Carlsberg shares leap as strong Russian sales support earnings

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Stockholm - Carlsberg reported earnings yesterday that beat analyst estimates as the fourth-biggest brewer gained market share in Russia by selling more premium beer. The stock rose the most in two years.

Fourth-quarter earnings before interest and tax rose nearly 8 percent year on year to 2.32 billion Danish kroner (R4.66bn), the Copenhagen-based company said. Thirteen analysts had estimated 2.19 billion kroner on average.

“We had concerns for the Russian market and how the currency would hit, and Carlsberg is performing better in those very difficult conditions,” Michael Friis Jorgensen, an analyst at Alm Brands, said. “Where we really see the positive is from price.”

In Russia, where Carlsberg is the largest brewer and has a quarter of its total sales, consumption has been curbed by an economic slowdown and regulation, while the rouble has depreciated. The Danish company gained market share in the quarter measured by the value of sales, aided by marketing efforts such as its sponsorship of the winter Olympic Games in Sochi and the country’s national hockey league, as well as by strong sales of premium brands like Tuborg.

Carlsberg’s stock rose as much as 6.8 percent, the biggest intraday gain in two years, and was up 6 percent at 579 kroner at 11.08am in Copenhagen.

The company planned to strengthen its Russian business and develop Asian operations to “capture the growth potential of the region”, chief executive Joergen Buhl Rasmussen said.

Brewers are increasingly turning to Asia, seeking relief from Europe, where tough economic conditions are weighing on drinking. In December last year, Carlsberg agreed to pay Chongqing Beer Group 1.56 billion yuan (R2.8bn) for eight Chinese breweries in its second acquisition in less than a month in the country.

Carlsberg’s organic beer volume, which excludes acquisitions and disposals, fell 3 percent in the quarter as growth in Asia failed to offset declines in western and eastern Europe. Revenue inched lower to 15.7 billion kroner.

Carlsberg forecast that western European beer markets would decline “slightly” this year while Asian markets would continue to grow in line with last year.

James Edwardes Jones at RBC Europe said: “Carlsberg still has plenty to do to rid itself of its accident prone reputation but these results are a step in the right direction.” – Bloomberg

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