Carlsberg warns of flat beer profits in 2012

COPENHAGEN: Danish brewer Carlsberg warned its operating profits will be flat in 2012 hit by declining beer markets in northern and western European markets while its biggest market, Russia, will only show a slow recovery.

The world’s fourth-largest brewer said yesterday it expected the Russian beer market to return to only modest growth this year after a 3% fall in 2011 after big tax hikes, high inflation and tighter regulations.

The group which brews Baltika, Tuborg as well as Carlsberg beers makes nearly a third of its group sales in Russia with a market share of close to 40%, and expects the world’s fourth-biggest beer market to start recovering in 2012.

It added it would look to take full control of its Russian Baltika arm to help reverse a fall in market share. An offer to buy the 15% of Baltika it does not already own will cost Carlsberg up to 6.5 billion crowns (Us$1.15bil).

Chief executive Jorgen Buhl Rasmussen said the step the group had taken in Russia would strengthen the business and would bear fruit in 2012 while it still faced a “challenging environment” in northern and western Europe where it had big operations in Scandinavia, France and Britain.

The group reported that fourthquarter operating profit rose in line with forecasts to 1.83 billion Danish crowns from 1.13 billion a year earlier, but added 2012 underlying operating profits will be flat.

“2011 ended on a good note, on the earnings side it was due to the effects of cost cutting. On the other hand, their expectations for 2012 are on the weak side. I had hoped they would be able to raise operating profits in 2012,” Sydbank analyst Morten Imsgard said.

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. – Reuters