Carlsberg profits hurt by weak beer markets

The world’s fourth biggest brewer, which brews Carlsberg, Tuborg, and Baltika brands, said its 2012 results would be dented by the eurozone crisis hitting beer drinkers and also by a low single-digit percentage rise in its input costs.

“We have taken a cautious view for northern and western Europe, and assume a slightly declining market in 2012,” chief financial officer Jorn Jensen said.

“Consumers in Europe are assumed to remain under pressure from the macro economic situation.”

Carlsberg said it expected the Russian beer market to return to modest growth this year after a 3 per cent fall in 2011 following big tax hikes, high inflation and tighter regulations.

The brewer gets nearly a third of its sales in Russia, the world’s fourth biggest beer market after China, the United States and Brazil, with a market share of close to 40 per cent.

“We lost market share in Russia, which is not satisfactory and we continue to take actions to address that,” chief executive Jorgen Buhl Rasmussen said.

Part of Carlsberg’s plan to reverse the falling market share in Russia would be to take full control of Russian unit Baltika through an offer to buy the 15 per cent it does not already own, and Rasmussen said the net cost of the deal in 2012 would be up to 4.4 billion crowns.

Carlsberg said buying out Baltika minority stakes would be immediately earnings-enhancing once completed, and it expected the delisting of Baltika to happen not later than May 2012.

Mr Rasmussen said the step would strengthen the business and bear fruit in 2012, though the group would still face a “challenging environment” in northern and western Europe where it has big operations in Scandinavia, France and Britain.

In Russia, inflation, especially on food products, would likely be significantly lower this year than in 2011, and the outlook for the economy was fairly positive, Mr Rasmussen said.

Fourth-quarter operating profit rose in line with forecasts to 1.83 billion Danish crowns from 1.13 billion a year earlier, but Carlsberg said 2012 underlying operating profits would be flat, which disappointed some analysts.

Group sales rose to 14.85 billion crowns in the fourth quarter from 13.40 billion a year earlier, exceeding a 14.30 billion average forecast.