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Drinks

Carlsberg Expects €1.3bn Writedown On Russia Divestment

Carlsberg expects a writedown of about DKK 9.5 billion (€1.3 billion) related to its decision to divest its business in Russia, the Danish brewer said in a statement.

The assessment did not take into account any external offers for the business, Carlsberg said.

The brewer said it also expected impairment charges in Ukraine of DKK 300 million (€40.3 million) along with goodwill write-downs of DKK 700 million (€94.1 million) for the Central and Eastern Europe region, which includes Ukraine.

"The writedown isn't quite as grim as one might have feared," Sydbank analyst Per Fogh told Reuters.

"This is what they consider to be fair value of the asset now, but the question still remains what a potential buyer would pay for it."

Profit Growth Forecast

Carlsberg lowered its operating profit growth forecast for this year to between minus 5% and plus 2%, compared with previous guidance of 0% and 7%.

The company last year generated 10% of its total revenue and 6% of its operating profit in Russia, where it has eight breweries and 8,400 employees.

It took full control of Baltika in 2008 but has faced sluggish sales amid a sanction-hit economy and regulations to curb alcohol abuse.

Carlsberg , the Western brewer most exposed to the Russian market, said in late March that it would sell its Russian business.

As of 1 January 2022 and until completion of the divestment, the Russian business will not be part of the Central & Eastern Europe region, Carlsberg added.

The beer giant also said that it hopes to resume production at its breweries in Ukraine when the situation in the country stabilises, and added that there will be changes to the accounting treatment of profit and loss from the business due to the 'extraordinary nature' of the situation.

News by Reuters, additional reporting by ESM – your source for the latest drinks news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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