Bright future for Carls­berg – an­a­lyst

The Star Early Edition - - INTERNATIONAL -

THE AN­A­LYST who’s fol­lowed Carls­berg longer than any­one else says Rus­sia’s po­lit­i­cal and eco­nomic as­cent points to a much brighter future for the brewer in its big­gest mar­ket, in a de­vel­op­ment that prom­ises to end seven years of headaches there.

“There are a num­ber of signs that things are im­prov­ing for Rus­sia and that is good news for Carls­berg,” Frans Hoyer, who’s tracked the brewer for four decades, in­clud­ing dur­ing the Cold War, said in an in­ter­view. Not only is the Rus­sian rou­ble do­ing bet­ter, in part thanks to higher oil prices, “but it may also be fair to spec­u­late that the in­ter­na­tional sanc­tions on Rus­sia are mov­ing closer to an end,” he said.

Carls­berg’s Rus­sian busi­ness rep­re­sents the big­gest ac­qui­si­tion in the Dan­ish brewer’s his­tory and was once its bright­est star, gen­er­at­ing al­most half of op­er­at­ing prof­its in 2009.

But after a series of shocks struck the Rus­sian mar­ket – in­clud­ing plung­ing oil prices, Western sanc­tions, re­ces­sion and higher beer taxes – Carls­berg now only gets about a fifth of its op­er­at­ing profit from there.

The new po­lit­i­cal land­scape is chang­ing all that, es­pe­cially since Don­ald Trump – a card-car­ry­ing fan of Pres­i­dent Vladimir Putin – won the US elec­tion.

“There are some ex­pec­ta­tions that Trump will be able to help Rus­sia get rid of the sanc­tions, and that would, of course, ben­e­fit Carls­berg,” said Hoyer, who’s now vice-pres­i­dent of eq­uity re­search at Jyske Bank.

“Trump is say­ing a lot of things and it’s dif­fi­cult to know what will ac­tu­ally hap­pen, but it’s not com­pletely im­plau­si­ble that we will see the West adopt­ing a more prag­matic ap­proach to Rus­sia, which would ben­e­fit Carls­berg.”

Hoyer, a 60-year-old Dane who has cov­ered Carls­berg since 1985 (the year Mikhail Gor­bachev be­came gen­eral sec­re­tary of the Soviet com­mu­nist party), is the most senior-rank­ing of 38 an­a­lysts listed on Carls­berg’s in­vestor re­la­tions web­site.

An­drew Hol­land at So­ciété Générale has tracked the brewer since 1996, the sec­ond-long­est cov­er­age period, ac­cord­ing to the web­site.

“For seven years, the over­shad­ow­ing theme for Carls­berg has been the neg­a­tive news out of Rus­sia, and it has weighed on the com­pany,” Hoyer said.

“For Carls­berg, Rus­sia is un­der way in shift­ing from a neg­a­tive to a neu­tral, or pos­si­bly even a pos­i­tive.”

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.