DENMARK: Carlsberg's Russia woes continue as FY profits dip
- FY net profits down 2.5% to DKK5.47bn (US$1bn)
- Net sales in 2013 come in flat at DKK66.55bn
- Operating profits also flat, at DKK9.85bn
- Global beer volumes slide by 1%
Carlsberg is optimistic over Asia
Carlsberg has posted a drop in full-year profits as volumes and sales declines in Eastern Europe outpaced growth in Asia.
Net profits in calendar 2013 were down 2.5% to DKK5.47bn (US$1bn), the Danish brewer said today (19 February). Net sales were flat at DKK66.55bn in the same period, while operating profits also came in flat at DKK9.85bn.
Global beer volumes slipped by 1% as volumes in Russia, one of Carlsberg's core markets sank by 7% because of continued pressures on consumption. Net sales in the country fell by 11% and operating profits were down by 3%.
There were also volumes declines in Western Europe, although the company found profits and sales growth in the region, as higher margin products such as Somersby Cider and other premium innovations performed well.
Meanwhile, Carlsberg's Asia market continued to grow, helped by a number of investments in the region over the year, including increasing control of Chongqing Brewery and the construction of breweries in Myanmar and China. Asia beer volumes were up by 19%, with net sales climbing by 11% and operating profits by 38%.
In the fourth quarter, operating profits were up by 8% to DKK2.32bn while net sales were flat at DKK15.66bn.
Carlsberg CEO Jørgen Buhl Rasmussen said the results showed “strong and focussed execution in spite of an overall challenging macro-environment, not least the negative market impact in Russia”.
He added: “This shows our ability to constantly execute and innovate effectively while maintaining tight control of our costs.”
The overall beer market in Russia, which accounts for about 40% of Carlsberg's profits, has been in decline for some time since the Government imposed outlet restrictions including banning beer sales from street kiosks. However, today's results appear to show a worsening environment in the country in 2013 after full-year results last year remained flat in Russia.
Looking ahead, Rasmussen said that Carlsberg will focus on strengthening its business in Russia, but will also further develop its Asia interests to "capture the growth potential of the region". He also said the brewer plans to “change our Western Europe business model and organisation” without giving details.
The company predicted full-year operating profits to grow by mid-single digits in 2014.
As of 1100 CET, Carlsberg's shares were up by 5% as earnings beat market estimates.
To read the company's official results, click here.
For an in-depth look at Carlsberg's 2013 performance, click here.
The brewer's post-results conference call is covered here.
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