Carlsberg A/S : Group 2022 Annual Report

ANNUAL REPORT 2022

MANAGEMENT
REVIEW
TO OUR SHAREHOLDERS
Letter from the Chair & the CEO	3
THE YEAR AT A GLANCE
Highlights	5
Strategic priorities	7
Financial results	9
5-year summary	10
Our regions	11
STRATEGIC REVIEW
Our brand portfolio	14
Our purpose	17
Business model	18
Our strategy: SAIL'27	19
Addressing climate risks	26
2022 REVIEW AND 2023 EXPECTATIONS
Navigating 2022	27
Group	29
Western Europe	33
Asia	35
Central & Eastern Europe	37
Russian operations held for sale	39
Capital allocation	40
2023 earnings expectations	41
Taxonomy reporting	42
GOVERNANCE
Corporate governance	44
Risk management	50
Supervisory Board	53
Executive Committee	56
Share information	58
Forward-looking statements	59

FINANCIAL

STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

Statements	61
Notes	65
PARENT COMPANY FINANCIAL
STATEMENTS
Statements	135
Notes	138
REPORTS
Management statement	145
Auditor's reports	146

OUR ANNUAL REPORTING

Our annual reporting suite comprises our Annual Report, our Environmental, Social & Governance Report and our Remuneration Report. Each includes content tailored to its specific audience, and cross-references to the other reports where relevant. The Environmental, Social & Governance Report serves as our statutory statement on corporate social responsibility in accordance with sections 99a, 99b and 99d of the Danish Financial Statements Act. It also forms the basis for our 2022 Communication on Progress to the UN Global Compact, which will be submitted in March 2023 in line with new requirements. It can be downloaded at: www.carlsberggroup.com/reports- downloads/carlsberg-group-2022-esg-report/

Front page: In 2022, we celebrated the 175th anniversary of the first Carlsberg lager beer, paying tribute to probably the best beer in the world.

ANNUAL REPORT

Our Annual Report is our detailed annual dislosure relating to company performance, strategy, corporate governance and financial results.

ENVIRONMENTAL, SOCIAL &

GOVERNANCE REPORT

Our Environmental, Social & Governance (ESG) Report provides detailed information and data on sustainability and our responsible business behaviour.

REMUNERATION REPORT

Our Remuneration Report includes full disclosure of Supervisory Board and Executive Management remuneration.

Unless otherwise stated, comments and figures in this report refer to the continuing operations. From 1 January 2022, the Russian business is presented as held for sale. 2021 figures have been restated according to IFRS.

To our shareholders

LETTER FROM THE CHAIR & THE CEO

STRONG RESULTS

IN A CHALLENGING YEAR

CARLSBERG GROUP ANNUAL REPORT 2022 TO OUR SHAREHOLDERS

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The strength and resilience of Carlsberg, and particularly our many colleagues across the Group, led the business to deliver strong results despite significant challenges during the year.

Cees 't Hart

CEO

2022 was a year of great contrasts. Despite significant challenges, Carlsberg delivered strong results and increased cash returns to shareholders.

During the year, our business was impacted by the horrible war in Ukraine. We remain deeply disturbed by the human tragedy unfolding there. Throughout the year, our first priority was the safety and wellbeing of our Ukrainian colleagues, whose resilience, courage and strength continue to make a profound impression on everyone at Carlsberg.

The war led us to take the very difficult decision to seek a full disposal of our business in Russia. We deeply regret the consequences of this decision for our more than 8,000 employees in Russia, many of whom have been loyal and valued members of the Carlsberg family for many years.

FINANCIAL HEALTH

Despite the immense challenges faced by our business in the past three years, the financial health of the Group remains very strong.

Organic revenue growth in 2022 was 15.6%. This was supported by a diminishing impact of COVID-19 in most markets, and subsequently very good recovery of the on-trade and price increases during the year.

Operating profit grew organically by 12.2% despite the increase in commodity prices and energy costs, and our decision to increase marketing investments. Reported operating profit amounted to DKK 11.5bn. Free cash flow was DKK 9.9bn and ROIC improved by 270bp to 15.2%. Read more about the Group's financial results on pages 29-32.

Continuous uncertainty and volatility were a fact of life for our business in

2022. In early March, we had to suspend our earnings guidance for the year due to the considerable uncertainty posed by the war in Ukraine. Six weeks later, we reinstated guidance and, thanks to early reopening of breweries in Ukraine and better-than-expected performance in many markets across our regions, we were able to increase our earnings guidance twice - in August and October.

As a result of the strong business performance and financial position, the Group increased cash returns to shareholders. In March, we paid a total dividend of DKK 3.4bn, and during the year we bought back shares amounting to DKK 4.4bn.

More information on cash returns to shareholders can be found on page 40.

CARLSBERG GROUP ANNUAL REPORT 2022 TO OUR SHAREHOLDERS

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STRATEGIC HEALTH

2022 marked the year when our SAIL'22 strategy came to an end, having successfully guided our journey since 2016. Setting sail for the next five years, we launched our new strategy, SAIL'27, in early February.

As its name suggests, SAIL'27 builds on the very strong foundation of SAIL'22. Going forward towards 2027, we are sharpening our focus, making distinct choices for our portfolio, markets, execution and winning culture, and raising our financial ambitions.

Within a month of the launch of SAIL'27, the world and our business changed dramatically due to the Russian invasion of Ukraine. Despite the consequences of this, our business fundamentals remain strong, and our ambitions and priorities for SAIL'27 are unchanged. We also remain confident in our ability to deliver on our top- and bottom-line growth ambitions.

Read more about SAIL'27 on pages 19-25.

SOCIETAL HEALTH

In August, we launched our enhanced ESG programme, Together Towards ZERO and Beyond (TTZAB), addressing the environmental, social and governance (ESG) topics that

impact our stakeholders and our business most significantly, with milestones set for 2030 and 2040.

With TTZAB, we aspire to achieve net zero carbon emissions across the entire value chain by 2040 - supported by new ambitions and targets within agriculture and packaging - and we also raise our ambition levels and sharpen our targets for other topics, such as water, responsible drinking, diversity, equity & inclusion (DE&I), human rights and community engagement.

TTZAB is embedded in SAIL'27 as a key mechanism for mitigating risks, accomplishing strategic objectives and demonstrating our company's purpose through concrete targets, actions and results.

Read more about TTZAB on pages 24-25, and in detail in the ESG Report.

ORGANISATIONAL HEALTH

On 10 November, we celebrated Carlsberg's 175th anniversary, which symbolically coincided with International Quality Day. We can reflect on 175 years of pursuing better - with a pioneering spirit, curiosity and a quenchless thirst for progress.

We have always looked to brew beers that exceed consumer

expectations each time - and we will continue to do so. This can only be achieved by excellent people, and we are proud to pay tribute to our excellent colleagues in all markets and functions for their great work and outstanding efforts in living the spirit of our founder and our purpose of brewing for a better today and tomorrow every day.

In 2022, we further intensified our DE&I efforts. Diversity is in our DNA. Our employees cover demographics far and wide - across nationalities, cultures, religions, sexuality, ability and beliefs.

We believe that nurturing a diverse, equitable and inclusive workforce will support our company performance and help us achieve our financial ambitions. We have therefore set time-bound targets for 2024 and 2027, which will be included in

the variable remuneration for management. Long term, our ambition is to have at least 40% of the under-represented gender

• currently women - in senior leadership roles.

Read more about our DE&I efforts on page 23 and in detail in the ESG Report.

CHANGES TO EXCOM

At the end of 2022, we said farewell to our CFO, Heine Dalsgaard. We

want to thank Heine for his significant contribution to the Carlsberg Group during his time with us, not least his relentless efforts to embed our Funding the Journey culture with its focus on cost and cash.

We were very pleased to welcome Ulrica Fearn as our new CFO from 1 January 2023. Ulrica brings strong international financial experience from multiple senior positions in global companies and industries, most recently as CFO of Equinor in Norway. Prior to that, she had 19 years of experience in the beverage industry.

During the year, Leo Evers, who was EVP, Asia, left the Group. He was succeeded by João Abecasis, then Chief Commercial Officer. The role of Chief Commercial Officer is currently being filled by Søren Brinck, EVP, Strategy and Digital.

LOOKING AHEAD

2023 will be another challenging year. We will need to increase our prices to offset continued increases in our costs. While beer historically has been a resilient consumer category, the higher prices in combination with the general high inflation may have a negative impact on beer consumption in some of our markets, particularly in Europe.

In addition, the development of the war in Ukraine and the impact on our business and the COVID-19 recovery in China remain highly uncertain.

We will address these challenges by leveraging our strong commercial programmes and well-embedded performance management systems, tools and capabilities, while maintaining investments in our SAIL'27 priorities and ambitions to drive long-term profitable growth. In addition, we will benefit from our diversified geographical footprint, including our exposure to growth markets in Asia.

THANK YOU

Once again this past year, we were impressed by the high level of engagement and commitment from the Group's employees, and we would like to say thank you to each and every one of them. In particular, we want to acknowledge our long- suffering colleagues in Ukraine.

We greatly appreciate the continued support and trust shown to us by our shareholders. We also extend our thanks to all suppliers and customers for their cooperation during 2022, and express our gratitude to our consumers around the world.

Henrik	Cees
Poulsen	't Hart
Chair	CEO

CARLSBERG GROUP ANNUAL REPORT 2022 THE YEAR AT A GLANCE

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2022 HIGHLIGHTS

KEY EVENTS

DURING 2022

2022 was an extraordinary year, with the terrible war in Ukraine forming the backdrop for the business environment. Nevertheless, many activities and actions were carried out during the year.

FEBRUARY

MARCH

JUNE

SAIL'27

Our new five-year strategy, SAIL'27, was built around our purpose of brewing for a better today and tomorrow, and our ambition of being the most successful, professional and attractive brewer in our markets. Read more on pages 19-25.

WAR IN	NEW BOARD	LEAVING
UKRAINE	CHAIR	RUSSIA
We strongly condemned	Henrik Poulsen	Following a strategic
the Russian invasion of	became Chair of the	review of the Carlsberg
Ukraine, which has led	Supervisory Board.	Group's presence in Russia,
to so much loss of life,	Find Henrik's CV on	we took the difficult
devastation and human	page 53.	decision to seek a full
tragedy. Read more		disposal of our Russian
about the impact of		business in Russia. Read
the war on page 27.		more on pages 27-28.

PAPER BOTTLE

In the largest pilot to date, we trialled our new Fibre Bottle, putting the bio-based and fully recyclable beer bottle into the hands of consumers for the first time. Read more in our ESG Report.

1664 BLANC

The global 1664 Blanc campaign "Good Taste With a Twist" depicted life on "Rue 1664", a world of French luxury and elegance. Read more about the iconic premium 1664 Blanc on page 30.

TUBORG OPEN	SOMERSBY
2022 was the sixth year of	Somersby launched a
Tuborg Open, a campaign that	new global campaign,
uses the power of music to	set in the charming
create unique experiences for	Somersby garden,
artists and fans around the	highlighting the
world. This year, Tuborg gave	playfulness, optimism
six aspiring artists from around	and welcoming attitude
the world the opportunity to	of Somersby. Read
be mentored by Jason Derulo.	more on page 36.

APRIL

MAY