Carlsberg Misses Profit Estimates

Carlsberg Misses Profit Estimates

Carlsberg Misses Profit Estimates

Carlsberg witnessed a decline in its quarterly profits as sales slumped in the Russian and Northern European markets. Similarly, shares of the company shrank following lower-than-expected fourth quarter earnings and high beer making expenses.

Q4 Earnings Tumble

Carlsberg A/S, the world’s fourth-largest brewer, reported fourth quarter profits for 2012, which did not meet analysts’ estimates, after sales in Northern Europe and Russia dropped while Asian markets advanced. Carlsberg strongly believes that the fourth quarter profits were affected by various factors such as an instable market condition, dampening hopes and low demand in some of the European regions.  According to a statement released by Carlsberg, the company failed to achieve its annual target of increasing sales by about 20 percent in the last three years. The net profit for 2012 rose by approximately 9 percent to 5.6 billion kroner while the earnings for the fourth quarter amounted to be around 2.1 billion kroner, slightly lower than analysts’ expectations. Many analysts had estimated the fourth quarter profits of Carlsberg to be nearly 2.3 billion kroner. However, the figure has improved since last year where the fourth quarter earnings were estimated at 1.8 billion kroner.

The last six months have been troublesome for Carlsberg as sales in Europe and Russia, where it is a major player, dwindled due to restrictions imposed by the Russian government on alcohol advertising. In the third quarter of 2012, Russia bagged about 40 percent of market share of Carlsberg. Moreover, the Eastern European regions, especially Russia, account for nearly 44 percent of net income of the company. The revenues of the company have slightly been hit by increased taxation and strict government regulation on alcohol sales which has led to a drop in sales by approximately 4 percent in the Russian market.

Carlsberg to Widen Profit Margin

In order to streamline its operations in the European regions, Carlsberg is planning to invest around 300 billion to 400 billion kroner in a project that would ease the process of supply resulting in long term benefits for the company. Carlsberg announced that its goal in 2013 would be to commence beer markets in Europe with the major aim of processing and managing the flow of resources under one roof, resulting in smoother functioning of operations. “The project will be a key priority in 2013. It represents a step change in the way we run our business in Western Europe and will provide us with significant long-term benefits and competitive advantages,” highlighted Joergen Buhl Rasmussen, Chief Executive Officer at Carlsberg.

Despite lower-than-expected fourth quarter profits, Carlsberg’s pre-tax net income amounted to nearly 9.8 billion kroner for 2012. The fourth quarter revenue rose to about 15.9 billion kroner, slightly higher than the 15.6 billion kroner which was estimated by analysts. High revenues were followed by sales of high-priced beers like Tuborg in Asian markets while the European markets suffered a loss of about 1 percent. With advancing Asian markets, the company is tapping growth opportunities in order to recover from the losses made in Europe and Russia. However, the company is expecting similar dynamics in 2013 for all the three regions. The annual forecast of operating earnings is expected to climb to approximately 10 billion kroner in 2013, according to the company’s estimates.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Ticketing app Dice raises $122 million from SoftBank and ex Apple veteran

Ticketing app Dice raises $122 million from SoftBank and ex Apple veteran

Dice is looking forward to expand more after its latest funding round raised $122 million, led by Tony Fadell.
11 hours ago
The chip shortage is a ‘short-term’ problems, says Elon Musk

The chip shortage is a ‘short-term’ problems, says Elon Musk

The CEO’s outlook is far more optimistic than other automotive industry leaders who believe it may last up to 2023-24.
2 days ago
Supply chain crisis bad news for automotive industry leaders

Supply chain crisis bad news for automotive industry leaders

The world’s biggest car companies are on track to lose production of 7.7 million vehicles in 2021. The forecast advices automakers on supply chain and other issues.
5 days ago
Scammers dupe Apple fans with free bitcoin lure

Scammers dupe Apple fans with free bitcoin lure

Savvy scammers used a fake event stream, a fake Apple website, and the promise of free bitcoin to lure fans into opening up their wallets.
6 days ago
Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

The total amount of cash to be received as part of MUFG Union Bank’s sale to Bancorp is $7.3 billion (800 billion yen).
1 week ago
Evergrande: A black swan event that could spook markets

Evergrande: A black swan event that could spook markets

EverGrande is now known as the “world’s most indebted property developer” and serves as a symbol of corporate excess.
1 week ago