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Carlsberg – Group TreasuryLars Vestergaard, VP
Probably the best beer company in the world2
Group Treasury
Agenda
• A short introduction to Carlsberg's development
• Evolution in Treasury tasks
• Example
• Employee skill set
• What will the future bring?
Group Treasury
Probably the best beer company in the world3
Group Treasury
Transformation of Carlsberg
• Carlsberg have changed from Danishconglomerate to international brewer
• 3 transformational deals in 7 years– Merger with Orkla (2000)– Buyout of Orkla (2004)– Acquisition of Scottish and Newcastle (2008)
• Credit capacity is tight – but a lot stronger that2004
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Probably the best beer company in the world4
Group Treasury
Markets are changing
Probably the best beer company in the world5
Group Treasury
Development in debt
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21,0
53,04,0
47,5
30,5
-10,0
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Debt 1996 Debt beforetransaction
Acquisition AssumedBBH debt
Equity Debt aftertransaction
DK
K(b
n)
Probably the best beer company in the world6
Group Treasury
15 years ago
• Carlsberg was a conglomerate
• Board not approving any expansion outsideDenmark
• DKK 20bn assets under administration
• Generating more earning than beer business
• Bureaucracy
• Speculation in all financial markets
• 12 persons
Probably the best beer company in the world7
Group Treasury
5 years ago
• Carlsberg expanding internationally within beer• Cash management implementation• Internal bank• ALM modelling• “No speculation”• 8 persons
Group Treasury
Probably the best beer company in the world8
Group Treasury
Now
• Beer industry consolidation extremely fast
• Strategic transactions• M&A
• Complex funding process
• Business models and synergies
• Intra group capital structure and tax
• Credit rating
• Financial risk mgt. incl. commodities
• Reorganisation of business
• Cash race
• Plus everything we did 5 years ago.
• 7 persons
Business related
Probably the best beer company in the world9
Group Treasury
Core Treasury
• Core Treasury– Funding– Financial risk management– Internal bank– Etc
• Related Treasury tasks– Working capital– Tax– Reorganisation– Etc
• Where is the value?
Probably the best beer company in the world10
Group Treasury
Treasurys role is changing - fast
• From bank to business
• Manage and support fast growth
• Not to slow – not to fast
• Credit capacity is key constraint
• Value adding
• Cash flow
• Capital structure (significant impact !!)
• Manage big risks – ignore small (if symmetric)
• Prioritise
Probably the best beer company in the world11
Group Treasury
Example: Alumium hedging
REXAM TreasuryCarlsbergSubsidiary Bank
IC swap OTC swap
Probably the best beer company in the world12
Group Treasury
Aluminium hedging principles from 2008
Fixed volumes
J F M A M J J A S O N D
Vo
lum
e
J F M A M J J A S O N D
Pri
ce
…..are off set by intercompany aluminium swap
Volatile aluminium prices from supplier…..
Fixed prices inlocal currency
…hence some volume risk remains
Leading to…
Hedges are done on fixed budgeted volumes…
1
2
Probably the best beer company in the world13
Group Treasury
Group Treasury stakeholders
Procurement
AccountingShared Service
Centre
Group Legal &Risk
management
Group Financeand Tax
Subsidiaries
Group Treasury
BanksBond investors
Rating agencies
Executive Board
Other corporatefunctions
Probably the best beer company in the world14
Group Treasury
Employee pipeline
Financial
Operational
Banker
business controlling
15 yearsago
Today and inthe future
Probably the best beer company in the world15
Group Treasury
Trends in Treasury
• Strong financial competences, butnot product specialist
• Big picture understanding, butunderstand the details
• Simplification - not time forcomplicated solutions
• Project management skills - therewill be less bookkeeping andrepeated tasks
• Communication skills - with manydifferent stakeholders
• Knowledge of many disciplines(Tax, Accounting, Legal, business) –the Treasury angle is insufficient
• Prioritize - there will not be time tosolve everything
15 years ago
Bank Treasury
Today and going forwards
Bank Treasury
Probably the best beer company in the world16
Group Treasury
Credit crisis – may change Treasury significantly
Carlsberg Investors
Bank
Bonds
BondsBankloans
?
Probably the best beer company in the world17
Group Treasury
The future
• Less oriented towards banks
• Recruitment will be very difficult
• More integrated into the business
• Cleanup after credit crisis
HQ function - specialist
Operation
15 years ago
Today
Future