Carlsberg first-half profit misses estimates on ruble drag

Sales fell to just over 31.23 billion kroner compared to 32.3 billion kroner for the same period previous year, which reflected the lower volume of beer and the effect of a weaker Chinese, British, Eastern Europe and Norwegian currencies.

This follows is in line with Carlsberg strategy since 2010 which has been to significantly reduce its reliance on the challenging Eastern and Western European markets. The company, Russia’s biggest brewer, has been struggling to contend with the weakness of the ruble and now gets only 17 percent of revenue from eastern Europe, compared with a peak of 30 percent in 2012.

The shares were down 5.6 percent at 641 kroner as of 12:23 p.m. local time.

Carlsberg has said it still expects to meet its targets for the full fiscal year, despite posting slightly-lower-than-expected results for its first half. This plan is progressing and Carlsberg said it is now developing action plans for 2017. This was a decline of 4% and a result of a translation impact of -11% and a net acquisition impact of -1%.

Stripping out interest, taxes and one-off items, earnings fell 3.6 percent to 3.45 billion kroner, which was below a Bloomberg analyst consensus of 3.58 billion kroner. Half of the benefits will be reinvested while the other half will go toward improving earnings.

On Wednesday, the company announced that it is expecting to post organic growth in operating profit in the low single digits during 2016, despite higher spending on the new strategy for the second half of the year. Beer volumes weakened, falling 2% organically. The brewer also took impairment and restructuring charges for its operations in the U.K., China and India.