Carlsberg’s operating profit in Russia drops
Whose figures do you trust more? Carlsberg reported that the Russian beer market grew 2 percent in the first six months of 2012 while Russian media said that beer consumption was down 0.3 percent to 51.8 million hl year-on-year. Be that is it may, there is worse to come. Beer consumption is expected to drop sharply in the first quarter of 2013, when beer sales by kiosks will be banned, while excise duties will go up 33 percent.
Market observers have pointed out that the impact of new regulations on the Russian beer market has yet to be felt, since some producers refrained from increasing prices until the high summer season. Once tighter regulations are enacted, consumers are expected to switch to vodka, which is viewed as a cheaper and more accessible product.
Releasing its second quarter 2012 results on 15 August 2012, Carlsberg said
that it has managed to slightly raise its market share in Russia in the second quarter, but this has not offset poor sales. Carlsberg increased its market share in Russia to 37.3 percent in the April-to-June period, up from 37 percent in the first quarter.
Carlsberg, which is the world’s number four brewer, said revenues from northern and western Europe accounted for 55 percent of total sales, while eastern Europe (aka Russia) accounted for 33 percent.
Its sales in the vital eastern Europe market returned an operating profit of DKK 1.5 billion (USD 248.5 million) in the second quarter, down 10 percent compared to the same period last year.
Overall operating profit for the Carlsberg group fell to DKK 3.5 billion (USD 580 million) in the second quarter 2012, from DKK 3.7 billion (USD 613.1 million) for the same period last year.
Carlsberg did not revise its outlook for the full year 2012, saying it expects "operating profit before special items at the level of 2011", that is, flat at around DKK 9.82 billion (USD 1.6 billion).
Carlsberg is not the only brewer that is struggling in Russia. It was reported that Sun InBev, an AB-InBev unit, saw its beer output in Russia drop 9.5 percent in the first quarter and 10.2 percent in the second.
On 21 August 2012 Danish brewer Carlsberg said it has increased its stake in Russia’s largest beer producer Baltika to 96.77 percent from around 85 percent after shareholders accepted Carlsberg’s offer. In may 2012 Carlsberg had made the offer to Baltika’s minority shareholders to purchase the remaining stock. The deal was expected to cost USD 1.15 billion.
