Russian woes take toll on Carlsberg profits

Carlsberg has reported a fall in profits for 2011, as the Danish brewer wrestled with rising costs and falling share in the key market of Russia.

Sales for the year rose by 6% to DKK63.6bn (£7.1bn), thanks to price hikes and continued growth in Asia. But heavy promotional activity and increased marketing spend took their toll on profits, down 4% to DKK 9.8bn.

As Carlsberg wrestled with falling market share in Russia, where volumes fell by 3% across the market as a whole, the brewer announced plans to buy the remaining 15% it does not already own in its local subsidiary, Baltika, and delist it from the Russian stock market. Carlsberg said the move would give it “greater operational flexibility” and improve earnings in the short-term.

“While 2011 was a challenging year with headwinds from rising input costs and a challenging Russian market, our Northern & Western European and Asian regions continued to perform well,” said chief executive Jørgen Buhl Rasmussen.

“We maintained our focus on profitable development by balancing volume and value share, which led to share growth in both volume and value in Northern and Western Europe and Asia but in Russia resulted in market share loss due to a high level of promotional activities from competitors.”