(neu) beacon global - carlsberg

BEACON GLOBAL CONSULTING


Jasper M. Stolzenbach | Jordan Wheeler | James Steinberg | Alexis Cuny

Carlsberg A/SEmerging as Market LeaderCopenhagen, Denmark


Carlsberg A/S

2

Agenda

Situation AnalysisBeer IndustryCarlsberg A/S

Decision RulesImplementation

AcquisitionSpinoffMarketingSupply Chain Integration

Summary

4/3/2012


Carlsberg A/S

3

Problem Statement

4/3/2012

1Competition

Missed opportunity in Eastern China

2Global Market

Western countries’ consumption falling

3Profitability

Rising raw materials cost

4Financial Structure

High debt load


Carlsberg A/S

4

Beer Industry

4/3/2012

Competitors

• Top breweries dominate market

Mature Markets

• Falling demand in developed countries

Materials

• Rising costs of hops, aluminum, and glass

Emerging Markets

• Rising demand in emerging countries


Carlsberg A/S

5

Carlsberg

4/3/2012

Rank

• Fifth largest producer

Market Penetration

• Top 3 - Every market you are currently in

Other sources

• 1.8 Billion in revenue from Russia

Main Revenue Source

• 61% sales in West Europe


Carlsberg A/S

6

Decision Rules

• Increasing Market Presence in Emerging Markets– Existing markets stagnant/mature,

future growth in Asia, Africa and S. America

• Gain Market Leadership–Majority of market captured by market

leader and runner-up

• Sustainable Growth

4/3/2012


Carlsberg A/S

7

Alternatives

4/3/2012

Emerging Markets

Market Leader

Sustainable Growth

Open Breweries in Africa

Joint Venture into India

Heineken Acquisition, Spinoff Soda, Vertical Integration, Marketing


4/3/2012 Carlsberg A/S

8

Acquisition

• Purchase a

controlling stake in

Heineken

• Gain market share in

Asia, Africa, S. America

• Finalize integration in

2010

Heineken

• €3.7 billion

Cost

• LT Debt/Equity/Cash

Funding

• 41% average

ROI



9

Spinoff

• Spin off Soft Drinks

segment

• Low/negative growth, focus

on alcoholic beverages

• Potential buyers: Existing

beverage producers,

consumer foods producers

• Finalize sale in early 2009

Soft Drinks

• €420 million

Inflow

• Debt reduction

Use



10

Marketing

• New Bottling Format Budget Bottle:

Emerging Countries• Sport Events World Cup 2010: South

Africa• Charities Concerts LiveEarth: 10 concerts

in Europe and Asia

Campaign

• € 110 million

Cost

• Operating Income

Funding

• 119%

ROI



11

Vertical Integration

• New Factories/Farms Hops Aluminum cans Glass bottles

• Location: Chengdu, PRC

• Reducing COGS by integrating supply chain

New Facilities

• € 275 million

Cost

• Cash

Funding

• 57% average

ROI


12

Summary

Your Successby 2011

Our Proposals• Acquisition• Spinoff• Marketing• SC Integration

1

Acquisition

• Strong position in emerging markets

1

SC Integration

• COGS reduced by 4%

1

Spinoff

• Reduce Debt load

1

Marketing

• Increased awareness, revenue growth

Carlsberg A/S4/3/2012


Questions


13

Marketing

Overview

ROI

Income Stateme

nt

Timeline Risks

Source/Use of Funds

Marketing Detail

COGS Overview

COGS ROI

Valuation

Acquisition

ROI

Spinoff

Valuation

Marketing

COGS

Summary

Regional Segment

s


Carlsberg A/S

14EXHIBIT:

Heineken Valuation

4/3/2012

Net Income 488€ Multiple 5Mkt Cap 2,505€ Heineken Earning 1,127€ Heineken Mkt Cap 5,784€

51% 2,950€ Premium 20%Special Dividend 200€ Price 3,740€


Carlsberg A/S

15EXHIBIT:

Heineken ROI

4/3/2012

Year 2010 2011Addl Profit 1,346.55$ 1,749.86$ Cumulative Addl Profit 1,346.55$ 3,096.41$ ROI 36.0% 46.8%Average ROI 41%Payback Period 2 years and 2 months


Carlsberg A/S

16

4/3/2012

Liters 2,080.00€ Revenues 624.00€ Profit Per Liter 72.80€ Price Per Liter 0.3Profit Per Liter 0.035Earnings Multiple 5Equity Value 364.00€ Good Will 15%Selling Price 418.60€

EXHIBIT:Soft Drink Valuation


Carlsberg A/S

17EXHIBIT:

Marketing Overview

4/3/2012

Year 2008 2009 2010 2011 TotalCost 10,400,000€ 10,400,000€ 50,610,800€ 37,207,200€ 108,618,000€ Addl Revenues 124,040,840€ 124,040,840€ 740,716,840€ 535,158,173€ 1,523,956,693€ Addl Profit 11,163,676€ 11,163,676€ 66,664,516€ 48,164,236€ 137,156,102€ ROI 107.34% 107.34% 131.72% 129.45% 126.27%


Carlsberg A/S

18EXHIBIT:

Marketing Detail

4/3/2012

Marketing World Cup Public Viewing Concerts TraditionalTotal Audience 800,000,000 15,000,000 400,000 38,000,000 Drinking Age Percentage 70% 80% 90% 71%Total audience of Drinking Age % 560,000,000 12,000,000 360,000 26,980,000 Total Audience to view ads % 80% 95% 100% 98%Total Audience to view ads 448,000,000 11,400,000 360,000 26,440,400 Conversion Percentage (emerging markets) 4% 65% 50% 20%Total audience to convert to Carlsberg Brands 17,920,000 7,410,000 180,000 5,288,080

Yearly Addl Purchase Rate 50% 60% 35% 60%Average Liter Amount Drank 40 40 20 20 12 Oz 16 13 5 4 7 Oz 4 11 2 8Avg Addl Cvarlsberg Purchased 20 24 7 12

Total Additional Purchased 358,400,000 177,840,000 1,260,000 63,456,960.00 Price 1.92 1.92 1.92 1.92Total (Per Year) 686,933,333€ 340,860,000€ 2,415,000€ 121,625,840€


Carlsberg A/S

19EXHIBIT:

COGS Overview

4/3/2012

Year 2007 2008 2009 2010 2011Revenues 6,018.88€ 6,349.91€ 6,075.16€ 6,409.29€ 6,761.80€ COGS (New) 5,116.04€ 5,397.43€ 4,957.33€ 5,229.98€ 5,517.63€

COGS (Old) 5,116.04€ 5,397.43€ 5,163.88€ 5,447.90€ 5,747.53€ COGS (Savings) -€ -€ 206.56€ 217.92€ 229.90€

EBIT 902.83€ 952.49€ 1,117.83€ 1,179.31€ 1,244.17€ Interest 414.06€ 414.06€ 414.06€ 414.06€ 414.06€ EBT 488.77€ 538.43€ 703.77€ 765.25€ 830.11€ Taxes 139.61€ 153.79€ 201.02€ 218.58€ 237.11€ Net Profit 349.16€ 384.63€ 502.75€ 546.67€ 593.00€


Carlsberg A/S

20EXHIBIT:


4/3/2012

New "Factories" on-line 2009Reduction in COGS 4%Cost (€ million) 275

2009 2010 2011Increased Profit 147.56€ 155.67€ 164.23€ ROI 54% 57% 60%Average ROI 57%Payback 1 years and 10 months


Carlsberg A/S

21EXHIBIT:

Income Statement

4/3/2012

Year 2007 2008 2009 2010 2011Revenues 6,018.88€ 6,473.95€ 6,199.20€ 16,175.34€ 18,504.91€ COGS 4,853.62€ 5,120.57€ 4,899.01€ 12,207.54€ 14,214.84€ EBIT 1,165.25€ 1,353.38€ 1,300.19€ 3,967.79€ 4,290.07€ Interest 474.25€ 414.06€ 701.82€ 769.75€ 769.75€ EBT 691.01€ 939.33€ 598.37€ 3,198.04€ 3,520.32€ Taxes 139.61€ 171.93€ 159.38€ 574.14€ 704.53€ Net Profit 349.16€ 430.00€ 398.59€ 1,374.53€ 1,688.34€


22

EXHIBIT: Timeline

2008 2009 2010 2011

Spinoff Soda

SC Integration

Heineken Acquisition

World Cup

Live Earth

Budget Bottle

Traditional Advertising

MKTG



Carlsberg A/S

23

4/3/2012

EXHIBIT: Sources and Use of Funds

Source Amount Use AmountEquity 1,000€ Acquisition 3,700€ LT Debt 2,300€ Marketing 110€ Op. Cash 365€ SC Integr. 275€ Spinoff 420€ Total 4,085€ 4,085€

Source

EquityLT DebtOp. CashSpinoff

Use

Acquisition

Marketing

SC Integr.


Carlsberg A/S

24EXHIBIT:

ROI Summary

4/3/2012

ROI 2007 2008 2009 2010 2011 AvgAcquisition 36.0% 46.8% 41%Marketing 107.34% 107.34% 131.72% 129.45% 119%COGS 53.7% 56.6% 59.7% 57%Interest Coverage (EBIT/Interest Expense)2.46 3.27 1.85 5.15 5.57


Carlsberg A/S

25EXHIBIT:

Regional Segments

4/3/2012


26

EXHIBIT: Risks

• Don’t accept offer

• May need regulatory approval

• Lower than expected synergies

• Management strain

Heineken Acquisition

• Bad reaction to budget

bottle

• LiveEarth concerts

unpopular

Marketing

• Lower than expected

savings

• Delays in implementation


• Lower than expected price

• Taking away a revenue

source

Soda Spinoff


(neu) beacon global - carlsberg

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