Carlsberg takes $1.4 billion charges, cuts jobs
By Sabina Zawadzki
COPENHAGEN (Reuters) - Carlsberg (CARLb.CO: Quote), the Danish brewer that has long been struggling in Russia, said it would take $1.4 billion in charges and cut 2,000 jobs to position the business for a return to growth.
Carlsberg, the world's fourth largest brewer, has long faced problems in Russia and Ukraine, from where it derives over a quarter of its operating profit, but the company is now also restructuring in China and Britain.
Carlsberg's share price jumped by as much as 8 percent. Investors were relieved they did not have to wait until next year's strategy review for the writedowns and felt the new chief executive's assessment of the business was realistic.
Most of the 10 billion Danish crowns ($1.4 billion) of charges were booked in the third quarter. As a result, Carlsberg now expects its 2015 operating profit to decline by high single-digit percentages, compared to the growth it had been anticipating when the year began.
It said charges relating to Russia would amount to 5 billion Danish crowns, while those relating to the Chinese business would be 4 billion crowns and to the UK business would be 600 million crowns.
"It is a sign of the new management 'kitchen sinking' and cleaning up after the old management. All of us have been expecting the measures regarding Russia, but the big measures on China are quite a surprise," Alm. Brand analyst Michael Friis Jorgensen said.
The business in Asia, including in China, was the only major regional unit to deliver operating profit growth in the third quarter but Carlsberg said its breweries in eastern China will be loss-making in the foreseeable future.
Chief Executive Cees 't Hart, in the job since June, said the company may shut down a few small breweries in the east and that by contrast, business in western China was doing well. Continued...