By Christina Zander
STOCKHOLM--Carlsberg A/S, the Danish brewer with operations in
Russia, Ukraine and other parts of Eastern Europe, said Wednesday
it will cut costs to mitigate "the significant negative earnings
impact arising from the rouble weakness" as it reported a net
profit that fell nearly 78% in the fourth quarter.
The company also announced its Chief Executive Jorgen Buhl
Rasmussen will retire and be replaced by Cees't Hart from June 15,
2015.
The world's number four brewer said net profit in the three
months ended Dec. 31 was 278 million Danish kroner ($42 million),
down from DKK1.25 billion in the same period in 2013. Analysts
polled by factset expected a fourth quarter net profit of DKK981
million.
Carlsberg, which generates about 27% of its sales in Eastern
Europe said that while it expects Western Europe and Asia to
continue their positive development, the expected GDP decline and
currency devaluation in Russia and Ukraine will put significant
pressure on the Group's overall performance.
"To mitigate this, in our planning for 2015 we have taken tough
decisions aiming at further improving our cost-effectiveness, while
also continuing to invest in our brands and our longer-term
capabilities for competitiveness," the company said.
As well as currencies, the company's performance was also hurt
by a 12% decline in beer volumes in Eastern Europe.
Even before western countries imposed sanctions after Russia's
annexation of Crimea, Moscow had moved to restrict sales and
marketing of beer as part of an effort to rein in heavy
drinking.
The Ukraine crisis has dented consumer confidence further,
hammering Russia's economic growth and weakening the ruble. Falling
oil prices have put further pressure on the country's economy at
the same time as food price inflation is high and rising, which is
also crimping consumer spending.
Sales in the fourth quarter was DKK14.33 billion, down 8% from
DKK15.66 billion the same period 2013. Operating profit was DKK1.79
billion, down from DKK2.32 billion.
The board proposes a dividend of DKK9.00 per share for 2014, up
13%.
Shares closed at DKK535.50 Tuesday.
Write to Christina Zander at christina.zander@wsj.com
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