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Carlsberg first-half profit misses estimates on ruble drag

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Danish brewer Carlsberg A/S reported first- half profit that missed analysts' estimates as the weakness of the ruble eroded earnings.

[LONDON] Danish brewer Carlsberg A/S reported first- half profit that missed analysts' estimates as the weakness of the ruble eroded earnings.

Earnings before interest, taxes and one-time items fell to 3.45 billion Danish kroner (S$696.5 million), the Copenhagen-based company said in a statement Wednesday.

Analysts on average had estimated profit of 3.54 billion kroner. Chief executive officer Cees 't Hart said he expects organic earnings growth to slow to about 1 per cent in the second half from 8 per cent in the first half on higher costs in Russia, where Carlsberg is the biggest brewer.

"We expect the headline miss and lack of guidance upgrades to disappoint," wrote Carl Walton, an analyst at UBS.

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Carlsberg raised its estimate for the headwind from currencies to 600 million kroner for the full year from 550 million kroner previously after a significantly negative currency impact from Eastern Europe, where it has a 35 per cent share of the Russian market.

The brewer plans to cut up to 2 billion kroner of costs by the end of next year as it readies to face an enlarged and more profitable rival after the combination of Anheuser-Busch InBev NV and SABMiller Plc.

The company is also pulling out of markets where growth is slowing, such as Malawi and some operations in Finland and Poland.

"We have a number of operations that are not operating in the way we would have liked, we are reviewing these and we continue the program of streamlining our business," Mr 't Hart said, adding that other operations could be exited by year-end.

First-half sales rose 4 per cent on an organic basis, which excludes currency and acquisition effects. That beat the consensus of 3.2 per cent.

Revenue in western Europe, which accounts for about 60 per cent of Carlsberg's sales, grew by 2 per cent on an organic basis, in line with the beer market, the company said.

BLOOMBERG

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