It was already known that Carlsberg’s (OMX: CARL B) numbers in Russia have suffered in the past year amidst officials efforts to tame alcohol consumption in the country. As more marketing restrictions are coming to force for the second half of the year, the company has been investing more in marketing at the start of the year.
Destocking by the distributors in the country affected Carlsberg’s group-wide revenue by 2%. Market share in Russia improved to 37% and the company is still guiding for the Russian beer market to return to growth in 2012. There has also been some migration to more expensive brands. Furthermore following a full Carlsberg’s takeover, the largest brewer of the country Baltika Breweries has applied for de-listing from Russian stock exchange.
Carlsberg is rejuvenating Tuborg brand, not only in Russia with another new bottle, but has also launched it in China and India. The premium brands of the company are doing well in Asia. Carlsberg-brand also grew fast in the region during Q1. The company is pushing Carlsberg-brand heavily ahead of EURO 2012 in Ukraine and Poland. Carlsberg is an official sponsor of the European Football Championship co-hosted by Poland and Ukraine that is to be held this June.
Adjusted for the Russian destocking, organic beer volume growth was 2%. Net revenue was flat year-on-year at 12.9 billion DKK. Operating profit grew nicely in Northern & Western Europe and Asia but challenges in Eastern Europe meant a near halving of the reported number in the already typically slow quarter to 574 million. Consolidated profit was a mere 44 million DKK. Despite this the brewery maintains 2012 guidance of operating profit on par with 2011 and slightly higher adjusted net profit. The stock market seems to be siding with the company so far in believing that the challenges are temporary and investors have bid up the share price by a few percentages in morning trading.
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