Carlsberg A/S (CARLB) Earnings Call Transcript & Summary

[Interpreted] Dear shareholders. I'd like to welcome you to Carlsberg's Annual General Meeting. Both those of you who are present here in the room today and to those of you who are following the meeting via webcast. According to Article 23 of the Articles of Association, the AGM is presided over by a Chairman elected by the Supervisory Board. We have asked Attorney-at-Law Anders Stubbe Arndal to be the Chair of this AGM. Before I give the floor to Anders, I'd like to introduce you to the people who are on stage with me here today. Next to me is the Chair, Anders Stubbe Arndal. Next to him, the company's CEO, Jacob Aarup-Andersen; our CFO, Ulrica Fearn and the Deputy Chair of the Supervisory Board, Majken Schultz. My name is Henrik Poulsen, and I am the Chairman of the Supervisory Board. The other members of the Supervisory Board are Mikael Aro, Magdi Batato, Lilian Fossum Biner, Bob Kunze-Concewitz, Richard Burrows, Punita Lal and Søren-Peter Fuchs Olesen. They're all elected by the AGM in 24. In addition, the employees have elected 5 members, Eva Vilstrup Decker, Erik Lund, Ivan Nielsen, Olayide Oladokun, and Peter Petersen. With these words of introduction, I give the floor to the Chairman of the AGM, Anders Stubbe Arndal. You have the floor.

[Interpreted] Thank you. Before we start with the actual agenda, I'd like to give you a bit of information concerning security and some practical information. In case of fire, the fire alarm will be activated and there'll be a sound. And all the guards will be notified via the radio system here at the museum. Obviously, no fire drills have been scheduled for today. So if you hear the alarm, please take it seriously, get out of the building and follow the guide's directions. We have to gather at Dantes Plads in front of Glyptoteket, where you have to wait for the fire brigade's permission to reenter the building. There is a defibrillator in the building, and the staff has first aid training. There are toilets, including for disabled persons at the lower floor near the cloakroom and at the ticket sale and the entrance to the French paintings at the Henning Larsen Building. Shareholders who want to leave the meeting and reenter, please bring your admission card because if you haven't got it, you can't get back in. If you leave the meeting and do not want to come back, please notify [ Julie Kesko ] from Euronext. She is standing there at the back of the room and please inform her that you are leaving the AGM before it's over. Carlsberg will be live streaming this AGM on the company's website simultaneously with the AGM being held and what is being done here at the AGM will be recorded also for the preparation of minutes. Shareholders who want to take the floor to comment on the agenda items, please take a seat here on the front row, on the right side when facing me. Speakers will then be giving their admission card and their voting slip to [ Andreas ], who is sitting here on the front row. The speakers' names will then be noted on the list, which will be given to me, so I can introduce the speakers, and they will then take the floor in the correct order. Speakers, they can speak up here from the rostrum. If they don't want to be filmed, you can tell [ Andreas ] and you can then remain seated in the front row and speak from there via a microphone. The press can take photos and film after the AGM, but not during, you can't do any audio files either. There is 1 photographer present and this is Carlsberg's internal photographer. This was it about the practical issues on my most first formal task as AGM Chair is to determine whether the general meeting has been legally convened and forms a quorum. The notice of the meeting and the agenda, including the complete proposals have been available on the company website since the 17th of February '25. And shareholders who have requested so, they have been notified by e-mail, if you registered your e-mail in the register of shareholders. So the AGM has been convened with at least 3 weeks' notice. That is in accordance with the provisions of the Companies Act and Articles 14(2) and 15(1) of the Articles of Association. On the 13th of January '25 with a minimum of 8 weeks' notice, the company announced the date of the general meeting and the final date for submission of data to be discussed at the -- to be put on the agenda. Now the following material has also been available on the company's website since the 17th of February, in accordance with Article 19 with the Articles of Association and Section 99 of the Danish Companies Act notice, including information regarding total share capital and voting rights, documents to be presented, agenda and complete proposals and forms for proxies and personal votes. The annual report, including the so-called CSRD report for '24 and the remuneration report for '24 have been available on the company's website since the 6 of February '25. The agenda is in compliance with the articles. Article 24 of the Articles of Association does not require that a specific part of the share capital must be represented to form a quorum. That leads me to the conclusion that the general meeting has been lawfully convened and forms a quorum in all respects. If anyone disagrees, please tell me now. Not the case. So the AGM has been lawfully convened and forms a quorum. And before we start, I have to tell you how big a percentage of the share capital and voting rights represented. I can tell you the 2,101,414,320, that's 79.40% of the capital, 92.73% of the votes, 708,000 a -- just over 708,000. If this changes before we come to 5B on the agenda, I will give you information about that. Now the agenda. In accordance with the Articles of Association Item 1, report on the activities of the company in the past year. Item 2, presentation of the audited annual report for approval and resolution to the discharge the Supervisory Board and Executive Board from liability. Item 3, proposal of distribution of the profit, including declaration of dividend. And 4 presentation of an advisory vote on the remuneration report for '24. 5A, approval of Supervisory Board remuneration for '25. 5B, proposal to reduce the company's share capital for the purpose of canceling treasury shares. 6, a selection of members to the Supervisory Board. 7, election of auditor and authorization. That's 8, authorization of the chair. Apart from 5B, all items on the agenda may be adopted by a simple majority. The proposal under 5B requires at least 2/3 of the votes cast and 2/3 of the voting share capital represented at the AGM. And it's for this reason that if you leave the AGM before we come to these items, please talk to [ Julie ] from Euronext. Right, we will then start with the actual agenda. As in previous years, what we'll do is we'll address items 1 to 4 under 1. So I give the floor to the Chairman of the Supervisory Board, Henrik Poulsen you have the floor.

[Interpreted] Thank you, Anders. And once again, welcome, as you have seen, we are holding our AGM in the beautiful setting of the Glyptotek again this year. On the sixth of February, the Carlsberg Group published its annual report. And for the first time ever, this was an integrated report covering both our financial and our sustainability reporting. The sustainability report was issued in accordance with a new set of rules, known as Corporate Sustainability Reporting Directive or CSRD for short. Just like for many years, we've had uniform standards for financial reporting, CSRD aims at ensuring uniform and transparent reporting for the status and progress within environment, social areas and corporate governance. There's a need for uniformity and credibility in companies reporting, but unfortunately, that also means that our reporting about the many exciting initiatives to continuously improve Carlsberg's efforts within areas such as CO2, water consumption and sustainable crops has become a quite boring read. We have tried to compensate for this by improving the section on our website that presents our many activities within the field of sustainability. On the 6th of February, alongside our annual report, Carlsberg also published our remuneration report for 2024. 2024 was a very eventful year for the Carlsberg Group. In February, we launched an updated strategy. We announced and executed a number of acquisitions and in December, we managed to conclude the very difficult situation in Russia by selling off our Russian business and at the same time, settling all pending legal disputes. We named the updated strategy Accelerate SAIL. And as the name indicates, the ambition of the strategy is to accelerate the positive development that Carlsberg has seen throughout the past many years. Now with the strengthened focus on driving growth and revenue as well as earnings. At last year's AGM, we already told you about Accelerate SAIL. And therefore, this year, I will just say that the Board is 100% committed to the strategic choices and the financial ambitions that we announced with this strategy. And that the Supervisory Board is very happy with the work done in 2024, to develop and adjust the top management team, our organization and our employees in order to lay the right foundation to execute this strategy. The 2 most important acquisitions were no doubt the British-listed soft drink producer, Britvic that has delivered good results and good growth throughout a number of years as well as the acquisition of the remaining 33% share from our partner in India and Nepal. These 2 acquisitions expand and diversify the Carlsberg Group strategic platform and supports the growth journey that we're on. In his report, our Group CEO, Jacob Aarup-Andersen will tell you more about both of these acquisitions. The Supervisory Board is convinced that these acquisitions will contribute positively to the value creation for our shareholders. 2024 was also a year where Carlsberg had to navigate in a world characterized by high uncertainty and low consumer confidence. This was not least the case in China, which is an important market for the Carlsberg Group. And therefore, it's with great satisfaction that the Supervisory Board could note that Carlsberg yet again delivered good results with a solid development in earnings and solid cash flows. Revenue was DKK 75 billion, corresponding to organic growth of 2.4%. The growth was positively affected by price increases and the positive product mix in Asia and Central and Eastern Europe, while volume growth was quite modest, particularly because of headwinds in the consumer demand in important markets such as China and France. Operating profits were DKK 11.4 billion, corresponding to an organic growth of 6%. This was the result of a very satisfactory development in our gross margin and a continued focus on cost control, which also allowed for an increase in our growth investments, including in sales and marketing. Annual net profit for the continuing business, that is without taking into account the effect of the sales of Baltika Breweries in Russia was at DKK 6.9 billion. Net profits for the total business, including the positive effect from the sales of Baltika Breweries was DKK 9.1 billion. Earnings per share for the continuing business adjusted for special items was DKK 54.9. That was a small increase of 0.6% compared to the year before, which was due to the lower number of shares. In his report, Jacob Aarup-Andersen will take you through the annual results, including the individual market regions. In 2024, Carlsberg paid out a dividend of DKK 3.6 billion to the company's shareholders. Furthermore, the company carried out a share buyback program at DKK 2 billion, and that means that cash return to our shareholders in 2024 amounted to DKK 5.6 billion. The share buyback program was stopped in connection with the announcement of the acquisition of Britvic because this acquisition means that our debt while would be above the level of a maximum of 2.5x the EBITDA, which is deemed appropriate. And therefore, in the coming year, we will have a sharp focus on bringing down the debt so that net interest-bearing debt by the end of 2024 has reached a maximum of 2.5x EBITDA. Carlsberg's dividend policy indicates a dividend payout corresponding to about 50% of annual net profits. In spite of the higher debt level, the Supervisory Board will maintain this dividend policy. And therefore, the Supervisory Board proposes to the AGM that we pay out a dividend of DKK 27 per share, corresponding to 49% of the adjusted net profit, excluding the sales of Baltika. Total dividends will, therefore, again this year correspond to DKK 3.6 billion taken from the company's reserve. As per 31st of December 2024, the reserves amounted to DKK 23.5 billion. As mentioned, Carlsberg has not issued a separate sustainability report this year as this reporting in accordance with the new rules are integrated in the company's annual report. Carlsberg has the comprehensive sustainability program called Together Towards ZERO and Beyond. As a part of this program, we have set a number of ambitious targets in a number of areas within sustainability. This concerns reduction of CO2 emissions in our value chain, the use of sustainably produced raw materials, increased use of recycled bottles and reusable packaging, a reduction of the company's water consumption, not least in areas with a lack of drinking water, promotion of responsible alcohol culture and the elimination of work-related accidents. As I mentioned, some might find the new sustainability reporting a tedious read and rightly so. Therefore, I would like to urge you to visit Carlsberg's website and read more about the progress achieved in 2024. Here, you can find exciting descriptions of a number of initiatives within the mentioned focus areas. Examples of these initiatives are electrical trucks in Sweden, a solar farm in Denmark, environmentally friendly rice paddies in Laos and water protection projects in China, Laos, India and Cambodia. Now let me change track and touch upon the work we do within corporate governance as well as our remuneration policy for the Supervisory Board and the executive management. In Carlsberg, we work actively with good corporate governance, and we have published our statutory report and corporate governance and our compliance with the recommendations from the committee for good corporate governance. This report is available on our website. In the report, you can read that Carlsberg fulfills all of the 40 recommendations, except for 2. The first 1 of these is the issuance of quarterly reports where Carlsberg for the first and third quarter will instead issue a so-called trading statement with a focus on our sales development across regions and markets. The other one concerns our People and Culture Committee where the share of so-called independent members constituted 50% and not more than 50% as the recommendation states. Each year, the Supervisory Board carries out an evaluation of its work and composition. In 2024, this evaluation took place on the basis of conversation between each Board member and me and also a report carried out by an external consultancy firm on the basis of an anonymous survey among the Board members. Apart from that, I've also held individual evaluation conversations with the entire Executive Committee. Once again, the Board members expressed great satisfaction with the work and collaboration in the Supervisory Board and with the work and results of the Executive Committee. Of course, we can always do better. And therefore, we've prepared an evaluation report with a number of suggestions that have been discussed in the Supervisory Board and with the Executive Commission. On that background, we have prepared an action plan with initiatives that have already been launched. The Supervisory Board has set a number of goals for diversity when it comes to international experience and gender. When it comes to international experience, the target is that at least half of the AGM elected members of the Board should have significant international management experience, not least due to the fact that about 95% of Carlsberg's business takes place outside of Denmark. And the Supervisory Board lives up to this goal. When it comes to gender, the company's target is that the share of the underrepresented gender should constitute at least 40% of the Board's AGM-elected members by 2028. In Carlsberg's Supervisory Board, we had 3 women out of the 9 AGM-elected members in 2024, corresponding to 33%. At today's AGM, 8 candidates for women and 4 men are up for election. Pending the approval of the AGM, we will therefore achieve an equitable distribution of genders in the Supervisory Board. Carlsberg has the Supervisory Board with a high degree of diversity when it comes to competencies within areas such as finance, sustainability, production, sales and marketing, management experience, regional and cultural knowledge as well as knowledge of consumer goods companies. Later today, the AGM will be asked to approve the specific remuneration for the Supervisory Board for 2025. The Carlsberg Board receives a fixed fee and does not participate in any sort of incentive pay. Based on a proposal from the Remuneration Committee, the Supervisory Board proposes to the AGM that the base fee is increased by 3.5% to DKK 487,000 per year. This increase is proposed to reflect the expected general pay increase in Denmark and to maintain parity with board fees and peer companies. The composition of the remuneration appears from the convening notice. The elements in the remuneration for the Executive Committee were unchanged in 2024, and they were in accordance with the remuneration policy adopted by the AGM in 2024. The remuneration is meant to reflect the tasks of the Executive Committee and the value creation for the shareholders as well as the conditions in other comparable international companies. The remuneration consists of 3 components. First of all, the fixed fee, second of all, an annual cash incentive program based on the achievement of a number of specifically set targets. And thirdly, a share-based remuneration based on the achievement of 5 specific goals for a 3-year period. This means that 2 out of 3 components in the Remuneration of the Executive Committee are variables, which means that they are closely linked to the interests of the shareholders and will only be paid out if Carlsberg delivers on the target set. The composition of the Remuneration for the Executive Committee in 2024 appears from Page 7 in the remuneration report and the total paid out remuneration for the Executive Committee can be seen on Page 8. It is the conclusion of the Supervisory Board that we have complied with our remuneration policy in 2024, and the remuneration report, which is on Item 4 on today's agenda, has, of course, been elaborated in accordance with that. Today, we suggest 2 new members for the Board. One of them is Winnie Ma. Winnie is a Chinese citizen that has worked for a number of American and European consumer goods companies in Asia throughout her professional career. Winnie has extensive international management experience and furthermore, significant insight into and understanding of the Asian consumer and consumer behavior, including not least, the Chinese consumers. The second candidate for the Board is Jens Hjorth, who is a professor in Astrophysics and a member of the Board in the Carlsberg Foundation. And as such, he is up for election as a candidate for the Supervisory Board of Carlsberg. This year, the Board will say goodbye to 3 members who are not up for election. Richard Burrows joined the Board in 2009 and throughout his long tenure, he's been a significant capacity in the Board's work. He deserves a very special recognition for his very competent contribution to Carlsberg throughout 16 years. Mikael Aro joined the Board in 2022 and has made important contributions to the Board, not least in connection with the last year's changes in the group management and Carlsberg's exit from Russia. Finally, Søren-Peter Fuchs Olesen will not stand for reelection. Søren-Peter has been a representative for the Carlsberg Foundation on the Supervisory Board. But as he turns 70 in 2025, he will step back from the Supervisory Board in accordance with the Carlsberg Foundation Charter. Søren-Peter has made a great and dedicated contribution to Carlsberg's Board among other things, in connection with our research laboratory and innovation. On behalf of the Supervisory Board, I would like to thank Richard Burrows, Mikael Aro and Søren-Peter Fuchs Olesen for their valuable contribution to the Supervisory Board. Let's give them a big hand. The purpose of Carlsberg's products is to be a part of good times and happy moments for our consumers, whether it be a beer with your friends, a Somersby cider on a warm summer's night on the beach, an alcohol-free beer after the bike ride or a soft drink with your popcorn at the cinema. I would like to take this opportunity to thank the many millions of consumers all over the world who enjoy our products. I would also like to thank you, our shareholders, for your support for Carlsberg, it is highly appreciated. Last but not least, I would like, on behalf of the Supervisory Board, to thank the group management, our extended group of managers and Carlsberg's skilled and dedicated employees for their great efforts again in 2024. And with those words, I will leave the floor to Group CEO, Jacob Aarup-Andersen, who will add to my report and take you through the key figures in the accounts for 2024.

[Interpreted] Thank you, Henrik. Dear shareholders, I'd also like to wish you a good evening, and welcome you to this year's AGM. The AGM is a very special event for me. As CEO, it is the day that I can talk directly to all of you, Carlsberg shareholders, about the year under review and our plans for the future. And I can also have a good dialogue with you to any questions and queries that you may have. As the Chairman said in his report, '24 was very much an eventful year for Carlsberg. But unlike recent years, we had headwinds in the form of COVID, war and inflation, that we handled. But in '24, well, that was a year in which we added a number of cornerstone to the growth journey that Carlsberg is now engaging on. The first milestone was the launch of our updated strategy, Accelerate SAIL that the Chairman has talked about and I talked about it last year from this rostrum. Accelerate SAIL sets the course for how we want to create organic growth in revenue and not least in earnings. With this strategy, we've defined the categories that we want to focus on. How we're going to grow and in which markets, which competencies we need to strengthen and how we will continue creating economic elbow room that allows us to invest in the future? Even if '24 was a kind of transitional year for Accelerate SAIL in which we developed and adapted the organization and started up a number of initiatives for the strategy and the execution. It was -- I was very satisfied to see that we are still able to see progress in all our growth categories. Our portfolio of international and local premium beer brands grew by 2%. Our international premium brands are Carlsberg, Tuborg, 1664 Blanc and Brooklyn, they all delivered growth. Our nonalcoholic beer grew by 6%. This is not least due to good growth from the nonalcoholic versions of Carlsberg, Tuborg and 1664 Blanc. But also, we have local nonalcoholic brands such as Swedish Eriksberg, Finnish Karhu, Polish Okocim and the Greek FIX. Our brands and what we call Beyond Beer, that's like cider and hard lemonade as we call it, grew all in all, by 5%. And finally, we have our soft drinks portfolio. It grew by 1% with a good growth for Pepsi and our own energy drinks, Battery and Flash Up. Soda pop. Well, that's very important in media coverage of Carlsberg in '24 because of the second big milestone, the acquisition of Britvic. As you probably know, Carlsberg has more than 30 years' experience running an integrated beer and soft drink business from production to sales distribution. We do it in Norway, Sweden, Switzerland, Laos and Cambodia. And from January this year, we're also doing it in Great Britain and Ireland and together with Pepsi -- and that's together with Pepsi. In Denmark and Finland, we have a good partnership with Coca-Cola. Many of you probably don't know Britvic. Let me give you a quick introduction to this fantastic company, which in our assessment, fits like hand in glove to Carlsberg, both locally in the U.K., in the Western European region and in the group as a whole. Britvic is the second largest soft drink producer in the U.K. and Ireland. In both countries, they produce and sell Pepsi's soft drink products. In addition to Pepsi, Britvic also has a number of iconic brands. They have Tango that you might call England's reply to Tuborg Squash. In '24. Pepsi products were about 50% of Britvic's revenue, while the remaining 50% were generated by the company's own brands. Britvic has around 30 different brands in categories of soda pop, tonic, iced coffee and juices. Thanks to a strong brand portfolio and an extensive and very skillful managerial group and employees, Britvic has for a number of years, delivered growth results, both on top line and bottom line. If you look at Carlsberg, soft drinks in '24, were around 28% of the total volume in the Western European region. So this does not include Britvic. As you can see clearly from the diagram here on the right on the screen, the profitability in the markets where we have a combined beer and soft drink business is higher than in the Western European region as a whole. This is because of the considerable cost synergies that you have when you combine beer and soft drinks, but also sales synergies because the combined portfolio give our colleagues in sales, a better possibility to cover the market broader and to make better deals with the customers. In addition, there are categories in soft drinks that are in structural growth. This applies the sugar-free products, in particular, there's an increasing demand here. We have achieved fair results with Pepsi Max in Norway and Sweden, for instance. And that's why Carlsberg acquisition of Britvic also makes very good sense from a strategic and operational and financial point of view. Britvic will contribute to the growth ambitions we've set with Accelerate SAIL. The combination of Carlsberg's U.K. beer business and Britvic will be transformative for our presence in the British market. We expect to realize cost synergies of around GBP 100 million. The acquisition of Britvic was concluded on the 16th of January this year. I can promise you we've been busy ever since. There are strict rules in the U.K. So we've had very limited access to Britvic until the 16th of January, but this doesn't mean that we were doing nothing. No. We did everything we could to prepare. So we have very enthusiastic teams in all functions that immediately got on board in the great integration job, which is now ongoing at all levels, locally in the region and across the whole group. So that we can deliver on the synergies that we promised to our shareholders, that is you. Now the acquisition of Britvic means that Carlsberg has become Pepsi's biggest partner in Europe and among the biggest in the world. This gives us opportunities to expand our cooperation into new markets where both companies can benefit from that. This leads me to the third -- to the year's third milestone, the further expansion of the cooperation with Pepsi. In September, we were able to publish that from the 1st of January '26 we will take over the Pepsi license in Kazakhstan and Kyrgyzstan. This is going to double our present business in Kazakhstan and make this market 1 of the 10 biggest for us globally. The fourth milestone that the Chairman also mentioned, we're able to announce in November where finally, after years, very many years of difficult negotiations. We were able to buy out our partner in India and Nepal. So we have 100% ownership of the business in both of these countries. Not least as regards India, this is a very interesting future we're looking at. Unlike many other countries, the Indian beer market is a growing market, both in volume and in value. Even if there are many people in India and many people I mean they don't bring alcohol, many of them don't. But there's still 140 million people in India who do. And more of them drink beer instead of stronger liquor that has traditionally dominated the market. Carlsberg started its journey in India in 2007. Since then, we followed a carefully planned expansion strategy. So today, we're actually #2 with a market share of about 21%. If you look at the states where we are present with our products. Over the last decade, we have been able to create growth in India twice as high as the market growth. This is really an impressive performance by our local colleagues in India. As a Dane, I'm proud to say that the good results in India have been achieved with 2 brands, Carlsberg and Tuborg, not least Tuborg has done very, very well. This is a very Danish beer brand with almost 150 years of service. It has been and still is the second biggest beer brand in India. and the biggest international beer brand in the country, it's particularly the local Tuborg Strong that has contributed to this result. Now that we have full control in the coming years, we will invest in developing our Indian business. So as to support and hopefully further accelerate the growth. In December, we launched 1664 Blanc in the super premium segment. It's a small segment. but it's a very fast-growing segment in the big cities in India. The last milestone I wanted to talk to you about was the sale of the Russian business in December. The sale of Baltika Breweries marked the end of a very sad chapter in Carlsberg's history started when the terrible war in Ukraine broke out. We are very pleased that after terpenes, we have succeeded with the final sale. The proceeds amounted to about DKK 2.3 billion, and this has been spent partially for financing the interesting acquisitions I've just talked to you about. Now let me look at the result under review and take you through the results. Firstly, 3 regions. The Western European business delivered solid results despite a sort of subdued consumer trust. And we also had some supply chain challenges in certain markets. On this background, the total volume fell by 1.1%. We did see, however, a small positive development in other drinks, particularly because of progress in soft drinks at least -- not least in Norway, Sweden and Finland. Again, in '24, we had to introduce price increases to offset the increase in our total cost. So our revenue went up organically by 0.9%. We saw solid organic progress in operating results, 5.2% because of improved gross margin, which more than offset the growth-directed commercial investments we made in the year under review. The reported progress in the operating result was 6%. The slightly higher reported growth was because of a positive currency effect. All of this gave an operating margin of 13.9%, up this up just now -- just over 0.5 percentage points. Our results in Asia were characterized by the economic slowdown, which we saw particularly in China, and it influenced consumer behavior across the region. Combined with bad weather in certain markets during the high season, our volume fell, but just by 1%. Like in Western Europe, we did see progress for other drinks. They grew by 1.2%. As a result of price increases, not least in Laos that has a very high rate of inflation, and positive product mix. the revenue in Asia organically went up by 1%. Just like in Western Europe, the gross margin was improved, and this was not least a result of the efficiency enhancement initiative, we are taking right now in all 3 regions as a part of Accelerate SAIL. The operating result grew organically by 7.9%. Unfortunately, we were up against negative currency development, not least in relation to layoffs. We had to implement special accounting requirements to take account of unusually high inflation, so-called hyperinflation and I'm sure our auditors had a good time with that in the year under review. The reported operating result just went up by 1%. The operating margin was still strong at 22.6%. This was an improvement again of 0.5 percentage point over the year before. Our last region. And in '24, we actually changed it to also include India. This means that this region is now called Central and Eastern Europe and India or CEEI. Lots of people have asked us, do we have a creative approach to a geography? Or do you have any political motives by combining India with Central and Eastern Europe. The brief answer is no, no. The reason for this change is also managerial. It is because our 3 special growth markets: China, Vietnam and India, were all under the same regional management. While the Central and Eastern European divisions without Russia had become rather small and did not have a big important market. Therefore, we saw it was better utilization of our managerial resources. If one of the important growth markets changed regions and it did make most sense to move India. Now despite the continued challenges because of the war in Ukraine, the region had a good year, wonderful growth in volume, revenue and earnings. The volume grew 4%. This was growth in practically all markets. Revenue went organically by 7.8%, and the operating result went up by as much as 9.6%. Despite headwinds in currencies, the operating result went up by satisfactory 6.8%. The operating margin was 18.5%, a bit better than the year before. And now to the group's consolidated results. The volumes sold in '24 grew a bit by 0.5 percentage to 125.7 million hectoliters. The revenue per hectoliter grew organically by 2%, is meant that the organic growth in revenue was 2.4%. The reported graph, including currencies, was 1.9%, primarily because of the currencies in China, Ukraine and Laos. The gross result grew organically by 5.9%, thanks to the higher revenue per hectoliter and declining production costs because of the efficiency enhancements that we carried out and slightly lower raw material costs. The reported gross result was DKK 34.4 billion. The gross margin was improved by 1.2% to 45.8%. The reported operating result was DKK 11.4 billion. The organic growth was 6% because of the weakened currencies, the reported growth was 2.8%. The operating margin aided at 15.2%, slightly higher than the year before. Special items net amounted to minus EUR 519 million. This was affected particularly by cost related to the acquisitions carried out and they were under review. Addition to Britvic and our partners in India and Nepal, we also acquired Marston's 40% ownership share of the U.K. business. It was a precondition for carrying out the acquisition of Britvic. We bought a share of Mikkeller here in Denmark and a share of a French microbrewery. Financial costs amounted to DKK 905 million net, this was higher than the year before, and this was obviously because of a higher level of interest rates and higher interest-bearing debt. Taxes were DKK 2 billion, corresponding to an effective tax percentage just under 20%. The Carlsberg Group share of the corporate result for the continued business, including the effect from the sale of the Russian business, that was DKK 6.9 billion. The adjusted net result for the continued business regulated for special items after tax amounted to DKK 7.3 billion. The total net results including the effect from the sale of Baltika Breweries was DKK 9.1 billion. The free cash flow amounted to DKK 9.8 billion. This is a net result of cash flows from operations of DKK 11.3 billion and cash flows from investments of minus DKK 1.5 billion. The net interest-bearing debt at the end of '24 amounted to DKK 27.4 billion in relation to EBITDA, which is the result before depreciation, interest and tax, the debt was 1.73x, which was certainly within our goal of maximum 2.5x. As the Chairman said, this number has increased markedly after the acquisition of Britvic on the 16th of January as was to be expected in the coming years, no later than at the end of '27, we'll be back at 2.5x EBITDA. We think that's appropriate for a company such as Carlsberg in the long run. Now in connection with the acquisition of Britvic, in connection with a number of banks, we introduced an intermediate term financing of the purchase sum about a month ago on the 19th of February. We introduced corporate bonds to the market to refinance this intermediate term financing. I'm very proud and satisfied to tell you there was a great interest from investors to bid for these bonds. We ended up at a very interesting interest level. So good work here by our CFO and our good colleagues in finance. And now to our expectations for '25 concerning earnings. Well, there is uncertainty again this year, in regard to relevant consumer trust in Asia and in Europe. We expect a moderate increase in our total costs, not least driven by the investment we are making in growth. There's no change in our approach to increasing growth. We intend to fend them off by a higher turnover by hectoliter and strict cost control. On this background, we expect to deliver organic growth, the primary operating result of 1% to 5%. This expectation does not include the effect from the acquisition of Britvic. We are still getting the full overview of all the details of this business. The financial year that ended on the 13th of September '24, Britvic, delivered an adjusted result of primary operations of GBP 250 million. So this is a good starting point for '25, we believe. Now before I finish my report, I'd like to mention that in '24, we strengthened the top management group, what we call the ExCom. We have a new -- a number of new profiles internally from Carlsberg and from outside. So today, we have the right competencies to execute, Accelerate SAIL. The new members of ExCom bring in competencies within technology, marketing and HR. Now this brings me to the end of my report. I'd like to take the opportunity to thank the Supervisory Board for their support and cooperation in the year under review. I also like to thank very much all our committed, enthusiastic employees. It is a great pleasure to work with you. And finally, a big thanks to you, shareholders for supporting us, supporting what we all feel is our Carlsberg. With these words, I recommend Carlsberg's annual report for '24 to the AGM for approval. Thank you for your attention.

[Interpreted] Thank you. Before I open the debate, I should inform the AGM that the ExCom, the Supervisory Board and the company auditors have signed the annual report. There's an audit report opinion on Page 199, it's been translated into Danish, and it reads as follows. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the group's and the parent company's financial position as at 31 December 2024 and of the results of the group and the parent company's operations and cash flows for the financial year 1st of January to 31st of December 2024 in accordance with IFRS as adopted by the EU and further requirements in the Danish Financial Statements Act. With that, we can open the debate, and we already have 2 speakers on my list. Mikael Bak from the Association of Danish Shareholders and Mr. Bjorn Hansen. If anyone else should wish to take the floor under items 1 to 4, please approach [ Andreas ] up here to my left, please bring your access card and your voting slip, but first, I give the floor to the Association of Danish Shareholders by Mr. Mikael Bak. You have the floor.

[Interpreted] Yes. Thank you for the floor. It's a pleasure to be back in what we might call the most beautiful AGM in Denmark. And thank you for a good report. As mentioned, I'm the Head of the Association of Danish Shareholders. We have 16,000 members, many of which are also shareholders in Carlsberg. First of all, thank you to all of the employees and to the management of Carlsberg for their good efforts in 2024, and thank you for the good dividends. The share price was not as good in 2024, but we are happy to see that it has rebounded in 2025. So if you can continue along the lines of the first quarter, you will hear no complaints from us. But back to my script, this is an uncertain time in the world. And most of your revenue comes from outside of Denmark, as we heard. In this beautiful annual report, we also see a risk analysis that we appreciate. As an investor, it's a good thing to focus on just that. And my first question is about the geopolitical risks. These have been very briefly mentioned in the report, and therefore, I would like to ask about this in more detail. How do you evaluate the current risks concerning the Chinese market? Is it an increased risk? Or is it more stable? In 2024 and in particular, in 2023, we talked a lot about China and human rights and the breweries activities in China. So I'd like a clarification of this aspect. Secondly, the European market, we might call it our home market, which is becoming increasingly important. We have been pleased to hear about the acquisition of Britvic. Do you expect more acquisitions along these lines or corporations in the coming years? And could you also venture a guess as to which markets in Europe seem to be the most interesting at present? And thirdly, the negative consequences or the uncertainty that we are seeing at the moment in the U.S., how do you expect that to influence the earnings of Carlsberg? Could it affect the American brands. Can we expect higher prices? Or is there anything else that we should be prepared for as shareholders with the crisis that we're seeing in the world around us. And talking about crisis, it's definitely not boring following the development at the moment. But it's nice to see that you have managed to exit Russia and you carried out the sales. You did incur a loss. And will that affect your analysis of values and prices elsewhere in the world where you might also be hit by depreciation? And finally, I would like to say to you, Jacob Aarup-Andersen, you have been the CEO since 2023, and we're glad to have you on board. And now that we're gathered here today, I would like to ask you from a shareholder to the CEO, what your personal view is? What has been the most positive surprise? Or perhaps also what has been the most negative surprise or the most challenging thing internally? To round off, I would just like to wish you all a very good 2025.

[Interpreted] Yes. Thank you very much. I will give the floor to Jacob Aarup-Andersen, Group CEO for an answer.

[Interpreted] Thank you very much, Mikael. Where did you go? There you are. Thank you. Let me just get my notes straight, many questions in a very short amount of time, well done. First of all, thank you for the dialogue. Thank you for your interest. Thank you for your support and the sparring that we get from your side. We highly appreciate it. It's important to us to have a close dialogue with you in this sort of forum and also externally, of course. First of all, you asked about the Chinese market. When it comes to our activities in China, it is quite right that it has been a subject for discussion at previous AGMs. Our view on China is completely unchanged. China is an important part of Carlsberg's strategy and will continue to be an important part. It is still our ambition to increase our business in China. We have an incredible portfolio and a strong team, and we are going to continue to win market shares. In spite of that, there's something going on, on the slide above my head. I'm sure it's all part of the plan. But in spite of the geopolitical uncertainty, there is no doubt that as a society, we benefit from trading internationally and China is an important part for the business of international companies such as ours. That said, we take a great deal of responsibility for our business and for making sure that our Chinese business also lives up to all the right standards. But China remains a strong market for us. Then you asked about Europe, Britvic and other opportunities that might arise. In the coming year, it's important to us to focus on integrating Britvic. We want to realize the GBP 100 million in synergies that we have promised you. And we want to make sure that we continue the strong underlying growth in this portfolio. We want to expand our soft drink portfolio even more through more partnerships and agreements. We haven't -- that is no surprise if you read our reports. There are great synergies to be found between beer and soft drinks, as I mentioned in my report. I would love to be more specific here, but for competition reasons, it's difficult for me to tell you about specific markets and plans. But we have previously said that we are open if the right opportunities arise to add more markets due to the value creation that we can see that this can lead to. Then you asked about the geopolitical situation in the U.S. Let me just state for the record that there's a lot of discussion about customs and tariffs these days and our business in the U.S. is quite limited, we export not very great volumes to the United States, and therefore, the discussion about tariffs going to and from the U.S., it's not something that affects us a great deal. But of course, we are monitoring the broader situation and the broader debate about American products and consumer behavior. And in this company, we have a long-term and valuable partnership with several American companies like Coca-Cola in Denmark and other American brands, and we will continue to develop these partnerships even under the current turmoil. So they might be foreign brands, but they are also Danish products produced by Danish colleagues. We have 800 colleagues in Fredericia here in Denmark, producing American brands alongside Danish brands, but these are Danish products produced in Danish factories for Danish customers. So the geopolitical turmoil is broader than what we can go through here from this rostrum today, but we are monitoring the situation and we will react accordingly. Then you asked more broadly about the effects of Russia and what that will mean to our activities in other countries. Of course, we have learned our lessons from the Russian situation and I know that your question, of course, also concerns our exposure in China, but we see no reason to change our view as to the value we place on our Chinese business. For instance, we have an annual impairment test of all of the assets in our portfolio, and we are quite comfortable with the position we have in our balance sheet. We have a very strong geographic diversification across our portfolio. And this is -- does a great deal to protect the overall value with Carlsberg, that is, in fact, that we sell and market our brands in more than 150 countries. But of course, we are continuously monitoring whether we need to make any adjustments. But currently, no, this has not led to any changes. And if we would have had to impair anything, then it would have appeared from the annual report. I can assure you that. And now for the more personal question, well, how much time do I have? Can I have an hour? Well, first of all, thank you for the nice words. It's only 18 months that I've been here, and I hope this will be the beginning of a long journey together. First and foremost, I have been blown away by positive impressions and it's not just a cliche, it's really my honest to God opinion. Well, the biggest surprise has been how local beer is. Once you go into the business, beer is a very local product. Consumer preferences vary a great deal from market to market. And that's the strength of Carlsberg that we have great country organizations that can combine our local brands with our international brands in order to create unique portfolios, which means that the customers don't have to leave us whatever their preference is. That is the strength of Carlsberg that has surprised me positively. Also, the culture of our employees is quite unique. We have amazing employees all over the globe, and that gives us a great foundation for the work we do and our continued journey when it comes to Accelerate SAIL when you have such dedicated and proud employees, [ Susanne Skippari ], Head of HR, and she was surprised when she joined us as to how low our churn is among our employees, they don't really tend to leave us. And I also have been surprised about the increased growth in the alcohol-free segment. That's really a very strong portfolio these days. Negative aspects. You would like to hear something in that category as well. Well, what surprised me the most in this respect was the extent of geopolitical uncertainty. I hadn't expected to spend so much of my first 18 months on geopolitics. It's a condition that we have to work with. And I think we've handled it well as an organization. We have a very robust organization in top management as well as among our employees. And with a history of 178 years, thus, it's no wonder that we are quite a robust company. But if you ask other C25 index companies, they will probably share some of those perspectives that the uncertainty has been quite extensive. I hope that answers your questions. Thank you very much.

[Interpreted] Thank you. The next intervention will come from Bjorn Hansen. He is down here, as agreed with him. I'm going to read out his question here from the rostrum. It sounds as follows. We have a number of questions to Carlsberg's management and leadership here at the AGM concerning the annual report for '24 and particularly the financial results. Now first, the loss in '23 is DKK 39 billion, just over that and the gain in '24 was plus DKK 8.500 billion, who covers these losses and how? Question two, Russia has paid just over DKK 2 billion in '24. How is that done? And is the figure correct? Is it money from insurance companies, they're paying in convertible currency or is it in rubles? Those were the questions that Bjorn Hansen would like an answer to and Jacob Aarup-Andersen, you get the floor for a reply.

[Interpreted] Thank you, Bjorn. I wasn't expecting questions about '23. We can do it. It is, okay. Looking at the loss in '23, it was because of the full impairment of the Russian business. So it does not -- this is an accounting impairment that's done, right, a write-down, but not a cash amount that left us. The net result was actually a plus of DKK 7 billion. If you disregard that write-down on this, that was -- the write-down that was done in the financial statements. In '24, again, if we exclude Russia was DKK 6.9 billion. So if you remove the effect from Russia, it's DKK 7 billion in '23, DKK 6.9 billion in '24. So there's no loss to be covered by anybody. In accounting terms, there is an effect? Yes. But there's no negative cash flow to be covered by anyone. I hope that was good news. And then you had a question concerning Russia and the sale. The DKK 2 billion, it is true that, well, you are asking, first of all, if the amount is correct? Yes, it certainly is. We have many good people who are good using a calculator. So I'm very comfortable about that. The sale of Russian business was done as what is called a management buyout. It was management in the Russian business that bought it, RUB 34 billion was the sales price, that was then converted into Danish kroner, DKK 2.3 billion. That money is in our account in kroner, not in rubles. I promise you that. That number can also be seen in the annual report that we published at the beginning of the year. So hopefully, that gives some clarification. Thank you.

[Interpreted] No one else has asked for the floor. So this means that I can finalize the debate and we can then move on to making decisions concerning Items 1 to 4 on the agenda. The annual report, I find that you have taken notice of the report with the supplementary comments that have been made by shareholders and management. Item 2, concerning the presentation of the annual report and granting of discharge. Discharge means that you give a response, you give freedom from responsibility for what is in the annual report for '24. Before we make the decision, I should say, first, as Carlsberg generally would like the exact result of votes to be recorded for each proposal on the agenda. So it can be established precisely how many vote in favor and how many vote against a given proposal. I propose that we seek to achieve that without a written ballot as we've done at previous general meetings. In relation to the specific items on the agenda, we may determine the exact result of the vote without a ballot if the general meeting agrees to the following procedure that we've used before. First, participants can indicate if anybody wishes to vote against or abstain from voting. If this is just a limited number of shareholders who want to vote against or abstain, and, they can then hand in their voting slip, voting against or abstaining. I then assume that everyone else is in favor. So we can then calculate the exact result of the vote. Once we've done that we can add the proxies, including instruction proxies and personal votes. And this means that we can then give the precise results. If a large number of shareholders indicate they want to vote against, we will have a ballot or written vote. I hope you can accept this procedure. We have used that before, nobody objects. That's good. We will then proceed to item 2. Approval of the Annual Report and a Granting of Discharge. Does anybody wish to vote against or abstain from voting? Does not seem to be the case. And I've not heard that anyone in Room 2 has said anything to that effect. So I take it that everyone in the room votes in favor and approves the annual report for '24 and grants discharge to Board and management. That brings us to Item 3 on the agenda. This is the matter of the distribution of the profit. You've seen it in the invitation to this AGM. The proposal is DKK 27 per share. I can tell you that under the Companies Act, the AGM cannot decide on a higher dividend that the Board has proposed. So does any shareholder wish to vote against or abstain? Or does anyone wish to propose a lower dividend? That is not the case. Okay. I then take it that everyone in the room votes in favor of the proposed dividend of DKK 27 per share. So this has been duly adopted. Brings us to Item 4 on the agenda. This is the Remuneration Report for '24. As you've seen from the convening notice, this is an advisory vote only. It means that if shareholders do not approve Carlsberg in next year's or the year report for '25 must explain how they've taken the result of the vote into account. Does anyone wish to vote against or abstain from voting? Does not seem to be the case. So the remuneration report has been duly approved in this advisory vote. That brings me to Item 5A here. We have 5A and 5B. First, it's 5A. The Approval of the Supervisory Board Remuneration for '25. The proposal from the Board is that the base fee, be increased by 3.5% to DKK 487,000. As the Chairman said, this is done in order to reflect the expected general market pay increases in Denmark and maintain parity with median Board fees payable in peak companies. It is thus proposed in accordance with the remuneration policy that the following fees will be paid. Ordinary Board members will receive a base fee of DKK 487,000. The Chair shall receive a fee of 4.5x the base fee, should not receive any further remuneration for any committee work. The Deputy Chair shall receive twice the base fee. The Chair of the Remuneration Committee and the Chairman of the People and Culture Committee shall receive an additional fee of 50% of the base fee. The Chair of the Audit Committee shall receive a fee of 113% of the base fee. Ordinary members of the Remuneration Committee and the People and Culture Committee shall receive a fee per committee seat of 38% of the base fee and ordinary members of the Audit Committee shall receive an additional fee of 50% of the base fee. I'd like to hear if anyone wishes to comment on that? Is not the case. Does any shareholder wish to vote against or abstain from voting? Not the case. So the proposal has been duly approved. That leads us to Item 5B, which is a proposal to reduce the company's share capital for the purpose of canceling treasury shares. And I can tell you that no one has left the AGM yet. So there are no new information about the representation of vote bearing capital. And the proposal is that the company's share capital be reduced by nominally DKK 32 million from DKK 2.6 billion to DKK 2.653 billion by cancellation of 1,600,000 of the company's holding of B shares in accordance with the rules on capital reduction with a view to distribution to the shareholders. The shares have been repurchased from 7th of February 2024 to 21 June 2024 for a total amount of DKK 1.505,616,211, billion corresponding to an average price per share of DKK 20. And that means the capital reduction is carried out at a price of DKK 4,705. As a consequence of the capital reduction, the share capital will be updated in Article 4 of the Articles of Association after final implementation of the reduction. As mentioned, this proposal must be adopted by no less than 2/3 of the votes cast and of the voting share capital represented at the AGM. And it has been marginally changed, but I can inform you that we still have a total of 92.73% of the votes and 79.7% of share capital. So that is what we need to know for this item on the agenda. Does anyone wish to vote against or abstain? That is not the case. And therefore, I can conclude that the proposal has been adopted. That leads me to Item 6, Election of Members to the Supervisory Board. And according to the Articles of Association, the Board members elected by the AGM are elected for 1 year at a time. This year, the Supervisory Board proposes reelection of Henrik Poulsen, Majken Schultz, Magdi Batato, Lilian Fossum Biner, Bob Kunze-Concewitz and Punita Lal and election of Jens Hjorth and Winnie Ma, as Henrik Poulsen mentioned. I can also inform the assembly that in accordance with Section 120 Subsection 3 of the Danish Companies Act. Information about the candidate's executive functions and other companies must be provided prior to the election at the AGM. A short presentation of each of the 8 candidates was included in the convening notice, including a link to the company's web page where information as to their other executive functions are set out. So this information has been available. Are there any other proposals? That is not the case. I can therefore conclude that the candidates have now been elected. Congratulations. That leads me to Item 7 on the agenda, which is the election of auditor. Here, I can inform you that pursuant to Article 33 of the Articles of Association, a state-authorized public accountant must be appointed. And based on the recommendation from the Audit Committee, the Supervisory Board proposes to reelect PwC as auditor, and to extend the audit assignment to also include the issue of an assurance report on the sustainability reporting in the management review. Are there any other proposals? That does not seem to be the case. And therefore, PricewaterhouseCoopers has been reelected. Item 8. This is a proposal to authorize the Chair of the general meeting. Here, the Supervisory Board proposes to authorize the chair to register the resolutions passed with the Danish Business Authority and to make such additions thereto and amendments therein, including to the Articles of Association as the authority may require for registration. Does that lead to any comments from the room? That is not the case. Does anyone wish to vote against or abstain? That is also not the case, and that means that the proposal has been adopted. That leads me to the concluding remark that we have now exhausted the items on the agenda, and that means that I only have left to resign as Chairman of the AGM. Thank you very much for good order and for your constructive cooperation, and I'll give the floor back to the Chairman of the Supervisory Board.

[Interpreted] So all that's left for me is to thank the Chair of the meeting for his competent management of our AGM and to thank all of you shareholders for your support. And for appearing here today. Thank you, and have a safe journey home. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]