Carlsberg predicts steep drop in Russia


Carlsberg posted fourth-quarter operating profits matching expectations and forecast a further steep drop in its key Russian market this year.

The firm said it would focus on profitable market share growth and efficiency improvements. "While we expect consumer dynamics to be challenging in 2010, we also see many opportunities to strengthen our position in key markets."

Operating profits at the Danish group rose to 1.64 billion crowns (€220 million) from 1.39 billion crowns a year earlier and against a mean forecast of 1.65 billion in a Reuters poll of analysts.

"The 2010 outlook is on the positive side," said Morten Imsgaard, analyst at Sydbank. "The fourth quarter roughly matches expectations."

Rival Heineken NV, the world's third-largest brewer, posted 2009 results broadly in line with expectations and forecast lower beer consumption in many regions, limited price increases and few cost benefits this year.

Carlsberg said it took market shares, with particularly strong gains in Russia, in a challenging 2009.

"We identified earnings protection and cash flow improvement as our top priorities going into the year. The 2009 result demonstrates that we have been successful in our efforts," chief executive Jorgen Buhl Rasmussen said.

Profits at its East European unit, which includes key Russian brewer Baltika, grew to 1.09 billion crowns from 798 million crowns.

Carlsberg said the Russian beer market shrank by around 10 per cent in 2009, but its own beer volumes in Russia rose 1 per cent as beer sellers stocked up ahead of a 200 per cent rise in beer excise taxes in the country from January 1st.

The tax hike however poses a threat to Carlsberg, which said it expected the Russian market to show a low double-digit percentage decline in 2010, though it would continue to outperform the market.

Due to Russian stockbuilding in the fourth quarter of 2009 and subsequent destocking in the first quarter of 2010, first-quarter and full-year 2010 operating profit will be negatively affected by about 300 million crowns, Carlsberg said.

Carlsberg, whose around 300 beer brands in some 150 markets include Tuborg, San Miguel and Kronenbourg, forecast group operating profits in 2010 in line with 2009.

In the fourth quarter, group sales shrank 6 per cent to 13.6 billion crowns while core beer volumes were flat.

Carlsberg generates most sales in Western Europe but mainly sees growth mid-term in Russia, and longer-term in Asia.

Carlsberg proposed a 2009 dividend of 3.50 crowns, unchanged from a year earlier.