high inflation and macroeconomic uncertainty, not structural [39][40] - Pricing actions will continue to cover cost increases, but the magnitude will be lower than in previous years [44][45] Question: China market performance and outlook [50] - China's price mix was flat year-to-date, with a slight decline of 1% in Q3, driven by mix rather than price [51][52] - Management does not expect significant improvement in Q4, with China contributing only 10% of annual business [68][69] Question: Supply chain disruption in the UK [60] - The UK supply chain issue impacted volumes and market share, but recovery is underway, with recent market share gains [64][116] Question: India performance and future changes [90] - India delivered strong growth, with Carlsberg brand growing over 40%, driven by existing team performance and capacity availability [93][94] Question: Vietnam and Laos performance [99] - Vietnam saw low single-digit growth in a stabilizing market, with market share improvements [101][102] - Laos faced mid-single-digit volume decline due to weather and inflation, but premium soft drinks showed growth [105] Question: Ukraine market dynamics [107] - Ukraine delivered strong performance with mid-teens volume growth, driven by premium and Beyond Beer categories [109] Question: UK budget impact [110] - The UK budget changes, including alcohol duty increases, were expected and have a small negative impact on the business [111]