Carlsberg, the world’s fourth-biggest brewer, said that it will close two of its ten breweries in Russia after a review of its production structure there.
The closures, in Chelyabinsk and Krasnoyarsk, will cut Carlsberg’s Russian capacity by about 15 per cent and affect as many as 600 employees, the Copenhagen-based maker of Tuborg beer said in a statement. The decision will result in a pre-tax non-cash write-down of about 700 million kroner ($106 million).
“We can’t see what the future holds, but there are no plans for further brewery closures at this time,” spokesman Jim Daniell said by phone. “We’re now at 60-70 per cent capacity utilisation. Without those two, it’s a seasonal business, and we’re in the low season now.”
Carlsberg, the biggest brewer in Russia, has been pummelled by regulations designed by the government to curb alcohol consumption. The breakdown in economic and political ties with Russia, following its incursion into Ukraine, has also battered Carlsberg’s business there. Last year, the brewer temporarily suspended production at the two breweries that it is now closing for good.
“The capacity situation and the Russian beer market have been key concerns,” Richard Withagen, an analyst at Kepler Cheuvreux, said in a note, adding that this is the first step in a more efficient brewery infrastructure. “Clearly, the closures ensure a more efficient brewery infrastructure in Russia on the one hand, but they also leave room for future growth, in case volumes recover.”
The company’s shares slumped about 20 per cent last year, compared with a 21-per-cent surge in the Copenhagen Benchmark Index of Denmark’s 20 most-traded stocks.
Bloomberg News, edited by ESM
