Beer tax hits Carlsberg profits

Danish brewer Carlsberg failed to meet first-quarter profit forecasts after its crucial Russian market took another hit from beer tax hikes.

The world's fourth-largest brewer, whose brands include Carlsberg, Tuborg and Baltika beer, said its beer volumes dropped by 4 per cent due to falling East European volumes while Northern and Western Europe saw growth.

The brewer's Russian volume market share improved slightly to 37 per cent in the first quarter from 36.8 per cent in the previous period.

At the beginning of the year, Russian taxes on beer rose by 20 per cent, meaning Russian consumers bought more beer before the increase.

Carlsberg warned in February its beer profits would stall as Europe struggles to emerge from sluggish growth and competition is tough in more mature markets.

Big brewers are relying on emerging market growth and price rises to offset those factors.

"The group delivered continued solid growth and performance in Northern and Western Europe and Asia, while destocking impacted our Russian results as expected," chief executive Jorgen Buhl Rasmussen said in a statement.

While some rivals such as SABMiller have seen the Americas region offset a slow Europe, Carlsberg is heavily exposed to Eastern Europe and Russia, where growth has stalled.

The group's beer volumes grew 2 per cent when adjusted for Russian destocking after the tax hikes. Eastern Europe sales accounted for about 24 per cent of group sales in the first quarter, Carlsberg said.

Carlsberg said it still expected operating profit before special items for this year to be at the same level as in 2011, which was 9.82 billion crowns. Carlsberg also said it expected 2012 adjusted net profit to rise slightly from last year's 5.2 billion crowns.

Carlsberg said in February it expected the Russian beer market to return to modest growth this year after a 3 per cent fall in 2011.

First-quarter operating profit dropped to 574 billion Danish crowns ($100.32 billion) from 1 billion crowns a year earlier. Group sales rose to 12.87 billion crowns in the quarter from 12.53 billion a year earlier.

Reuters