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Carlsberg to cut 2,000 jobs after tough Q3 & YTD

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  • YTD net losses at DKK3bn (US$431m) after a DKK4.2bn profit last year 
  • Net sales in nine months to end of September inch up 1% to DKK50.7bn
  • Operating profits down 5% to DKK7bn
  • YTD beer volumes slip 1.5% to 94.8m hectolitres
  • Q3 net losses hit DKK4.5bn after a DKK2.1bn profit in 2014
  • Net sales up 1% to DKK18.3bn
  • Operating profits up 2% to DKK3.46bn
  • Q3 beer volumes flat at 34.3m hectolitres

Carlsberg is cutting 2,000 jobs as it forges ahead with cost-cutting plans after another tough quarter. 

Carlsberg said the job losses will be completed by the end of 2016

Carlsberg said the job losses will be completed by the end of 2016

The Danish brewer reported year-to-date net losses of DKK3bn (US$431m) after a DKK4.2bn profit last year. Net losses for the third quarter reached DKK4.5bn. Meanwhile net sales in the first nine months of the year inched up 1% and both sales and operating profits lifted slightly in the quarter. 

The company said its third quarter was impacted by special items of DKK7.7bn, mainly relating to impairment of Russian brands and assets in China, leading to a reported net loss of DKK4.5m.

As a result, the company has launched 'Funding the Journey' - which contains impairment and restructuring costs during 2015-2017 of DKK10bn, of which around DKK8.5bn will be charged in 2015. The company said the programme is expected to deliver annual benefits of DKK1.5-2bn by 2018. As part of the restructuring, 2,000 jobs will go and some breweries may be closed, Carlsberg said.

The company said two-thirds of the staff losses have already been carried out and all cuts will be completed by the end of next year. It is unclear where the job losses have landed, however before the summer, Carlsberg reduced staff at its headquarters in Copenhagen and Hart said efficiencies will come from white-collar positions.

CEO Cees ‘t Hart said the new initiative "merges all existing and new profit-enhancing initiatives under one umbrella and sees us taking significant steps to right-size parts of our business. Funding the Journey will release funds to be invested as well as increase profits. This, and the fact that we are approaching the inflection point where our growth markets in Asia more than compensate for the declining markets in Eastern Europe, gives me confidence in the future.”

For coverage of Carlsberg's post-results conference call, click here

In its second quarter, the company said it expected its bottom line to "decline slightly" in the full-year after posting a near-12% slide in operating profits in the first half of 2015. In its YTD statement, the company said its  "expectations to the underlying business performance for 2015 remains unchanged".

Carlsberg has been hit by declining beer consumption in Russia, its core market, and has closed breweries in the country. In June, Hart replaced Jørgen Buhl Rasmussen as CEO. Buhl Rasmussen retired at the same time as the company announced a slide in full-year profits.

Hart's comments today were well received by investors. As of 1251 in Copenhagen, Carlsberg's share price was up 8% to DKK620.40.

To read the company's official statement, click here.


Sectors: Beer & cider, Company results

Companies: Carlsberg

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