Carlsberg Gains Russia Share as Earnings Met Estimates

By Katarina Gustafsson

Carlsberg A/S (CARLB), Russia’s biggest brewer, said its market share improved in the country as the maker of Tuborg sponsored a hockey league and organized music festivals to bolster the visibility of its brands.
The Copenhagen-based company’s Russian volume share improved to 37.9 percent in the third quarter from 36.5 percent in the preceding period, Carlsberg said in a statement today, as the beermaker reported earnings that met analysts’ estimates. The stock rose 4.3 percent to 531.50 kroner in early trade in the Danish capital.
The world’s fourth-biggest brewer is feeling the pain from a weakening ruble, political turmoil and government regulation to curb drinking in Russia. Carlsberg is cutting back on production in the country and filling bottles with less beer to minimize price increases while also introducing new products to boost sales.
“While the region offers long-term growth opportunities, the
greater uncertainty and volatility has required a detailed contingency and scenario planning,” Carlsberg said in the statement.
The Danish company said it continues to invest in its brands despite the “challenging” Russian market. The brewer is sponsoring the Continental Hockey League and local soccer teams and organizing events such as music festivals to support its premium and middle-cost beers. Carlsberg increased prices in Russia in March, May and October. In the first nine months of the year, the brewer’s volume market share in Russia declined by 110 basis points to 37.6 percent.

Photographer: Andrey Rudakov/Bloomberg

Cans of Carlsberg beer, produced by Carlsberg A/S, stand inside an X5 Retail Group NV's... Read More

Forecast Reiterated

Carlsberg’s earnings before interest, taxes and one-time items were little changed at 3.39 billion kroner ($570 million) for the three months through September. The average of 11 analyst estimates compiled by Bloomberg was for 3.36 billion kroner. Quarterly sales advanced 4 percent to 18.1 billion kroner, topping the average estimate of 17.8 billion kroner.
“We consider this a good set of results, especially in light of the top line beat considering the organic performance in the sector has been generally below expectations so far,” James Edwardes Jones, an analyst at RBC Europe, said in a note today.
The brewer reiterated that operating profit on a so-called organic basis will rise at a low- to mid-single-digit pace for the year and also repeated forecasts for reported operating profit and adjusted net profit.