The Danish brewing giant Carlsberg Breweries reported a 96% dive in first quarter operating profits today, shocking the market and sending its share price down. Operating profit amounted to DKK18m against DKK440m a year ago.

The company said that although first quarter beer and soft drink sales of the Carlsberg Group were level with last year at 16.1m hl, its operations had been hit by the impact of the SARS virus, currency movements, falling prices in Russia and a sales decline in southern Europe’s on-premise market.

Net revenue fell to DKK6,855m, against DKK7,572m in the same period last year - a 9% decline. “This decline is mainly due to adverse exchange rate developments, divested business areas in Switzerland (soft drink and wine), the calendar shift in Easter sales as well as a shift from on-premise sales to off-premise sales,” the group said.

In the Nordic region, beer sales showed a slight decrease during the period and Sweden, in particular, experienced a decline, which was characterised by severe price competition in Systembolaget, Carlsberg said.

In the UK, Tetley's maintained volume in the decreasing ale-market and an increase of 14% was achieved for the Carlsberg brand. The minor decline in operating profit compared to 2002 was primarily due to expenses in connection with the increased pension provisions as well as the exchange rate developments.

In Eastern Europe, Baltic Beverages Holdings, its joint venture with S&N, saw its net revenue declined by almost 15% to DKK 802m.

Meanwhile in Asia Operating profit declined by DKK24m compared to last year, primarily due to the adverse exchange rate developments.

But analysts seemed to be particularly concerned that Carlsberg had lowered forecasts.

"What's really disappointing is that they are lowering their EBITA outlook. It seems they are having different problems in different units, indicating that the problem is not only with weak markets but also with structural problems within the group," one analyst said.

Operating profit in Carlsberg Breweries is now expected to be at level with last year, compared a previously expected 5-10% increase.

The company said this was primarily attributable to the weak economic development in several of the company's most important markets and adverse exchange rate developments.