Carlsberg warns of “challenging” 2023 whilst Russia exits drag on

Denmark | Carlsberg said that it intends to raise prices this year in response to higher input costs but warned that the move may impact sales in some of its key markets.

“While beer historically has been a resilient consumer category, the higher prices in combination with generally high inflation may have a negative impact on beer consumption in some of our markets, particularly in Europe,” Carlsberg said on 8 February.

It added that it remains “uncertain” how the ongoing war in Ukraine and China's reopening from strict covid lockdowns will impact demand.

As a result, the world's number three brewer issued a super-cautious outlook. It expects organic operating profit this year to change between minus 5 percent and plus 5 percent, compared with 12 percent growth last year.

In the 2022 financial year, Carlsberg fell to a net loss of DKK 1.06 billion (USD 145 million), down from a profit of DKK 6.85 billion (USD 989 million) in 2021. This was mainly due to the write-down of the Russian assets.

Carlsberg’s Russia exit

As to its announced retreat from Russia, Carlsberg said that it now hopes to sign a deal in the middle of 2023, after a careful screening process of potential buyers. The next step will be to have the sale authorised by the Russian government. As few western companies have completed this process, Carlsberg is unsure as to how long it could take and what the outcome will be.

Reading through Carlsberg’s lengthy explanation, as to why the divestment is so difficult, observers could not shake off the impression that Carlsberg is dragging its feet. Perhaps the Danes are hoping that the war in Ukraine will soon end in a ceasefire, and Carlsberg may not have to divest a business, which it valued at nearly DKK 10 billion (USD 1.45 billion) – Carlsberg’s impairment charge – but may not fetch in the sale?

In March 2022, following Russia’s invasion of Ukraine, Carlsberg had announced its decision to seek a full divestment of its Russian unit, Baltika, setting itself a deadline of December 2022.

Carlsberg also said that its 2022 revenue in Russia grew 56 percent on the year to DKK 10.2 billion (USD 1.5 billion). Profit after income tax was DKK 1.9 billion (USD 270 million).

Since the second quarter 2022, Carlsberg has classified the Russian business as an asset held for sale and is not included in overall financial results.