Carlsberg has highlighted a drop in the Russian rouble as one of the key factors behind a fall in its third quarter profits.
The Danish brewer reported a 4.8 per cent decline in net profit for the three months to the end of September reaching 2.1 billion kroner (£222 million). Carlsberg said in its trading statement that it had faced some "market challenges in Eastern Europe" but was still pleased to have delivered organic earnings growth and increased cash flow.
Earlier in the year, Carlsberg was among a number of companies that had noted their concern about the ongoing tensions between Russia and Ukraine. Over the summer months, Carlsberg saw its beer volumes in Russia drop between six and seven per cent while in Ukraine this figure had fallen by ten per cent.
A decline in the value of the rouble has once again impacted Carlsberg's operations. The Russian currency lost seven per cent against the euro in the third quarter and over a quarter of its value since the start of 2014. Carlsberg does a lot of trade in Russia and the fall in the nation's currency had resulted in the Danish brewer losing 15 per cent of revenues in the region.
Jørgen Buhl Rasmussen, Carlsberg's chief executive, said: “The man on the street (in Russia) isn't very optimistic about the future, and we don't expect the climate to ease in the near term or in the early part of 2015."
While Carlsberg has seen revenues and profit drop in Russia, the company is set to continue its investment plans in the country. The company's Russian market share stood at 37.9 per cent for the quarter, which included TV advertising and sponsoring local football teams.
Shares in Carlsberg grew by 2.7 per cent following the trading update.
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.