Carlsberg expected to close breweries in Europe
At Carlsberg they are taking their own sweet time. Although they announced massive brewery closures in 2005 already, nothing drastic happened. Now Carlsberg’s top brass seems to be investigating the issue again.
Alex Myers, Senior Vice President Western Europe of Carlsberg did not beat about the bush at Canadean’s Madrid Conference in April: Forecasting a one percent annual decline in beer consumption in western Europe until 2010 he emphasised that improving earnings in this market geography was Carlsberg’s major goal. Following the takeover of Scottish & Newcastle which gave Carlsberg access to even more western European markets like Greece (small) and France (tough going), Carlsberg will have to think hard as to how to satisfy its investors, who have helped underwrite a cheque for Scottish & Newcastle the size of Carlsberg’s annual turnover.
In May a Danish business journal reported that Carlsberg was planning to take several breweries off stream, many of them in Germany, Norway and the United Kingdom. However, a company spokesperson denied the rumour, saying that nothing has been decided yet.
In 2005 already Carlsberg shocked the public that it would shut down 14 of its then 29 breweries in Europe. Carlsberg Germany felt it necessary then to stress that its breweries in Germany (Hamburg, Dresden, Braunschweig and Lübz) would not be hit by the axe. This time the denial was more muted. Yet even if Carlsberg were looking for greater efficiencies in Germany, several of its brands like Lübz refer to a specific locality like the town Lübz which means that they have to be brewed where their origins are. That may be a real hindrance if Carlsberg thinks of closing down plants.
The news came shortly after Carlsberg reported first quarter 2008 earnings which were lower than expected. The first quarter in Europe is usually a weak quarter with people recovering from the spending excesses over the Christmas period. On 7 May Carlsberg said that its first quarter earnings before interest and taxes (EBIT) were DKK 388 million (EUR 52 million) down from DKK 402 million a year earlier. Turnover had climbed 6 percent to DKK 9.4 billion.
