Putting on a brave face
Carlsberg has said it is confident it will benefit from the Russian market in the long-term, despite a recent slowdown. In October 2008, Carlsberg saw its share price decline 25 percent after it cut its 2008 growth outlook for the Russian beer market to 1–2 percent from 5 percent. Earlier this year Carlsberg had taken a big gamble on Russia when it bought a part of UK-based brewer Scottish & Newcastle for around DKR 57 billion (USD 9.8 billion). The deal included the 50 percent of Baltic Beverages Holding, which Carlsberg didn’t already own. Now Carlsberg relies on the Russian market for 40 percent of group earnings.
Carlsberg’s operating profit before special items in the first nine months of 2008 rose to DKR 6.6 billion (USD 1.15 billion) from DKR 4.3 billion in the year-ago period, largely as a result of its acquisition of S&N’s Eastern European assets.
The Copenhagen-based brewer said it now expects operating profits of DKR 7.9 billion this year, compared to its earlier prediction that earnings would be above DKR 8.1 billion, largely due to weakness in the United Kingdom and the Baltics, and a deterioration in consumer sentiment.
The group said although debt reduction had a high priority, it had sufficient funding through committed credit facilities and does not need to refinance until 2011.
