By Christina Zander
Battered for months by economic turmoil in Russia and Eastern
Europe, Carlsberg A/S, the world's fourth-largest brewer, said it
would replace its chief executive and cut costs amid sharply
falling profit. (
The Danish brewer said Wednesday that Chief Executive Jorgen
Buhl Rasmussen, who turns 60 this year, is retiring. Carlsberg and
Mr. Rasmussen said the decision was his own, and that he had
previously signaled his intention to step down. But the move
surprised investors and analysts. Carlsberg shares ended Wednesday
trading in Copenhagen down 1.7%.
Carlsberg said Mr. Rasmussen will be succeeded by Cees't Hart,
currently chief executive of Royal FrieslandCampina, a Dutch dairy
cooperative. He will take over from Mr. Rasmussen in June.
Mr. Rasmussen, who has led Carlsberg since 2007, has presided
over what analysts described as a generally successful turnaround
at Carlsberg in Western Europe. They also credit him with setting
the company up for growth in Asia. But Carlsberg's big bet on
Russia--which Mr. Rasmussen also spearheaded--has overshadowed that
success more recently.
Even before Western countries imposed sanctions last year after
Russia's annexation of Crimea, the once-frothy beer market in
Russia was flattening out. In recent years, Moscow has 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 Russian ruble,
while sapping consumer confidence across Eastern Europe. Falling
oil prices have put further pressure on Moscow's finances.
Food-price inflation is high and rising, meanwhile, crimping
discretionary spending.
All this has come after Carlsberg pushed hard into Russia.
Carlsberg entered a joint venture with Russian brewer Baltika in
1992. Mr. Rasmussen doubled down, positioning Carlsberg as the
controlling shareholder in Baltika in 2008. He then bought up 100%
of the joint venture in 2012.
Now, Carlsberg is saddled with one of the highest exposures to
Russian sales among Western, non-financial firms. The company says
about 27% of its sales come from Eastern Europe.
Carlsberg has already undertaken a flurry of countermeasures to
offset declining beer volumes in the region, such as price
increases and reduced container sizes. Last month, Carlsberg said
it would close two of its 10 breweries in Russia due to
overcapacity.
On Wednesday, Carlsberg said it would cut costs to counter the
impact of the weak ruble and downbeat outlook for the region. The
company didn't detail those efforts.
"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.
Carlsberg also reported that net profit sank 78% in the three
months ended Dec. 31 to 278 million Danish kroner ($42 million),
down from 1.25 billion kroner a year earlier, 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.
On a conference call, Mr. Rasmussen said that for him it would
be "business as usual" until June, and that he would most likely
focus on non-executive board roles in the future.
"I've always said that Carlsberg would be my last executive
role," he said.
Morten Imsgard, an analyst at Sydbank, a Danish lender, credited
Mr. Rasmussen with successes in Western Europe and Asia. "These
efforts have, however, been overshadowed by challenging conditions
in Eastern Europe," Mr. Imsgard said.
Mr. Hart, a Dutchman, "knows how to build a strong consumer
brand and drive growth in weak markets through innovations," said
Mr. Imsgard.
Write to Christina Zander at christina.zander@wsj.com
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