As Carlsberg reviews its policy on how to hedge ruble losses, the company’s market value has slumped more than $2 billion in less than a month.
Shares in the Danish company, which is the biggest beer maker in Russia, had plunged 15 per cent this month through yesterday, giving it a market capitalisation of 70 billion kroner ($12 billion).
Carlsberg is now reviewing its policy of not resorting to currency hedging contracts. “We’re evaluating our efforts on a running basis so we can make the right decisions,” chief financial officer Joern P. Jensen said.
Carlsberg generates about one-third of its profit in Russia. After delivering the year’s worst share performance of the world’s four largest beer stocks, Carlsberg is looking for ways to soften the blow to its business from the ruble’s slump, Jensen said.
The ruble’s 47 per cent decline against the euro this year is the worst of any currency tracked by Bloomberg.
“We’re constantly trying to reduce risk,” Jensen said. “We’re sourcing locally, hedging inputs, signing long-term contracts on procurement and long-term financing contracts. In Russia’s case, we’re sourcing and producing locally to minimise the transaction risk.”
Among Europe’s non-financial companies, Carlsberg is the third-most exposed to Russia, based on revenue calculations, Morgan Stanley said in March.
Carlsberg shares had lost 25 per cent this year through yesterday compared with a 4.7 per cent gain in the Stoxx 600 Consumer Goods Index of 70 companies. Shares of Carlsberg’s three biggest competitors, Anheuser-Busch InBev, Heineken and SABMiller, have all gained over the same period.
Bloomberg News, edited by ESM
