Katarina Gustafsson Stockholm

CARLSBERG and Heineken, two of the top four brewers, have signalled tougher times ahead for the beer industry as escalating political tensions in eastern Europe weigh on the region’s economy.

Carlsberg, the biggest brewer in Russia, cut its forecasts for full-year revenue and earnings yesterday, causing the shares to slump as much as 6.9 percent even as quarterly profit beat estimates.

Heineken said yesterday it expected growth to moderate in the remainder of the year, though the shares surged 8 percent after the company posted first-half earnings that topped estimates and said profitability would improve.

Across the globe, beer companies are under pressure as drinkers shift to rival craft brews and increasingly trade up to spirits. The recent political tension between Russia and its Western trading partners has added to difficulties in a country where government measures to reduce drinking have been hurting sales for the past five years.

“Conditions are difficult and apparently getting worse,” Frans Hoyer at Jyske Bank said of Russia. “Rather than finding some type of stabilisation now given several years of volume decline, it looks like we are in for another bout of decline in the next several quarters.”

While Carlsberg gets more than a third of its total selling volume from Russia, Heineken is less dependent on any one country. The Amsterdam-based brewer is also benefiting from a three-year cost-saving plan and said yesterday that it was targeting a 0.4 percentage point yearly expansion in the operating margin, with the improvement likely to be greater this year.

Heineken’s results were “truly impressive” with almost every division beating estimates, Jonathan Fyfe, an analyst at Mirabaud Securities, said in a note.

Carlsberg said operating profit on a so-called organic basis would rise at a low- to mid-single-digit pace for the year, less than its previous guidance for high-single-digit percentage growth. The Copenhagen-based maker of Tuborg also forecast steeper drops in reported operating profit and net income than previously indicated.

“Due to the recent macro events the consumer sentiment and the outlook for some of the economies in eastern Europe are becoming increasingly challenging and uncertain,” Carlsberg said. “Consequently, we believe that the beer category will deteriorate further in the second half.”

Heineken said growth in revenue per hectolitre of beer sold and profit would slow in the second half from the first six months as some countries lagged. The firm still anticipated stronger sales this year.

“The economic outlook remains mixed,” chief executive Jean-François van Boxmeer said in a statement.

At Carlsberg, the volume of beer sold in eastern Europe declined 13 percent in the second quarter on an organic basis. Higher prices in the region limited the drop in net revenue to 4 percent. – Bloomberg