Probably problems: Carlsberg shares hit by Russian issues

The Danish beer company said it is no longer possible to provide a financial forecast because of the invasion of Ukraine

Carlsberg shares tumbled as the Danish brewing giant froze profit guidance and warned of a financial hit from its Russian exposure.

Carlsberg shares fell sharply after the biggest brewer in Russia suspended its 2022 financial guidance and warned that it may have to write down its assets in the country.

The Danish company said it is no longer possible to provide a financial forecast because of the Russian invasion of Ukraine. 

The beer maker said it is also reviewing a full range of strategic options for its Russian business, which is called Baltika Breweries.

The Copenhagen-based company, which employs 8,400 people in Russia, entered the country in 2000 and the operations were for years seen as the beer maker’s biggest growth opportunity. Russia previously made up almost a third of profit but has in recent years diminished in significance for Carlsberg as the Russian beer market has underperformed.

Russia and Ukraine accounted for about 13% of group revenue and about 9% of operating profit in 2021, Carlsberg said. Previously the brewer forecast that adjusted earnings would increase as much as 7% this year.

“The group’s assets in both markets may also be subject to non-cash impairment and write-down,” the company said.

Dutch rival Heineken said, this week, that it will stop the production and sale of its own brand beer in Russia, joining a wave of companies to exit the country in response to the invasion of Ukraine.

Carlsberg, which last week suspended investment in Russia, said it will drop all advertising in Russia, and will stop producing and selling the flagship Carlsberg brand in the country. All profit from the Russian business will be donated to relief organisations.

“Baltika Breweries will be run as a separate business, with the purpose of sustaining our employees and their families,” Carlsberg said.

Sales halted

Heineken's move, earlier in the week, expanded on previous steps by the Dutch brewer, which had already halted all new investments in Russia as well as exports of other brands. Production, advertising, and sale of the Heineken brand there has immediately halted, the company said.

“Heineken will no longer accept any net financial benefit derived from our Russian operations,” the company said this week. It added that it is now also assessing the strategic options for the future of the business in Russia where it has operated for two decades.

Heineken is also taking steps to ring-fence the Russian business from the wider group to “stop the flow of monies, royalties and dividends out of Russia.”