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Why Carlsberg's running dry

Taps could be about to run dry across Denmark, as a labor dispute halts production of Carlsberg at its only brewery in the country.

Based in Fredericia, the brewery produces all of Carlsberg’s draft beer in the country.

It comes as the company announces a fall in profit in the second quarter, dropping to to 3.44 billion Kroner from 3.47 bn Kroner a year earlier, missing analyst estimates of 3.55 bn Kroner.

It’s not just profits that are lower; shares have also risen less than its peers this year after a pessimistic outlook for Russia - its single largest market.  The company said it sees a mid-single-digit percentage market decline in the country, which has increased beer taxes and introduced more regulation on alcohol sales. Around 80 percent of its sales come from the mature markets of Western Europe or Russia.

A slowing market in Russia increases the need to diversify and cash in on the potential of emerging markets.

Chief Executive Officer Joergen Buhl Rasmussen says Asia remains a focus for Carlsberg’s acquisition strategy “there is no change to our acquisition strategy if it creates value for our shareholders we will certainly look at it and possibly do it.”

The brewing industry has been dominated by a race to globalize and Saxo Bank’s Peter Garnry says Heineken is winning that battle.

01:25 minutes
Tags: acquisitions, asia, brewing industry, carlsberg, denmark, earnings, equities, heineken, labor dispute, peter garnry, profit, rasmussen, revenue, russia, saxo bank, saxo tv, tradlingfloor.com

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