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Carlsberg to cut 2,000 jobs as brewer seeks to reduce costs

Wednesday, November 11, 2015 - 16:16
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Carlsberg A/S plans to cut about 2,000 jobs as the world's fourth-largest brewer seeks to reverse a profit decline caused largely by the weakness of Russia's beer market.

[LONDON] Carlsberg A/S plans to cut about 2,000 jobs as the world's fourth-largest brewer seeks to reverse a profit decline caused largely by the weakness of Russia's beer market.

The move will reduce annual costs by as much as 2 billion Danish kroner (US$288 million) by 2018 and will cut staff by 15 per cent, the Copenhagen-based maker of Kronenbourg said on Wednesday. Carlsberg also further reduced its profit outlook for the year.

"Acknowledging the fact that the profit development of recent years has not been satisfactory, we are taking further steps to prepare the Carlsberg Group for the future," Cees 't Hart, who became CEO in June, said in the statement.

Carlsberg is looking to reduce costs to compete with more profitable rivals such as Anheuser-Busch InBev NV, which plans to take over SABMiller Plc in the beer industry's largest deal. The maker of Skol lager and Black Panther stout dominates the beer market in Russia, where a slump in the price of oil and high inflation are denting consumer spending.

About 1,300 employees have already been notified of the job cuts, Carlsberg said. The company will take impairment and restructuring costs of 10 billion kroner from 2015 through 2017.

"We expect reaction to be positive, focusing on the restructuring announcement," Carl Walton, an analyst at UBS Group AG, wrote in a note to investors.

Carlsberg forecast a "high" single-digit percentage decline in full-year organic operating profit. The company said in August that earnings would fall "slightly," slashing previous guidance for the year.

Third-quarter earnings before interest, taxes and one-time items rose 2 per cent to 3.47 billion kroner. Analysts on average had estimated profit of 3.11 billion kroner. Sales advanced 3 per cent, excluding currency and acquisition effects.

Carlsberg is seeking a new chief financial officer after Joern P. Jensen retired after 15 years in September. The brewer is reviewing its strategy, which it will update in the first quarter of next year.

BLOOMBERG