DEN: European woes force Carlsberg brewery closure
Carlsberg is to close a brewery in the Danish capital of Copenhagen as it looks to cut costs from its ailing operations in Western Europe.
The Danish brewing giant today (21 February) said it would shut its plant in Valby, Copenhagen by 2008 to save DKK130m (US$21m) each year.
Its site in the Danish town of Fredericia would be expanded and would receive DKK800m of investment over the next three years, Carlsberg said.
The announcement came as Carlsberg again reported a slump in earnings from its operations in Western Europe during 2005.
Operating profit from Western Europe slumped in the year by 11% due to falling sales in the UK and rising costs associated with the company's efficiency programmes across the continent.
Carlsberg has suffered from stagnant beer markets across Western Europe and now generates over half of its earnings from emerging markets in Eastern Europe and Asia.
"We are not satisfied with Western Europe, but, as you can see, we are taking determined steps to counter this, and we expect the situation to improve during 2006," Carlsberg chief executive Nils S. Andersen said.
Meanwhile, Baltic Beverages Holding, its Eastern European brewing venture with Scottish & Newcastle, gave a boost to full-year earnings.
BBH, in which Carlsberg owns a 50% stake, posted a 27% leap in operating profit, on the back of a 13% rise in beer sales in Russia.
Group operating profit reached DKK3.5bn for 2005, up from US$3.4bn a year earlier. Net revenues climbed 5% to DKK38bn.
Revenues from Carlsberg's operations in Asia rose 11%, although operating profit fell from DKK404m to DKK392m on the back of the cost of launching Carlsberg Chill China.
Carlsberg added that it expects revenues in 2006 to reach DKK39bn "driven by organic growth at both BBH and the other Eastern European units".
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