By Christina Zander
STOCKHOLM-- Carlsberg A/S on Wednesday said it would replace its
chief executive and slash costs amid falling profit, as the world's
fourth-largest beer maker struggles with its costly bet on
Russia.
The Danish brewer said Chief Executive Jorgen Buhl Rasmussen
would retired and be replaced by Cees't Hart as it reported a sharp
fall in fourth-quarter profit because of the weakening Russian
ruble and declining beer sales in Eastern Europe.
Carlsberg Chairman Flemming Besenbacher told reporters on a
conference call that Mr. Rasmussen was leaving the position, which
he has held since 2007, at his own request.
The executive shift was, according to Kepler Cheuvreux analyst
Richard Withagen "not controversial, but unexpected" as Mr.
Rasmussen has had a good track record with the company.
Mr. Hart, currently CEO of Royal FrieslandCampina, a Dutch dairy
cooperative, will take over the helm at Carlsberg on June 15.
The management change came as Carlsberg said net profit in the
three months ended Dec. 31 came in at 278 million Danish kroner
($42 million), down from 1.25 billion kroner in the prior-year
period, and well below analysts' forecasts of 981 million kronor.
Sales in the period dropped 8% to 14.33 billion kronor from 15.66
billion kronor. Despite the falls, the board proposed a 13% rise in
its dividend to 9 kronor a share.
Carlsberg also warned that the expected GDP decline and currency
devaluation in Russia and Ukraine would put significant pressure on
the group's overall performance.
To counter the impact of the weak ruble and downbeat outlook for
the region, the company, which generates about 27% of its sales in
Eastern Europe, said it would cut costs.
"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.
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.
Carlsberg has already undertaken a flurry of countermeasures to
offset declining beer volumes in Eastern Europe--which the brewer
maintains offers long-term growth opportunities--such as price
increases and reduced container sizes. Mr. Rasmussen said the value
of volumes in Russia is expected to increase in 2015 as a result of
prices increases.
Despite weakness in Eastern Europe, Carlsberg said it expects
group organic sales to grow by "mid to high single digits" in
2015.
Write to Christina Zander at christina.zander@wsj.com
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