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Carlsberg loses market share in Russia amidst political tension
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Alcohol, particularly beer, has been repeatedly linked to low testosterone and high estrogen in men. (Shutterstock/*)
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slowdown in Russian demand for beer as international sanctions threaten the country’s economy is weighing on Danish brewer Carlsberg A/S’s sales.
The Russian market shrank about 5 percent, hurt by restrictions on bottling, Carlsberg said Tuesday.
“Our market share decline accelerated during the year because of increased promotional pressure” in Russia, the company said. Chief Executive Officer Cees ’t Hart maintained the company’s forecast for mid-single-digit percentage organic growth in operating profit.
Carlsberg is the largest brewer in Russia, where it produces about a third of beers sold. Its business there has suffered in recent years amid retreating oil prices and political tensions, clouding Carlsberg’s ambition to step up its focus on revenue growth.
Total first-quarter revenue fell 5 percent to 12.7 billion kroner ($2.1 billion), dented by performance in eastern Europe, the Copenhagen-based company said. Analysts expected 12.8 billion kroner.
“For the equity story to push on, the company now needs to demonstrate improvement in top-line,” Jefferies analyst Ed Mundy wrote in a note to investors.
Organic sales growth was 2 percent in the quarter, meeting estimates, and volume rose 1 percent, while analysts expected no change.
Sales growth was strong in China, as the Lunar New Year festivities in February took place later than usual this year, making for favorable annual comparisons. Carlsberg joins distillers Pernod Ricard SA, Remy Cointreau and Hennessy maker LVMH in reporting strong sales of alcoholic drinks in the country, where demand for cognac is soaring.
