EARNINGS EXPECTATIONS We delivered strong  operational performance and  underlying earnings growth  while investing in growth and  efficiency opportunities. JØRGEN BUHL RASMUSSEN President & CEO materials and become more resilient to poten- tial resource scarcity and increased costs in the  future, we have joined forces with key global  partners to rethink the design and produc- tion of packaging material. The cooperation  was formalised in 2013 through the Carlsberg  Circular Community (CCC), where Carlsberg,  together with our partners, will develop the  next generation of packaging solutions opti- mised for reuse or recycling. CCC was officially  launched during the annual World Economic  Forum meeting in Davos in January 2014. 2013 marked the beginning of the roll-out  of the supply chain integration and business  standardisation project (BSP1) in Western  Europe. The purpose of BSP1 is to improve  capabilities, customer service and efficiency,  and increase speed and asset utilisation. The first markets to go live were Sweden  in April, followed by Norway in November.  The next market to go live will be the UK in  2014. The implementation process is running  according to schedule and with no major  disruption to our daily business. 2014 is expected to be a year when the  Carlsberg Group will continue to build on  the strengths of our company to ensure  that we capture both the short- and longer- term opportunities that are present in our  markets. To do so, we will: We will continue our tight cost agenda  across all markets and functions to ensure  that the Group delivers earnings growth. In  2014, the focus on strong execution, both  internally and externally, will be even more  important as we assume significant head- wind from currencies. New accounting standards coming into ef- fect as of 1 January 2014 mean that it will  no longer be possible to proportionately  consolidate jointly controlled entities such as Unicer in Portugal and Cambrew in Cam- bodia 1 . Proportionately consolidated entities  will hereafter be recognised as associates.  For 2014, the Group assumes the following  market development in our major markets/ regions: The outlook, in reported terms, is based on  an assumed 2014 average for our major  currencies calculated on forward rates,  including an average EUR/RUB exchange  rate of around 49 (an EUR/RUB change  of +/- 1 impacts Group operating profit by  slightly less than +/- DKK 100m).  The major assumptions behind the outlook  are listed below. Based on restated figures for 2013 1 , for 2014  the Group expects: Restated income statement and segment  reporting by region (beverages) for 2013 are  included in section 9.3 in the consolidated fi- nancial statements. Following the change in  accounting policies, the restated net interest- bearing debt was DKK 34,634m (reported  DKK 35,022m). Based on restated figures 1 , reported cost of  goods sold per hl is expected to be lower than  in 2013. In organic terms, cost of goods sold  per hl is expected to be similar to last year. Based on restated figures 1 , sales and market- ing investments to net revenue is expected to  remain at a similar level to last year. Costs related to the integrated supply chain  and business standardisation project in West- ern Europe are expected to impact Group  operating profit in 2014 by DKK 450-500m. Average all-in cost of debt is assumed to  be similar to 2013. The tax rate is expected to be 24-25%. Capital expenditures are expected to be at  the level of 2013 with continued capacity  investments in Asia. In 2014, the DKK 1.4bn  acquisition of Chongqing Beer Group Assets  Management is expected to be completed. 10 Management review STATEMENT FROM THE CEO • The Western European beer markets will  decline slightly as consumers in many  markets remain under pressure, in spite  of the macroeconomic situation in some  markets having improved slightly in the  second half of 2013. • Further develop and invest in our Asian  business to ensure that we continuously  position it to capture the growth oppor- tunities in the region.  • Drive the ongoing efficiency improve- ments in Western Europe and maintain  a focused commercial agenda that will  further strengthen our business and the  region’s profitability. • Utilise the strength of our Russian brand  portfolio, route-to-market, innovation  capabilities and execution skills to further  strengthen our market position and  improve profitability. • Reported adjusted net profit 2  to grow by mid-single-digit percentages.  • Operating profit to grow organically by  high-single-digit percentages (reported  mid-single-digit percentage growth).  • The Asian markets will continue to grow  in line with 2013. • The Russian market will decline low- single-digit in volume terms, while  continuing healthy value growth. The  Russian beer market will be impacted  by the macroeconomic slowdown and  weaker consumer sentiment. The outlook  assumes that no new regulations will be  implemented following the significant  regulatory changes which have been  introduced in recent years.  THE SUPPLY CHAIN INTEGRATION AND  BUSINESS STANDARDISATION PROJECT IMPLEMENTATION OF CHANGE IN ACCOUNTING POLICIES 2014 EARNINGS EXPECTATIONS 2  Adjusted for special items after tax. 1  See section 9.3 in the consolidated financial statements. Carlsberg Group Annual Report 2013