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Q3 2023 Trading Statement


COMPANY ANNOUNCEMENT NO 28/2023 - November 8, 2023 

Q3 2023 Trading statement

Higher EBIT and improved EBIT margin in Q3

Statement by Royal Unibrew’s CEO Lars Jensen: "Third quarter was the second quarter in a row with positive organic EBIT growth and the first quarter with margin expansion in more than two years despite being negatively impacted by very poor weather in July and August, which for us are the two most important months of the year. This is reflected in our volume development that is down organically by 8% in the quarter despite market share gains in most of our markets. For the remainder of the year and going into 2024, we expect a change in consumers' reaction to the continuously higher living costs, which in turn we expect to have an impact on On-Trade in particular. We still see inflation in some raw material categories as well as from pressure on wages, for which reason we do not expect the total cost base to come meaningfully down next year.”

“We signed and closed the acquisition of Vrumona in the Netherlands during the third quarter. Together with our new colleagues, we are looking forward to starting the journey of creating an even stronger and more profitable multi-beverage business in the Netherlands. In addition, we recently closed the acquisition of the brewery in San Giorgio in Italy, which is already running on our IT system, and the integration of the brewery is therefore down to being mostly supply chain related. For the short-term, internal focus is on the ongoing integration processes and bringing down our financial leverage as quickly as possible,” Lars Jensen continues.

“We are well underway with our decarbonization journey. The roadmaps for becoming 100% emission free in 2025 for scope 1 and 2 are finalized. And we are now intensifying our initiatives for decarbonization of scope 3. Our science-based targets have been validated by the SBTi, and we have added more ambitious targets for scope 3, where we now have a target of 50% reduction in scope 3 CO2 in 2030 compared to our 2019 baseline, excluding acquisitions,” says Lars Jensen.

Key highlights of the quarter:

  • Positive organic price/mix of 7% driven by pricing initiatives
  • Organic net revenue declined by 1% (Q3 2022: +12%)
  • Strengthened market positions in most markets
  • Organic EBIT growth of 2% (Q3 2022: -20%)
  • EBIT margin expansion to 15.2% (Q3 2022: 14.9%)
  • On track to deliver within the EBIT margin guidance range

Financial highlights Q3-2022
Volumes for Q3 2023 declined by 7% compared to Q3 2022 and amounted to 3.5 million hectoliters. Organic volume growth amounted to -8% with the difference explained by acquisitions (Amsterdam Brewery and Nørrebro Bryghus). In the third quarter of 2023, net revenue increased by 1% (organic decline of 1%) and amounted to DKK 3,336 million. Organic price/mix growth therefore amounted to 7% in the third quarter primarily driven by price initiatives implemented in the beginning of 2023.

Earnings before interest and tax (EBIT) for Q3 2023 increased by DKK 17 million compared to the third quarter of 2022 and amounted to DKK 507 million (2022: DKK 490 million), while EBITDA increased by DKK 39 million and amounted to DKK 651 million (2022: DKK 612 million). The increase in EBIT corresponds to an organic growth of 2% compared to last year, which is a result of the price increases implemented during the past couple of years to mitigate the input price inflation, which we have experienced since the beginning of 2021.

The EBIT margin expanded by 30 bp from 14.9% to 15.2% driven by an improvement in the gross profit margin from 42.1% in Q3 2022 to 43.8% in Q3 2023. Operating expenses are higher than last year, despite a decline in marketing spend, meaning that EBITDA increased from DKK 612 million in Q3 2022 to DKK 651 million in Q3 2023. Depreciation and amortization increased by 18%, corresponding to DKK 22 million, primarily driven by M&A.

Net financial expenses increased by DKK 31 million from DKK -22 million in Q3 2022 to DKK -53 million in Q3 2023 due to the higher interest rate as well as the higher financial debt compared to last year. For the first three quarters of the year, net financial expenses have increased from DKK -47 million in 2022 to DKK -164 million in 2023.

Free cash flow amounted to DKK 210 million in Q3 2023 compared to DKK 304 million in Q3 2022. In the first nine months of the year, free cash flow generation has amounted to DKK 755 million, which is DKK 141 million higher than last year of DKK 614 million.

The full-year outlook for net revenue of approximately DKK 13.3 billion is maintained, while we narrow the EBIT range to DKK 1,600-1,700 million (previously: DKK 1,600-1,750 million).

Selected financial highlights and key ratios
mDKK Q3 2023 Q32022Q1-Q3 2023 Q1-Q32022

Volume (million hectoliters)




Organic volume growth (%)-82-52
Net revenue3,3363,2969,4838,669
Organic net revenue growth (%)-112314
EBITDA margin (%)19.518.617.217.9
Organic EBIT growth (%)2-201-16
EBIT margin (%)15.214.912.814.0
Profit before tax4614741,0651,520
Net profit for the period3633818501,307
Free cash flow210304755614
Net interest-bearing debt6,4564,364
ROIC incl. goodwill (%)*1014
ROIC excl. goodwill (%)*1623
NIBD/EBITDA (times)**3.12.2
Equity ratio (%)3234
Earnings per share (EPS)
Earnings per share (EPS), adjusted***

* Running 12 month

** Running 12 month. At the end of Q3 2023, the number including proforma EBITDA from M&A was 2.9x

*** Earnings per share (EPS) is adjusted for gain on remeasurement of investments in associates (DKK 360 million) in 2022

Management’s Review
We are pleased that we have succeeded in securing organic EBIT growth for the second quarter in a row and that our EBIT margin is up in Q3. We have achieved this in spite of the fact that the weather in the very important months of July and August was colder and more rainy than normal, impacting volumes negatively especially in the Nordic countries. Our expanded partnerships with PepsiCo and Diageo were on the other hand supporting the volume development together with improved market shares in most countries. In Western Europe, our Italian beer business volumes were up against tough comparable numbers last year and continues to improve, and we have now delivered six months of calibrated sell-in and sell-out. In Africa, the market stabilization that started at the end of the second quarter continued throughout the third quarter.

In Q3, we started to lap some of the extraordinary inflation driven price increases implemented last year, which means that the price/mix development no longer benefits from this. The continued weak Norwegian and Swedish currencies are also putting pressure on the reported top line growth and thereby also impacting price/mix negatively. We have taken price increases in September, and we are therefore going to take further actions to close the gap between cost and price during the coming months. For Q3 2023, the weaker currencies impacted net revenue negatively by around DKK 65 million, whereas it for the first nine months of the year has impacted net revenue negatively by around DKK 185 million.
We have experienced some benefits on costs from lower energy prices, whereas we continue to see inflation in other categories. As for raw materials, sugar and orange juice are trading at very high price levels, and the tight labor market continues to support wage and maintenance cost inflation. At this point in time, we do not expect a significant decline in the total cost base next year.

With the higher interest rates and higher costs of living, we expect to see changes in consumer preferences in the remainder of 2023 and into 2024. This will likely include that consumers will go out less, spend less and increasingly look for good offers, resulting in private label continuing to gain additional slight shares of the total market.

Acquisitions and partnerships
Acquisitions (Amsterdam Brewery and Nørrebro Bryghus) contributed as expected by more than DKK 60 million to net revenue and by around DKK 10 million to EBIT.

On July 3, 2023, we announced that we have signed an agreement to acquire Vrumona in the Netherlands from Heineken, which closed on September 29, 2023. With this acquisition, we establish a new growth platform in central Europe, as Vrumona has a strong portfolio of local brands supported by strong partner brands, including PepsiCo's beverage portfolio. Vrumona is the second largest soft drinks manufacturer in the country with solid positions in both On-Trade and Off-Trade. The company has been a front runner in creating healthy and functional beverages for years for which reason the majority of its business is anchored in the no/low sugar and calories segment.

The acquisition of Vrumona closed on the last day in the quarter and consequently, it has no impact on the income statement. On the balance sheet the acquisition is consolidated and explains the majority of the increase in net interest-bearing debt and intangible assets.

On July 21, 2023, we announced the signing of an agreement to acquire a production facility in San Giorgio di Nogaro, Italy, from Birra Castello. This strategic move supports our growing Italian business as well as our growing business in international markets. At the same time, it aims to reduce our periodic capacity constraints. The transaction was finalized as of November 2, 2023, and the integration will be managed locally by our strong Italian organization. The integration is expected to be a smooth and relatively uncomplicated process, as IT is already up and running on Royal Unibrew's IT platform.

The benefits from the acquisition in Italy is primarily to free up capacity in our production network and to reduce logistic costs. The production facility cannot support the Royal Unibrew network and deliver the planned benefits until we have completed some investments. The benefits will materialize in both Italy and International as we have been out of capacity in primarily Denmark for some time.

From the beginning of the third quarter, Hansa Borg and Solera extended its partnership with Diageo to include all products in Diageo’s spirits portfolio for the Norwegian market. By extending the agreement, Hansa Borg & Solera strengthens its position as a multi-beverage business in the Norwegian beverage market with an even stronger portfolio to offer customers in On-Trade and Vinmonopolet.

Net interest-bearing debt and financial leverage
By the end of Q3 2023, net interest-bearing debt amounted to DKK 6,456 million, which is an increase of DKK 1,673 million compared to the end of H1 2023. The increase is driven by the payment for the acquisition of Vrumona less the free cash flow generated during the quarter. Calculated on a rolling 12 month basis, NIBD/EBITDA was 3.1x by the end of Q3 2023 (year-end 2022: 2.2x).

On September 12, 2023, we announced the sale of 430,000 existing treasury shares in Royal Unibrew A/S. The shares were sold to finance part of the acquisitions of Vrumona and the San Giorgio brewery in Italy. The share sale raised gross proceeds of approximately DKK 250 million.

Our focus is on bringing down the financial leverage, as we are currently above our target of net debt/EBITDA below 2.5x. Since it is our aim to be around 1.5x net debt/EBITDA, we keep share buy-backs on hold for now.

Corporate Social Responsibility
We are well underway with our decarbonization journey. The roadmaps for becoming 100% emission free in 2025 for scope 1 and 2, are finalized, corresponding to 10% of our total footprint. Our solar park in Faxe has already produced more than 9.8 GWh, with a gradual phase in from January to April 2023. We have seen similar positive progress on our additional solar installations in the Baltics and Italy, and not least the biogas plant in Lahti, Finland, which has already produced more than 2 GWh since June based on our spent grain from production and still ramping up to 100% coverage of heat through the remainder of the year.

Our science-based targets have been validated by the SBTi, and we have added even more ambitious targets for scope 3, where we now have a target of 50% reduction in scope 3 CO2 in 2030 compared to our 2019 baseline, adding to our current KPIs for climate actions.

Subsequently, we are intensifying our initiatives for decarbonization of scope 3 even further. We do not only focus on CO2 data and renewable energy from our value chain, but we also establish specific projects with our business partners to reduce the climate and environmental impact. These projects include our on-going initiatives on packaging material such as reuse, design optimizations, reducing complexity of materials, and not least increasing the content of recycled material.

The full-year outlook for net revenue of approximately DKK 13.3 billion is maintained, while we narrow the EBIT range to DKK 1,600-1,700 million (previously: DKK 1,600-1,750 million).

Net finance expenses, excluding currency related losses or gains, are expected to be around DKK 220 million (previously: around DKK 200 million) for the full-year.

Vrumona has not delivered the price increases expected to mitigate inflation, and consequently, the past 12 months' normalized EBITDA has been around EUR 20 million. It is a focus area to re-establish the underlying profitability over the coming quarters, and for 2024, we expect EBITDA to reach around EUR 20 million, including the positive benefits we expect from utilizing some of the spare capacity at Vrumona.

The San Giorgio brewery in Italy will add around DKK 300 million to net revenue in 2024, whereas the impact on EBIT will be neutral. The benefits of the acquisition is primarily to free up capacity in our production network and reduce logistic costs. We will do investments in Italy during 2024, which will neutralize the underlying earnings of the business, and the benefits, which will materialize in both Italy and International, is not expected to impact EBIT until 2025.

Sugar prices remain high, the labour market is tight and recent increases in oil prices are just a few examples on cost items going up in price, and we expect costs to remain high for the remainder of the year and going into 2024. We will continue to invest in commercial opportunities and behind our brands to secure a continued solid market share development, which in combination with our ongoing integration efforts mean that the total cost base is not expected to decline meaningfully in 2024.

Towards the end of the quarter, we noted the first signs of weakening consumer sentiment. Consumers seem to go less out and spend less when they go out, which especially impacts the On-Trade negatively. We also expect to see consumers in Off-Trade being more on hut for good offers, which means that we expect private label and discount products to continue to win slight market shares.

For further information on this announcement:
Investor Relations: Jonas Guldborg Hansen, (+45) 20 10 12 45
Media relations: Michelle Nørrelykke Hindkjær, (+45) 25 64 34 31

Investors and analysts can register for a conference call on Thursday, November 9, 2023, at 09.00am CET at the following link:

The presentation may also be followed at the following link:

Financial Calendar for 2024

February 24, 2024         Annual Report
April 30, 2024                Trading Statement for 1 January – 30 March 2023
April 30, 2024                Annual General Meeting 2023
August 22, 2024            Interim Report for 1 January – 30 June 2023
November 12, 2024       Trading Statement for 1 January – 30 September 2023

Forward-looking statements

This trading statement contains forward-looking statements, including statements about the Group’s sales, revenue, earnings, spending, margins, cash flows, inventories, products, actions, plans, strategies, objectives and guidance with respect to the Group’s future operating results. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the following words or phrases “believe, anticipate, expect, estimate, intend, plan, project, will be, will continue, likely to result, could, may, might”, or any variations of such words or other words with similar meanings. Any such statements involve known and unknown risks, estimates, assumptions and uncertainties that could cause the Group’s actual results, performance or industry results to differ materially from the results expressed or implied in such forward-looking statements. Royal Unibrew assumes no obligation to update or adjust any such forward-looking statements (except for as required under the disclosure requirements for listed companies) to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Some important risk factors that may have direct bearing on the Group’s actual results include, but are not limited to: economic and political uncertainty (including interest rates and exchange rates), financial and regulatory developments, development in the demand for the Group’s products, introduction of and demand for new products, changes in the competitive environment and the industry in which the Group operates, changes in consumer preferences, increasing industry consolidation, the availability and pricing of raw materials and packaging materials, cost of energy, production- and distribution-related issues, information technology failures, breach or unexpected termination of contracts, price reductions resulting from market-driven price reductions, determination of fair value in the opening balance sheet of acquired entities, litigation, pandemic, environmental issues and other unforeseen factors.

New risk factors may emerge in the future, which the Group cannot predict. Furthermore, the Group cannot assess the impact of each factor on the Group’s business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Accordingly, forward-looking statements should not be relied on as a prediction of actual results.


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