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Carlsberg takes $1.4bn hit from sale of Russian business

Carlsberg has warned it will book a $1.4bn writedown from the sale of its Russian business as part of the exodus of western companies following Moscow’s invasion of Ukraine.

The Danish group, which owns Russia’s biggest beer brand Baltika, has more exposure to the market than any other international brewer, earning 9 per cent of its total revenue in the country and employing 8,400 staff at eight breweries.

The sale, which was announced at the end of March, “may take up to 12 months and will have multiple implications for the group’s financial statements”, Carlsberg said on Thursday, noting that the disposal would lead to a non-cash writedown of approximately DKr9.5bn ($1.4bn).

The figure is the largest charge so far signalled by a consumer goods group after the sector faced pressure to exit Russia following the February invasion. Carlsberg had already pledged to stop selling its flagship brand in the country.

The disposal marks the end of a troubled relationship lasting more than two decades. Carlsberg first bought a stake in Baltika in 2000 and became the majority shareholder in 2008, later fully acquiring and delisting the group.

By 2012, Russia was by far the largest market for the Danish brewer, accounting for about 40 per cent of sales and profits. But it was hit by growing Russian attempts to crack down on alcoholism, which included tax rises and curbs on advertising.

A weakening Russian economy and rouble added to its problems, and in 2015 Carlsberg closed two of its Russian breweries with the loss of at least 5,000 jobs.

The war has also affected Carlsberg’s business in central and eastern Europe, which the brewer said would result in an additional goodwill writedown of about DKr700m, while its Ukrainian business faces a DKr300m writedown.

“The war is severely impacting our activities in Ukraine . . . we assume that we will be able to resume production at our breweries in Ukraine when the situation in the country stabilises,” it said.

Dutch rival Heineken has already said it expects to book a €400mn impairment from its decision to leave Russia. It employs 1,800 staff and makes 2 per cent of its global sales in the country.

Carlsberg, which also brews Kronenbourg, Grimbergen and Somersby cider, said organic operating profit for the full year would come in at between a 5 per cent drop and a 2 per cent rise, but said the outlook was “significantly more uncertain than usual” given Covid-19, Ukraine and inflation.

Its shares were up 1.2 per cent in early afternoon trading at DKr890.

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