Financial statement analysis and valuation of the Carlsberg Group

Alexander Aagesen Velde

Student thesis: Master thesis


The purpose the thesis is driven by the goal of examining if the theoretical price of one Carlsberg B share is undervalued, overvalued or equal to the market price at the date 31.12.2009. The method of the process in the thesis is primary divided in strategic analysis, financial statement analysis and valuation. By Carlsberg`s non- financial value drivers, the strategic analysis concludes that Carlsberg`s three regions are expecting growth. The expectations are not primary driven from Carlsberg`s largest market, which are Northern- and Western Europe, as a matter of fact this region has declined. The reason can be divided in two. Number one, there are a growing number of microbreweries, and the second reason is that the consumers are changing their drinking habits, by substituting beer with wine. Further on, in the Eastern European region and Asia, Carlsberg has increased their market shares in the growing markets, which they still are expected to continue with in the future. In the financial statement analysis, Carlsberg has performed strong. The financial statement analysis is characterized by finding financial value drivers with the purpose of using them together with the non- financial drivers to provide strong budgeting in the valuation. The valuation is done by the DCF model, which is calculated by Carlsberg`s free cash flows discounted by the wacc. The Carlsberg share price at the date 31.12.2009 is DKK 384; we estimated the theoretical price to DKK 428 per B share. Seeing that the prices where different has resulted in a creation of different scenarios which is done to analyze how changes in the cost of equity, cost of debt and the risk free rate affects the B share through movements in wacc. The scenario analysis showed that the Carlsberg B share was strongly affected by changes of the variables in wacc. The DCF model is usually considered to be stronger with support from relative valuation models, which we also concluded within the thesis. The Carlsberg B share is characterized as underpriced at the date 31.12.2009. The qualitative conclusion in the thesis is that we have unrealized gain in the Carlsberg B share.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2010
Number of pages104