Carlsberg lowers outlook on fall in Russian sales

Brewer warns it might have to close breweries as beer consumption has decreased in its largest market.

Carlsberg lowers outlook on fall in Russian sales
Photo: Alexander Demianchuk/Scanpix
Danish brewer Carlsberg cut its annual profit guidance on Wednesday and said economic uncertainty in Russia, its biggest market, could prompt it to close some breweries.
Clouds over the outlook in some parts of eastern Europe had cut consumption of beer, the company said.
"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," the company said in its quarterly earnings statement.
"Consequently, we believe that the beer category will deteriorate further in the second half of the year," it added.
As a result, the company said it believed reported adjusted net profit would decline by "mid to high" single digit percentages, rather than an earlier forecast of low single digit growth.
The estimate was based on a high single digit sales fall in Russia, while prospects for the beer market in western Europe looked flat or slightly lower this year. The outlook for consumption in Asia was growing "in line with 2013."
The company said: "In order to mitigate the risks as much as possible, several changes have been and will be made in our eastern European business, including structural changes.".
Carlsberg said: "These include considerations related to brewery closures."
Second-quarter profit rose to 2.21 billion kroner (296 million euros, $394 million) from 2.07 billion kroner, which was above a Dow Jones Newswires analyst consensus of 2.08 billion kroner.
A turnaround in the Russian market could take at least a year to materialise and was unlikely to affect next year's results, Sydbank analyst Morten Imsgard told news agency Ritzau.
"The escalation in recent weeks combined with Carlsberg's announcement suggests that we might as well view 2015 as a year in which Carlsberg will struggle to achieve any growth in eastern Europe," he said.
Shares in Carlsberg were down by 4.4 percent in mid-morning trading on the Copenhagen stock market, where the main index was 0.35 percent higher.

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Is Carlsberg about to release a paper beer bottle?

Two prototypes and new partnerships have brought Danish brewing giant Carlsberg a step closer to releasing a paper beer bottle.

Is Carlsberg about to release a paper beer bottle?
Is the glass Carlsberg bottle living on borrowed time? Photo: Kristian Juul Pedersen/Ritzau Scanpix

Carlsberg said in a press release that it was close to selling beer in paper bottles, in part to the partnership.

Having worked on development of sustainable packaging since 2015, the company is scheduled to present two prototype paper bottles in Copenhagen on Friday.

“Although we’ve not yet reached our goal, the two prototypes are a significant step on the way to achieving our ultimate ambition, which is to bring this groundbreaking technology onto the market,” deputy director of Group Development at Carlsberg, Myriam Shingleton, said via the press statement.

A ‘paper bottle union’ between Carlsberg, The Paper Bottle Company (Paboco) and three other global companies – Coca-Cola, L'Oréal and The Absolut Company – is driving the development, according to the Danish brewery.

Paboco said that the partnership with the high-profile brands would strengthen work to create sustainable packaging.

“We are working across different retail sectors, sharing risk and are together in our vision to make the paper bottle reality which would fundamentally change the sector forever,” Paboco CEO Gittan Schiöld said.

Both prototypes are constructed primarily of sustainably grown wooden fibres and have internal coatings which enable them to contain beer.

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