DENMARK: Carlsberg cuts forecast on market slowdown
Slower western beer markets have forced Carlsberg to cut its earnings forecast for the full-year, despite announcing sales and profit rises for the year-to-date.
Operating profit for the first nine months of 2008 rose 10% on an organic basis to DKK6.6bn (US$1.1bn), Carlsberg said today (5 November). Organic revenue grew by 7% to DKK45.4bn, although this reflected 34% growth including acquisitions.
Tough beer markets across the Baltic countries and Western Europe, particularly the UK, forced the Danish brewer to cut its full-year forecast, however.
Net revenue is expected to rise 7% for the full-year, compared to a previously predicted 10%, Carlsberg said. Operating profit in brewing is expected to rise 8% for the year, compared to a previously predicted 12%. Net profit, the brewer added, was likely to hit DKK2.6-7bn, down from an initially anticipated DKK3bn.
Indicating that the UK's beer market slowdown is structural rather than temporary, Carlsberg announced it would close its brewery in Leeds by 2011. It expects to cut up to 170 jobs. A further 60 job cuts are to be made in Finland, following poorer sales in the Baltic region.
The brewer said that UK sales "have been severely hit by sharp declines in consumption driven by on-trade". In Western and Northern Europe, it added: "United Kingdom was the only market in the third quarter with net revenues below last year."
Carlsberg's volumes for the nine months rose 4% on average, although the Baltika continued strong double-digit growth, rising by 17% for the period.
Group volumes in the third quarter fell by around 2% across Europe, the brewer said, as poor weather and consumer price inflation sent the key Russian beer market into decline during the period.
Carlsberg issued a warning over Russia's beer market slowdown last month, but it said today that overall market growth would likely be 1-2% for the full-year.
Regarding the economic crisis hitting several countries, Carlsberg maintained that beer "is proven" to be one of the consumer products most resilient to changes in the economy.
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