Carlsberg A/S estimated that the Russian beer market would shrink at least 5 percent this year, stunting the Tuborg maker’s growth prospects, as a ban on large bottles takes hold.
That market, which was the source of a sixth of last year’s operating profit, is declining due to a prohibition on selling beer in 1.5 liter plastic bottles that took effect at the start of the year, Carlsberg chief executive officer Cees ’t Hart said during a conference call with reporters yesterday.
The stock fell as much as 2.9 percent in Copenhagen.
Carlsberg’s Russian business represents the biggest acquisition in the Danish brewer’s history and was once its brightest star, generating almost half of its operating profits in 2009.
However, after a series of shocks struck the Russian market — including plunging oil prices, Western sanctions, recession and higher beer taxes — Carlsberg now only gets a fraction of earnings there.
BALTIKA
The Danish company sells about a third of the beer consumed in that country under brands such as Baltika.
Operating profit would rise by a mid-single-digit percentage on an organic basis after rising 5 percent last year, the Copenhagen-based maker of Tuborg beer said yesterday.
The company also forecast currency shifts would boost earnings by 350 million kroner (US$50.2 million) this year.
UPBEAT ANALYSIS
“From a conservative management team, guidance of a mid-single-digit increase in organic profit is as good as one could hope for at this stage,” Exane BNP Paribas analyst Eamonn Ferry said in a note to investors.
The firm’s operating profit of 8.25 billion krone last year missed analysts’ estimates of 8.29 billion kroner.
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