Carlsberg warns of flat beer profits in 2012
COPENHAGEN, Feb 20 – Danish brewer Carlsberg warned its operating profits will be flat in 2012 hit by declining beer markets in northern and western European markets while its biggest market, Russia, will only show a slow recovery.
The world’s fourth largest brewer said today it expects the Russian beer market to return to only modest growth this year after a 3 per cent fall in 2011 after big tax hikes, high inflation and tighter regulations.
The group which brews Baltika, Tuborg as well as Carlsberg beers makes nearly a third of its group sales in Russia with a market share of close to 40 per cent, and expects the world’s fourth biggest beer market to start recovering in 2012.
It added it will look to take full control of its Russian Baltika arm to help reverse a fall in market share. An offer to buy the 15 per cent of Baltika it does not already own will cost Carlsberg up to 6.5 billion crowns (US$3.47 billion).
Chief Executive Jorgen Buhl Rasmussen said the step the group has taken in Russia will strengthen the business and will bear fruit in 2012 while it still faces a “challenging environment” in northern and western Europe where it has big operations in Scandinavia, France and Britain.
The group reported that fourth-quarter operating profit rose in line with forecasts to 1.83 billion Danish crowns from 1.13 billion a year earlier, but added 2012 underlying operating profits will be flat.
Carlsberg shares dipped 0.4 per cent to 427.40 crowns by 0905 GMT reflecting the disappointing outlook for 2012, analysts said.
“2011 ended on a good note, on the earnings side it was due to the effects of cost cutting. On the other hand, their expectations for 2012 are on the weak side. I had hoped they would be able to raise operating profits in 2012,” Sydbank analyst Morten Imsgard said.
Group sales rose to 14.85 billion crowns in the fourth quarter from 13.40 billion a year earlier, exceeding a 14.30 billion average forecast.
Carlsberg said buying the rest of Baltika would be immediately earnings-enhancing, and expects the delisting of Baltika to happen not later than May 2012.
In the Russian market, its volume market share declined to 37.4 per cent in 2011 from 39.2 per cent previously.
“Russia resulted in market share loss due to a high level of promotional activities from competitors,” the brewer said.
It had earlier said it expected its key Russian beer market to begin recovering in 2012 but that the decline in western European markets could intensify over the next three years as the eurozone crisis bites. – Reuters