Royal Unibrew is considering the closure of one of its breweries in Denmark.

The Danish company said today (7 January) that the proposed closure of the facility in Aarhus comes off the back of its performance in the first nine months of last year which "did not meet expectations". Unibrew also highlighted rising raw material prices as forcing its hand.

"Royal Unibrew has today initiated negotiations with production workers at the brewery in Aarhus on contemplated redundancies," said company CEO Poul Moeller.

"The company has made an analysis of the group's Danish production structure as a basis of the cost-cutting decisions to be made. One consequence of this might be a closure of production in Aarhus, which would, if implemented, affect some 130 employees. The functions in Aarhus relating to sales, marketing, exports, purchasing, logistics, draught beer service and technical support, administration, etc are not expected to be affected."

The closure, should it go through, would take place in the last quarter of this year, and would boost earnings before interest and tax by around DKK20m (US$3.9m) from 2010 onwards. Production would shift to Unibrew's other breweries in Odense and Faxe, while impairment losses and additional costs would total around DKK90m.

"Following closure, if any, of production in Aarhus, the site is expected to be sold," Moeller added. "A sale of the site is estimated to yield proceeds in the order of DKK600-900m."

Separately, Unibrew confirmed late last week that its proposed purchase of Latvia's Livu Alus brewery, initially announced in August, has been completed. The acquisition of Latvia's third largest brewery has cost Unibrew EUR17.5m.

Unibrew is Scandinavia's second largest brewery group, behind Carlsberg.