WEBVTT 1 00:00:06.880 --> 00:00:08.280 Today, we are fortunate to be here 2 00:00:08.280 --> 00:00:11.270 at Carlsberg's headquarter in Copenhagen 3 00:00:11.270 --> 00:00:13.110 with Cees 'T Hart to talk about 4 00:00:13.110 --> 00:00:16.870 Carlsberg's transformation since 2015. 5 00:00:16.870 --> 00:00:20.981 Could you maybe first layout the overall transformation 6 00:00:20.981 --> 00:00:24.230 that you have been going through the last year? 7 00:00:24.230 --> 00:00:25.600 We took stock of the situation 8 00:00:25.600 --> 00:00:27.970 and came to the conclusion that we needed to have 9 00:00:27.970 --> 00:00:30.700 a new strategy for Carlsberg going forward. 10 00:00:30.700 --> 00:00:33.120 We had two, if you like, two options. 11 00:00:33.120 --> 00:00:36.690 Either to go in a kind of ivory tower 12 00:00:36.690 --> 00:00:39.960 and to script a strategy, maybe together as consultants, 13 00:00:39.960 --> 00:00:40.793 and then to say, 14 00:00:40.793 --> 00:00:41.910 "Look, I have thought about it, 15 00:00:41.910 --> 00:00:43.010 and this is what you need to do." 16 00:00:43.010 --> 00:00:44.810 That is maybe a good process 17 00:00:44.810 --> 00:00:49.380 and will really be speedy in terms 18 00:00:49.380 --> 00:00:51.330 of getting to at least some results 19 00:00:51.330 --> 00:00:53.120 in terms of definition of a strategy, 20 00:00:53.120 --> 00:00:54.770 however, it doesn't engage people. 21 00:00:54.770 --> 00:00:58.300 So we did it differently. 22 00:00:58.300 --> 00:01:01.250 We asked the heads of the countries 23 00:01:01.250 --> 00:01:04.160 and the heads of the functions to come together. 24 00:01:04.160 --> 00:01:06.490 We like to call that the top-60. 25 00:01:06.490 --> 00:01:09.720 We went through the kind of analysis of the business. 26 00:01:09.720 --> 00:01:11.430 I said, "Look, based on this, 27 00:01:11.430 --> 00:01:15.870 we now need to have to build a longer-term strategy." 28 00:01:15.870 --> 00:01:19.440 We set up a strategy which is called SAIL'22, 29 00:01:19.440 --> 00:01:21.090 a seven-year strategy. 30 00:01:21.090 --> 00:01:25.740 But the way to fund that strategy was by first focusing 31 00:01:25.740 --> 00:01:29.230 on a new program, which is called Funding the Journey, 32 00:01:29.230 --> 00:01:32.490 and that Funding the Journey aspired 33 00:01:32.490 --> 00:01:37.490 to go for a reduction of cost, or savings if you like, 34 00:01:38.520 --> 00:01:41.520 of 1.5 to 2 billion DKK 35 00:01:41.520 --> 00:01:46.490 in order then to half use that for investing 36 00:01:46.490 --> 00:01:49.040 in SAIL'22 program and the other half 37 00:01:49.040 --> 00:01:51.530 to improve our returns to the shareholders. 38 00:01:51.530 --> 00:01:52.480 And the last part 39 00:01:52.480 --> 00:01:55.780 of that meeting was about creating a kind of circle 40 00:01:55.780 --> 00:01:58.050 and say, "Look, guys, we have gone through this for three, 41 00:01:58.050 --> 00:02:03.050 four months, are we sure that this is our strategy?" 42 00:02:04.100 --> 00:02:07.100 And that meeting was a decisive meeting, of course 43 00:02:07.100 --> 00:02:09.810 because basically, there are people committed 44 00:02:09.810 --> 00:02:10.820 to the strategy. 45 00:02:10.820 --> 00:02:14.205 Both Funding the Journey and the first moves of SAIL'22 46 00:02:14.205 --> 00:02:16.710 went much faster than we anticipated. 47 00:02:16.710 --> 00:02:18.060 How did you manage to get 48 00:02:18.060 --> 00:02:21.960 this sense of urgency to the organization 49 00:02:21.960 --> 00:02:23.980 and believe that something had to be done? 50 00:02:23.980 --> 00:02:26.630 My first presentation was about the glass is half full 51 00:02:26.630 --> 00:02:28.330 and the glass is half empty. 52 00:02:28.330 --> 00:02:31.601 So we need to respect the past, but stating as well 53 00:02:31.601 --> 00:02:33.763 that a few things needed to be done. 54 00:02:34.640 --> 00:02:38.740 The other side is that we got some pressure from analysts 55 00:02:38.740 --> 00:02:42.000 and in share price from shareholders as well 56 00:02:42.000 --> 00:02:43.940 over the last five years. 57 00:02:43.940 --> 00:02:48.140 So the combination of that really helped to stage 58 00:02:48.140 --> 00:02:50.100 a kind of need for change. 59 00:02:50.100 --> 00:02:52.810 I think for many people, the motivating part 60 00:02:52.810 --> 00:02:56.410 was that half of the savings would be used 61 00:02:56.410 --> 00:02:58.300 for the brands and building the capabilities. 62 00:02:58.300 --> 00:03:02.960 What kind of financial effects 63 00:03:02.960 --> 00:03:06.690 and also more general holistic effects, if you wish, 64 00:03:06.690 --> 00:03:10.520 would you say that the transformation so far has delivered 65 00:03:10.520 --> 00:03:15.520 and what kind of changes are you looking at in the future? 66 00:03:16.260 --> 00:03:19.250 So when we started off with the entire program, 67 00:03:19.250 --> 00:03:20.147 we said to the shareholder, 68 00:03:20.147 --> 00:03:22.180 "We will improve our margin, 69 00:03:22.180 --> 00:03:24.360 we will increase our cash, 70 00:03:24.360 --> 00:03:25.883 we will reduce our debt, 71 00:03:26.760 --> 00:03:28.670 we will improve our dividend, 72 00:03:28.670 --> 00:03:32.737 and then we will do acquisitions or share buybacks." 73 00:03:33.800 --> 00:03:35.810 And we were talking about that, that 74 00:03:35.810 --> 00:03:38.083 would be after the first three years. 75 00:03:39.260 --> 00:03:42.280 The program has been extremely fast, 76 00:03:42.280 --> 00:03:46.150 so we have been able to really improve our margins, 77 00:03:46.150 --> 00:03:48.120 increase our cash, reduce our debt, 78 00:03:49.456 --> 00:03:52.430 and we are now in share buybacks, 79 00:03:52.430 --> 00:03:55.590 because we don't have relevant targets for M&A. 80 00:03:56.450 --> 00:04:00.763 Our share price grew from roughly 500 in 2015, 81 00:04:03.170 --> 00:04:07.854 by let's say 878, 880 nowadays, 82 00:04:07.854 --> 00:04:10.340 so there's a nice improvement. 83 00:04:10.340 --> 00:04:15.340 Our TSR is, relative to our sector 84 00:04:15.620 --> 00:04:20.620 and peers, very good, performing at the top quartile. 85 00:04:21.670 --> 00:04:23.020 And now what we need to do 86 00:04:23.020 --> 00:04:26.670 is to further improve our margins 87 00:04:26.670 --> 00:04:31.110 and basically continue our current trajectory. 88 00:04:31.110 --> 00:04:34.860 Carlsberg is a very old company 89 00:04:34.860 --> 00:04:38.910 and very proud tradition, from 1847 actually, 90 00:04:38.910 --> 00:04:43.180 and also with a very distinct sense of purpose. 91 00:04:43.180 --> 00:04:44.710 Could you say a few words 92 00:04:44.710 --> 00:04:47.929 on how you have connected the transformation 93 00:04:47.929 --> 00:04:50.890 with the purpose and the history? 94 00:04:50.890 --> 00:04:53.240 We raised ourselves three questions: 95 00:04:53.240 --> 00:04:55.750 the what, the how, and the why. 96 00:04:55.750 --> 00:04:57.750 We started with the what, what the objectives are. 97 00:04:57.750 --> 00:04:59.240 The how, there's the strategy. 98 00:04:59.240 --> 00:05:02.646 We went through all the kinds of thoughts and behaviors 99 00:05:02.646 --> 00:05:05.120 of the founder and came to the conclusion 100 00:05:05.120 --> 00:05:07.070 that basically what he did in the past 101 00:05:07.070 --> 00:05:10.600 was very relevant for now. 102 00:05:10.600 --> 00:05:13.846 And we reframed that, if you like, 103 00:05:13.846 --> 00:05:17.610 with a purpose we brew for a better today and tomorrow, 104 00:05:17.610 --> 00:05:21.030 and out of that came our guidance towards the future 105 00:05:21.030 --> 00:05:23.900 improving our quality of the brews 106 00:05:23.900 --> 00:05:25.600 and getting back to people. 107 00:05:25.600 --> 00:05:27.879 There are so many changes happening in the environment. 108 00:05:27.879 --> 00:05:32.879 So how do you get your team to think about those changes 109 00:05:33.480 --> 00:05:36.120 and actually start acting ahead of the curve? 110 00:05:36.120 --> 00:05:37.090 Challenge, if you like, 111 00:05:37.090 --> 00:05:39.920 to see how digital and new technologies 112 00:05:39.920 --> 00:05:42.720 will impact our business and business environment. 113 00:05:42.720 --> 00:05:45.430 In this program, we will more or less apply the same 114 00:05:45.430 --> 00:05:48.070 as we did to this Funding the Journey and SAIL'22. 115 00:05:48.930 --> 00:05:50.580 We really want to focus first 116 00:05:50.580 --> 00:05:52.770 on projects that have a quick return 117 00:05:52.770 --> 00:05:56.440 in order to reinvest these kinds of returns 118 00:05:56.440 --> 00:05:58.700 into new projects and digitals. 119 00:05:58.700 --> 00:06:03.340 I talk about the supply chain focus in smart brewery, 120 00:06:03.340 --> 00:06:07.010 I talk about maybe a different view on the sales 121 00:06:07.010 --> 00:06:10.530 and operational planning, where we could use, or can use, 122 00:06:10.530 --> 00:06:12.870 or will use artificial intelligence. 123 00:06:12.870 --> 00:06:14.170 One of the things I've been impressed 124 00:06:14.170 --> 00:06:18.010 with is that drive into sustainability. 125 00:06:18.010 --> 00:06:21.450 A few words on how you have been driving that agenda. 126 00:06:21.450 --> 00:06:23.980 We have the purpose 127 00:06:23.980 --> 00:06:26.260 brewing for a better today and tomorrow. 128 00:06:26.260 --> 00:06:29.210 Out of that brewing for a better tomorrow, 129 00:06:29.210 --> 00:06:32.943 we got a program which is called Together Towards ZERO. 130 00:06:34.000 --> 00:06:37.030 Part of that is very much focused about environment. 131 00:06:37.030 --> 00:06:40.611 What we saw by being very serious about this, 132 00:06:40.611 --> 00:06:42.440 that if we've got a lot of initiatives 133 00:06:42.440 --> 00:06:45.840 from people within the company, but as well from suppliers. 134 00:06:45.840 --> 00:06:49.550 So they say, "Look, you made almost a kind 135 00:06:49.550 --> 00:06:52.090 of industry statement about your purpose 136 00:06:52.090 --> 00:06:55.323 that you really want to have no emissions of CO2 by 2030, 137 00:06:57.170 --> 00:06:59.480 and no water waste by 2030." 138 00:06:59.480 --> 00:07:01.160 We got via LinkedIn, 139 00:07:01.160 --> 00:07:03.670 hundreds of applicants of young people 140 00:07:03.670 --> 00:07:05.510 that want to work with us. 141 00:07:05.510 --> 00:07:08.530 Thank you, Cees, lots of interesting learnings here 142 00:07:08.530 --> 00:07:10.410 and a very impressive transformation. 143 00:07:10.410 --> 00:07:11.580 Thank you for your time today. 144 00:07:11.580 --> 00:07:13.060 Thank you very much for your interest in the company. 145 00:07:13.060 --> 00:07:13.893 Thank you.