Weaker sales in Russia see Carlsberg shares suffer record fall

CARLSBERG, the world’s fourth-largest brewer, fell the most ever in Copenhagen trading yesterday after slashing its profit forecast because of weaker sales in Russia. The shares dropped as much as 19%, wiping 10 billion kronor (€1.32 billion) off the company’s market value.

Adjusted net income will rise 5% to 10% compared with a prior forecast of a 20% increase, the Copenhagen-based company said yesterday as it reported second- quarter earnings that missed analysts’ estimates.

Carlsberg, Russia’s biggest brewer, said the market there will decline at a “low single-digit” rate, compared with a previous forecast of 2% to 4% growth. The company cited higher taxes on beer and bad weather, and said it no longer expects to increase market share in Russia this year.

“The Russian consumer remains subdued with the market down 2% in the second quarter,” Dirk Van Vlaanderen, an analyst at Jefferies International Ltd in London, wrote in a note to clients. “To make matters worse, the company has walked away from its market share target.”

Chief executive officer Joergen Buhl Rasmussen acquired 1,346 shares yesterday for 498,020 kronor, Carlsberg said.

Brewers have sold less beer in Russia after taxes on the drink were increased by 200% last year. Consumers have not yet fully adjusted to higher prices, Rasmussen said on a conference call with analysts.

Carlsberg, the owner of the Baltika brand, gets about 45% of profit from the country, where President Dmitry Medvedev last month approved a law that will prohibit beer sales from kiosks by 2013 and restrict advertising.

The government’s move to tighten restrictions on the sale of beer may have a “slightly negative” effect on Russian revenue for the remainder of the year, the brewer said.

Sales in the second quarter were also hurt by wet weather, especially in June, executives said on the call.

Failure to increase market share in Russia means the brewer won’t meet previous expectations of market-share growth in two-thirds of its businesses. The company accounted for 38.4% of the market in Q2.