Carlsberg profit tops forecast, ups Russia outlook
COPENHAGEN (Reuters) - Brewer Carlsberg (CARLb.CO) posted an unexpected rise in operating profit and raised its 2010 outlook as the rate of decline in its biggest market, Russia, slows and the stronger rouble boosts earnings.
The maker of Tuborg, San Miguel and Kronenbourg, said operating profit rose to 4.25 billion Danish crowns (467 million pounds) from 3.66 billion a year earlier. The average forecast in a Reuters poll of analysts was for a marginal rise to 3.68 billion.
Currency effects, especially the strengthening of the Russian rouble against the crown, had a positive 11 percent effect on revenue growth.
Carlsberg, which is active in 150 markets and has around 300 beer brands, gets most of its revenues in western Europe but, as these markets are saturated, sees mid-term growth in Russia, although sales of beer have been hit by a tripling in excise tax this year to combat alcoholism.
"The group's performance was strong for the first six months in spite of challenging consumer dynamics. We achieved higher margins in all three regions ... showing that we are clearly on-track to meet our medium-term margin targets," Chief Executive Jorgen Buhl Rasmussen said.
The firm raised its overall market share in all regions in the first half of the year.
Carlsberg said its Russian beer market declined by 7 percent in the second quarter as brewers raised prices because of the tax hike. But the rate of decline was slower than in the first quarter.
Carlsberg's Russian unit Baltika raised its market share in the country to 40.1 percent in the quarter from 39.1 percent in the first.
Carlsberg shares rose 1.9 percent by 0810 GMT, while the Stoxx Europe 600 food and beverage index .SX3P was flat.
Nordea said in a note to clients Carlsberg's first-half earnings as well as the guidance upgrades beat expectations.
The firm said it now expects a high single-digit percentage decline for the Russian market in 2010, pointing to an improving Russian economy and slightly better consumer sentiment, compared with a previous forecast for a low double-digit percentage drop.
As late as June 22, the firm said it expected the Russian beer market to shrink between 10 and 13 percent this year.
The firm did not repeat in the report on Tuesday that it still expects to outperform the Russian market.
The Russian parliament is expected to vote this year on further proposals to reduce alcohol consumption.
Carlsberg raised its full-year operating profit forecast to around 10 billion crowns, from guidance given in February for a profit in line with 2009 when it was 9.39 billion.
Carlsberg did not comment on the impact of drought in Russia and its temporary ban on grain exports, which have caused world grain prices to rise and prompted sharp falls in brewer shares earlier this month on fears of that higher raw material prices would pressure profit margins.
Anheuser-Busch InBev (ABI.BR), the world's largest brewer, last week helped allay fears over higher grain costs saying it had hedged its barley needs for 2010 and 2011 so any price rise would not hit the brewer until 2012 at the earliest.
Recent brewing results have been mixed with an upbeat AB InBev last week saying its profits and beer volumes beat its own expectations helped by strong sales in Brazil and the soccer world cup.
However, world No. 2 brewer SABMiller (SAB.L) reported last month a decline in beer volumes, while No. 3 Heineken (HEIN.AS) reports half year results on August 25.
(Reporting by Anna Ringstrom; Editing by Erica Billingham and Louise Heavens)
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