Carlsberg Keeps 2013 Profit Forecast as Russian Market Slows

Carlsberg A/S maintained its 2013 earnings forecast as the maker of Tuborg beer reported little-changed second-quarter profit, saying it sees declines in the Russian market that it dominates.

The seller of Somersby cider still expects operating profit of about 10 billion kroner ($1.8 billion), while net income will probably rise by a mid-single-digit percentage, the Copenhagen-based company said in a statement today.

“The fact management has been able to reaffirm full-year guidance is reassuring,” Jonathan Fyfe, an analyst at Mirabaud Securities Ltd., said in a note to clients.

Carlsberg shares have risen less than peers this year, partly because of concern over sales in Russia, where it’s the biggest brewer. The company said today it sees a mid-single-digit percentage market decline in the country, which has increased beer taxes and introduced more regulation on alcohol sales. It had previously predicted a “flat” market.

Carlsberg rose 1.3 percent to 571 kroner at 12:27 p.m. in Copenhagen, extending this year’s gain to 3 percent. Heineken NV, which today predicted that earnings won’t grow this year, has risen 6.7 percent in 2013 and SABMiller Plc 7.5 percent.

Carlsberg’s second-quarter earnings before interest and taxes fell to 3.44 billion kroner from 3.47 billion kroner a year earlier. Analysts had expected 3.55 billion kroner, according to the average of 17 estimates. The earnings and company forecasts exclude one-time items.

Slowing Russia

Sales advanced to 19.6 billion kroner from 19.3 billion kroner a year earlier, matching analysts’ estimates.

The brewer grabbed a larger share of the Russian market in the second quarter, boosting its slice by 130 basis points to 39.2 percent compared with the same period last year. Carlsberg increased prices in Russia in March, May and June.

For Asia and western Europe, the Danish brewer expects the beer market to be “similar” in 2013 to last year.

Asia remains a focus for Carlsberg’s acquisition strategy, Chief Executive Officer Joergen Buhl Rasmussen said in an interview, without giving details.

“There is no change to our acquisition strategy, if it creates value for our shareholders we will certainly look at it and possibly do it,” Rasmussen said, adding that Asia is “a strong growth engine for Carlsberg.”

Carlsberg has introduced a range of new products in the past few years and saw particularly strong growth for its Somersby brand, with volume growth of 85 percent in the first half, helped by new markets like the U.K.

“Somersby is a very successful cider product, it’s different to many other cider products in the way it’s positioned and in the taste profile,” the CEO said. “Of course, the growth can’t stay at 85 percent, but I think we can grow fast in the years to come.”

(Updates with CEO comments from 11th paragraph.)
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