A downward revision from Carlsberg as beer consumption in Russia falls

Out of the three major interim reports from Denmark today, The Carlsberg Group’s was the sole disappointment, and what a disappointment it was: the share closed down by 17.5%. Second quarter net revenue grew by 4% to 187 billion DKK. Before tax profit was down 25% to under 3 billion and net net profit fell from 2.7 billion to 2.2 billion.

The main story is the negative development in Russia. What was supposed to be a growth engine printed a negative sales growth number (-2% on Q2). Carlsberg says that Russian consumer has not accepted higher prices resulting from a large duty increase. Market share in Russia was up to 38.4%. The recently announced beer sales restrictions are expected to have a ’marginal impact’ from H2.

Carlsberg revised Russian growth expectations from 2-4% growth to ”a low single digit decline” for 2011. Stemming from this, the group’s 2011 earnings expectations were also lowered. Carlsberg now expects ~10 billion DKK operating profit before special items (10.25) and adjusted net profit growth of 5-10% (>20%). CEO Jørgen Buhl Rasmussen admitted that second quarter performance in Russia was below expectations but he was pleased with the performance from the rest of the group.