London - Carlsberg A/S, the world’s fourth-biggest brewer, cut its full-year profit forecast after second-quarter earnings missed estimates amid plunging volume in Russia.
Operating profit in 2015 will decline slightly, the Copenhagen-based company said in a statement on Wednesday, prompting an 8 percent plunge in the shares. It had previously forecast mid- to high-single-digit growth. Earnings in the second quarter slumped 19 percent.
As the biggest brewer in Russia, where the beer market dropped 9 percent in the quarter, Carlsberg has been hit by a slump in the country’s currency and tightening regulation. The beermaker has closed two breweries there to counter weaker demand. Carlsberg stock has traded in tandem with the ruble, which fell to a six-month low against the dollar on Monday.
“The macroeconomics in Russia are not good at this point in time,” Chief Financial Officer Joern P. Jensen said on a conference call with reporters. “We have to make sure we make all the changes necessary, but we have no radical plans” such as closing more breweries, he said.
Carlsberg shares fell as much as 47 kroner to 543 kroner in Copenhagen, the steepest intraday drop since December 16.
Sales drop
Earnings before interest, taxes and one-time items were 2.92 billion Danish kroner ($432 million), Carlsberg said. Analysts on average had estimated profit of 3.23 billion kroner. Sales in the quarter fell 3 percent on an organic basis, which excludes currency and acquisition effects.
“Part of the miss is driven by the slow delivery of cost savings from their self-help initiatives,” Jonathan Fyfe, an analyst at Mirabaud in London, said in a note. “Those initiatives formed a significant part of our investment case for Carlsberg, so that is particularly concerning.”
A strong performance by the company’s operations in Asia for the year won’t be enough to offset weaker results in western Europe and tough conditions in eastern Europe, said Chief Executive Officer Cees’t Hart, who replaced Joergen Buhl Rasmussen in June.
“Expectations will now be reset,” Francois Mosnier, an analyst at Exane BNP Paribas, said in a note.
BLOOMBERG