Brewers Heineken and Carlsberg, which carved up Scottish & Newcastle in 2008, yesterday committed to slashing debt, costs and spending in anticipation of recession effects in 2009.
Heineken said it was cautious about the development of beer consumption in 2009 after a number of markets had slowed at the end of 2008.
Both Heineken and Carlsberg noted beer consumption was typically resilient to recessions, although the Dutch brewer said downturns could spur a switch from bars to drinking at home and to cheaper brands.
Carlsberg chief executive Jorgen Rasmussen said: "Beer is clearly not immune to weaker economies but overall it's holding up well."
The two bought Scottish & Newcastle last year for £7.8 billion (R113.1 billion at Wednesday's exchange rate), with the British assets going chiefly to Heineken, while Carlsberg expanded in Russia and France.
Analysts said Wednesday's figures suggested Carlsberg got the better part of the deal.
Heineken said its focus would be on cash generation of more than 100 percent of net profit for 2009 to 2011 to pull net debt down to 2.5 times earnings before interest, tax, depreciation and amortisation (Ebitda) from 3.3 times.
Cash generation had been on average 50 percent of profit in 2007 and last year, as the company expanded in eastern Europe and Africa.
Capital expenditure would drop to €700 million (R9 billion) from €1.1 billion last year.
It also unveiled a new three-year cost-cutting programme, Total Cost Management, but gave no targets. Its Fit2Fight scheme concluded last year with €486 million in savings.
Carlsberg's Rasmussen said his company would focus in 2009 on increasing cash flow and cost control, significantly reducing capital expenditure and accelerating debt repayment. In 2008 the group announced cost cuts in its French and British businesses.
Capital expenditure would drop to 3.75 billion Danish krone (R6.5 billion) in 2009 from 5.3 billion krone in 2008 and Carlsberg would reduce net debt to about three times Ebitda by the end of 2009, from about 3.8 times at the end of 2008.
A positive note will be lower costs for oil, aluminium for cans and essential ingredients such as barley this year.
"We have contracted part of input costs but there is a very strong downward trend," said Heineken chief executive Jean-Francois van Boxmeer. - Reuters