4 November, 2009
UPDATE 3-Carlsberg says eyeing "equally challenging" 2010
* Q3 EBIT rises to 3.30 bln DKK, beating average forecast
* Keeps 2009 earnings guidance, trims sales outlook
* Preparing for "equally challenging" 2010
* Shares down 5.8 pct
(Adds details, quotes; updates share price)
By John Acher
COPENHAGEN, Nov 4 (Reuters) - Carlsberg (CARLb.CO), the world's fourth-biggest brewer, beat third-quarter profit forecasts by operating more efficiently in a shrinking market that it expects to be just as challenging next year.
The report followed higher third-quarter profits but lower sales also at the world's No. 3 brewer Heineken (HEIN.AS) and lower six-month sales at No. 2 SABMiller (SAB.L) as beer sales volumes remained under pressure in the global economic downturn. [ID:nLS393866 ] [ID:nLE224038]
Earnings before interest and tax rose to 3.3 billion Danish crowns ($654 million) in the three months to the end of September from 3.05 billion a year earlier, beating an average forecast of 3.18 billion in a Reuters poll of 19 analysts.
Shares in Carlsberg had slid 5.8 percent by 1545 GMT, trading at three-week lows, hit by below-forecast revenues and uncertainty in Russia. The shares underperformed a flat DJ Stoxx European food and beverage sector index .SX3P.
Sydbank analyst Morten Imsgard cut his recommendation on Carlsberg shares to "neutral" from "overweight" and said in a note to clients: "The Russian market continues to develop more weakly than Carlsberg's and our expectations."
The Russian market shrank by around 10 percent in the first nine months of 2009, and the full-year drop would be in line with the first nine months, Carlsberg said, downgrading its outlook from an earlier expectation of a 5 to 6 percent decline.
In a declining market, Carlsberg's Russian market share rose by 2.2 percentage points from a year earlier to 40.9 percent.
CHALLENGING 2010
Carlsberg also said that if the Russian government implemented its proposals for a significant increase in beer excise duty in 2010 and a more moderate rise in spirit excise duties, it would "clearly affect the beer market negatively".
"We are...planning for an equally challenging 2010 and we will be as prepared for 2010 as we were for 2009," Chief Executive Jorgen Buhl Rasmussen said.
He said that the decline in the Russian market exceeded Carlsberg's expectations.
The Russian proposals for the tax hike are still being debated but a decision is expected later this year, Carlsberg said.
Calling it a "highly illogical" plan, Rasmussen said it was not clear what would happen with Russian duties, but he added: "There will be some tax increase, we know that for certain."
He declined to say how Carlsberg would react if the duties were increased.
"We don't want to reveal our strategy," he told a news conference. "Our strategy depends on what our competitors will do, but they are waiting for what we will do."
"This industry has often been highlighted as a star example of how to invest abroad," he said. "We pay taxes, we create jobs. I think this will damage Russia's investment image."
Rasmussen said that Russia would remain a growth market where Carlsberg aims to continue taking market share.
Carlsberg trimmed its guidance for 2009 net revenue to a range of 59 billion to 60 billion crowns from an earlier forecast of around 61 billion.
Third-quarter net revenue fell about 11 percent year-on-year to 16.36 billion crowns, missing analysts' average expectation of 17.27 billion in the Reuters poll.
But Carlsberg stood by forecasts for 2009 operating profit and net profit of "at least" 9 billion and 3.5 billion crowns.
It raised its forecast for 2009 free cash flow to at least 6.5 crowns from at least 6 billion due to lower investment.
Carlsberg also said it had signed a deal to buy the half of Vietnamese Hue Brewery that it does not already own. ($1=5.047 Danish Crowns) (Additional reporting by Henriette Jacobsen and Teis Jensen) (Reporting by John Acher; editing by Karen Foster)
Source: http://www.reuters.com
UPDATE 3-Carlsberg says eyeing "equally challenging" 2010 Added: (04.11.2009)
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