Danish brewer Carlsberg posted a drop in second-quarter profit and more than halved full-year growth prospects as drinkers in its key Russian market struggled to absorb higher beer prices.

The world's fourth-largest brewer said it now saw full-year adjusted net profit growth of 5-10 per cent, against previous guidance for more than 20 per cent growth.

It also cut its outlook for 2011 beer volume growth in Russia, which accounts for about 40 per cent of Carlsberg's total beer sales.

"Second-quarter performance in Russia has been below expectations," said Chief Executive Jorgen Rasmussen in the statement.

"The recovery in the beer category is taking longer than we anticipated as the Russian consumer adapts to the exceptional price increases of around 30 per cent undertaken during the last
18 months."

Carlsberg said it sees Russian beer volume growth at a low single-digit percentage figure from a previous forecast of between 2 and 4 per cent this year. The Russian market declined by about 2 per cent in the second quarter, it said.

Unfavourable weather during the second quarter also hit beer consumption, the brewer said.

"I would not have thought that Carlsberg would have to downgrade its outlook due to this," Nymann said, adding he had expected it would have been easier to get price increases through in Eastern Europe.

"Perhaps we are now heading towards more difficult times for the Russian economy and Carlsberg ought to be careful not to tighten the price screw too hard from now on," said Sydbank analyst Morten Imsgard.

In spite of the weak second-quarter development, Mr Rasmussen said he still saw improvement ahead.

"I'm confident that our Russian business will return to growth," he said. "At the same time, I'm pleased with the performance of the rest of the Group."

Beer markets in Northern and Western Europe grew slightly for the first six months. In Asia most beer markets reflected growth of mid- to high single-digit percentages.

For the Copenhagen-based brewer of Tuborg, Baltika and Carlsberg beers, northern and western Europe account for about 40 per cent of total beer sales and Asia about 20 per cent.

Second-quarter operating profit fell to 3.70 billion Danish crowns (€497 million) from 4.24 billion in the same quarter last year, missing analysts' average estimate of 4.34 billion forecast in a Reuters poll.

Sales rose 4.3 per cent to 18.74 billion, in line with a 18.73 billion average forecast.

Reuters