DENMARK’S CARLSBERG unexpectedly raised its second-quarter profits and 2010 outlook yesterday, as the rate of decline slowed in its key Russian market and the stronger rouble boosted earnings.
The maker of Carlsberg, San Miguel, Kronenbourg and some 300 other brands said that while beer drinking in Russia continued to drop in the quarter following a sharp tax rise in January, the slowdown was less steep than in the first quarter.
Quarterly operating profit rose to 4.25 billion crowns (€570 million) from 3.66 billion crowns a year earlier, beating the average forecast in a Reuters poll for a marginal rise to 3.68 billion.
The company said the result was helped by currency effects, mainly a strengthening of the Russian rouble against the crown.
It forecast a high single-digit percentage decline for the Russian market in 2010 – implying roughly the same drop rate in the second half as in the first – pointing to an improving Russian economy and better consumer sentiment. Its previous forecast was for a low double-digit percentage drop.
Chief executive Jorgen Buhl Rasmussen said he still intends to increase market share in Russia this year, striking a more cautious note than previous guidance that the firm would outperform the Russian market.
Carlsberg said it was too early to see the full impact of the recent Russian drought, forest fires and temporary grain export ban, which lifted world grain prices and hit brewers’ shares this month.
Higher grain prices have little effect on Carlsberg, as grain accounts for a small part of its costs, Mr Rasmussen said.
Carlsberg gets more than half its revenue in western Europe. But, as those markets are saturated, it sees mid-term growth in Russia – even though sales there were hit by a tripling in excise tax to combat alcoholism – and longer-term growth in Asia.
“The group’s performance was strong for the first six months, in spite of challenging consumer dynamics. We achieved higher margins in all three regions,” Mr Rasmussen said.
He said he sees consumer behaviour improving overall throughout 2010 in all regions. – (Reuters)
