Business World

Monday 22 January 2018

Carlsberg growth will probably slow as it grapples with rising prices in Russia

Danish football legend Peter Schmeichel at a Euro 2016 campaign launch for Carslberg
Danish football legend Peter Schmeichel at a Euro 2016 campaign launch for Carslberg

Thomas Buckley

Carlsberg forecast slower earnings growth in the second half of 2016 as inflation adds to costs in Russia, where it sells a third of the country's beer.

Organic operating profit will probably rise about 1pc after gaining 8pc in the first half, chief executive officer Cees 't Hart said yesterday.

The stock fell as much as 4.9pc in Copenhagen.

Carlsberg is grappling with Russian consumer prices that rose 7.2pc in July, almost twice the central bank's target.

The company, Russia's biggest brewer, has seen production costs increase and also has been weighed down by the weakness of currencies including the ruble.

Currency shifts will cut profit by 600 million kroner (€80m) in the full year, up from a previous estimate of 550 million kroner, it said yesterday.

Earnings before interest, taxes and one-time items fell to 3.45 billion Danish kroner in the first half. Analysts on average had estimated profit of 3.54 billion kroner.

The company - which was the official beer of the Euro 2016 tournaments, along with previous Euros - is also pulling out of markets where growth is slowing, such as Malawi and some operations in Finland and Poland.

"We have a number of operations that are not operating in the way we would have liked, we are reviewing these and we continue the programme of streamlining our business," Mr 't Hart said, adding that other operations could be exited by year-end.

The shares traded 4.3pc lower at 650 kroner as of 9:50 a.m. local time yesterday . They had gained 13pc in the past two months. (Bloomberg)

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