Carlsberg Group again lowers 2013 forecast for Russian market, says it will shrink by around 7%-9%

MOSCOW , November 14, 2013 () – Danish brewer Carlsberg, the largest beer producer in Russia, has again lowered its 2013 forecast for the falling beer market based on third quarter results.

Carlsberg projects that the Russian market will shrink by around 7-9% or high single digits. The concern expected a market fall of around 5% in the second quarter, while it had earlier forecast that the market would remain the same as 2012.

The ban on beer sales at street kiosks and the slowdown of the Russian economy, which contributes to further deterioration of consumer sentiment, negatively affected the market, the company said in its quarterly report.

The Russian beer market fell by 7% in January-September, and by 9% in the third quarter. Apart from the industry's tougher regulation and macroeconomic factors, bad weather in September negatively affected quarterly sales, the company said.

In spite of a falling market in Russia, Carlsberg was able to increase its stake in January-September to 40% in value, up from 38.7% last year and 39% in the second quarter. The growth in market share was aided by the beer sales of Holsten, Baltika #0, Baltika Cooler, Zatecky Gus, Zhigulevskoye and Holsten. Baltika #7 sales suffered due to the ban on beer sales at kiosks.

The Ukrainian beer market fell by 6-7% in January-September due to the slowing economy and bad weather in September.

Overall in Eastern Europe, where Carlsberg includes Russia, beer sales in January-September fell in physical terms by 4% to 32.9 million hectoliters. In the third quarter, sales decreased by 15%. Company revenues in the region fell by 9% to 13.756 billion Danish kroner ($2.5 billon) in January-September. This year Russia raised the prices of its products in all countries of Eastern Europe. In Russia sales were increased in March, May, June and September. The company's operating profit in the region grew by 1% to 3 billion kroner ($538 million).

In Russia, Baltika Brewing Company (MOEX: PKVA) belongs to Carlsberg. As a result of an offer to buy out minority shareholders, Carlsberg increased its stake in Baltika by 100%. In September the concern announced a squeeze-out. At that time Carlsberg's share of the Russia company was 97%. Earlier in the course of the voluntary buyout, minority shareholders owned 12.05% of Baltika shares. The total cost of buying out Baltika's minority shareholders was $1.1 billion.

Baltika was delisted from the Moscow Exchange in October of last year.

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