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Saturday 23 August 2014

Carlsberg maintains earnings forecast as Russian sales drop

Published 22/08/2013 | 05:00

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Danish brewer Carlsberg
Customers have lunch in a Subway

CARLSBERG maintained its 2013 earnings forecast as the maker of Tuborg beer reported little-changed second-quarter profit, saying it sees declines in the Russian market that it dominates.

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The seller of Somersby cider still expects operating profit of about 10bn kroner (€1.3bn), while net income will probably rise by a mid-single-digit percentage, the Copenhagen-based company said in a statement.

"The fact management has been able to reaffirm full-year guidance is reassuring," Jonathan Fyfe, an analyst at Mirabaud Securities, said in a note to clients.

Carlsberg shares have risen less than those of its peers this year, partly because of concern over sales in Russia, where it's the biggest brewer.

The company said it saw a mid-single-digit percentage market decline in the country, which has increased beer taxes and introduced more regulation on alcohol sales. It had previously predicted a "flat" market.

Carlsberg rose 1.3pc in Copenhagen, extending this year's gain to 3pc. Heineken, which predicted that earnings would't grow this year, has risen 6.7pc in 2013 and SABMiller 7.5pc.

Carlsberg's second-quarter earnings before interest and taxes fell to 3.44 billion kroner from 3.47bn kroner a year earlier. (Bloomberg)

POOR OUTLOOK FOR HEINEKEN

BREWING

HEINEKEN, the world's third- biggest brewer, said poor spring weather in Europe led to weak second-quarter revenue and predicted that earnings this year won't grow as consumers in the region curb spending.

The company witnessed a "further moderation versus what we had expected after the first quarter", chief executive Jean-Francois van Boxmeer said.

The second quarter was "clearly below" company expectations "and that will have an impact on total outlook for the year."

Group beer volume fell 3pc in the first half on an organic basis, the Amsterdam-based brewer said in a statement, led by an 8pc decline in western Europe after an increase in French beer taxes and a prolonged spell of cool weather. (Bloomberg)

BRITAIN POSTS BUDGET DEFICIT

REVENUE

BRITAIN posted its first July budget deficit since 2010 as an increase in government spending outstripped tax revenue.

Net borrowing excluding temporary support for banks was £488m (€571m) compared with a surplus of £823m a year earlier, the Office for National Statistics said in London. Underlying tax receipts rose 3.4pc, lagging behind a 3.7pc increase in spending.

Britain's economic recovery has gathered momentum in recent months, which will help Chancellor of the Exchequer George Osborne meet his budget targets.

While Barclays described the data as "disappointing", it said the government may take "some comfort" from the increase in receipts and is broadly on track to meet its full-year goal. (Bloomberg)

SANDWICH CHAIN SUBWAY PLANS 1,000 NEW OUTLETS ACROSS EUROPE

FOOD

SUBWAY, the closely held restaurant chain with more outlets than McDonald's, plans to pick up the pace of openings in Europe by adding as many as 1,000 new locations in 2014.

The sandwich shop operator (pictured) has 4,018 stores in Europe, where it has continued to grow during the continent's recession and wobbly recovery, assistant regional director Mike Charest said.

The Milford, Connecticut-based company has opened about 500 stores a year in Europe for the past two years, and may add 800 to 1,000 next year.

"Europe is the strongest, fastest-growing international market for Subway outside of North America, and will continue to be," Mr Charest said by phone from his Amsterdam office on August 13. Subway's strategy "works for us regardless of economic situation" by balancing affordability with high-quality food.

The UK is at the "top of the list" for growth in Europe, with a goal to have 2,000 outlets by 2015, the executive said. Subway has added 63 locations in the UK in 2013 to take the number to 1,544, up from 59 openings in 2012. Growth may also quicken in the Netherlands, Finland and Sweden, where at least 20 stores have been opened in each country in 12 months.

The company aims to be in Latvia, Lithuania, Georgia and Ukraine by the end of this year. Ukraine has similar growth potential to Romania, which has 16 stores after the first opened in April 2012, said a Subway spokesman. (Bloomberg)

UK ORDER BOOKS IN BEST SHAPE FOR TWO YEARS

MANUFACTURING

BRITISH manufacturers' order books looked in their best shape for two years in August, an industry survey showed on Wednesday, providing further evidence that the recovery is picking up steam.

The Confederation of British Industry's total orders balance rose to zero from -12 in July.

That beat expectations for a reading of -8 and was the highest since August 2011. The long-run average for this index is -17.

The improvement was broad-based. Export order books rose to their highest since June 2012 and output expectations for the coming three months were the strongest in more than two years.

"Manufacturers have seen a real upturn in fortunes this quarter," said Stephen Gifford, CBI Director of Economics.

"Domestic and export orders have rebounded almost across the board." (Reuters)

CHINA PRESSURISES FOREIGN FIRMS TO ADMIT VIOLATIONS

REGULATION

A SENIOR Chinese official put pressure on around 30 foreign firms, including General Electric and Siemens, at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Sources who were at the closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases.

The official who delivered the blunt remarks was said to be Xu Xinyu, a division chief at the National Development and Reform Commission. (Reuters)

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