In Q4 2009 retailers choose to build up their beer supplies before the 200 per cent increase in Russian excise duty came into force at the beginning of 2010. This meant that comparison figures for Q4 2010 were never going to look flattering.
In the end, organic volumes were down five per cent. Carlsberg estimates that without the Russian stockpiling effect organic volumes would have been flat.
Overall Carlsberg management put a positive spin on the impact of the Russian tax increases in 2010. The Danish brewer said in its trading update: “Importantly, the Russian market was stronger than the Group anticipated at the beginning of the year.”
For the full year 2010, net revenue stood at DKK 60.1bn (€8bn), up 1 per cent on a reported basis and down 3 per cent on an organic basis. And operating profit increased by 9 per cent to DKK 10,249m.
Looking ahead to 2011 CEO Jørgen Buhl Rasmussen was cautiously optimistic. He said: “For 2011 we believe market dynamics will improve slightly, not least in Eastern Europe where we anticipate the Russian market to return to growth.”
For 2011 Carlsberg anticipates high single digit operating profit growth and adjusted net profit growth of more than 20 per cent.
Nomura analyst Ian Shackleton suggested that this may be a conservative estimate and that the Russian market will come good for the company.
Shackleton said in a note to investors: “We believe that FY11 guidance has been set conservatively, and we see newsflow turning positive from 1Q reporting in May.” And on the Russian market, he said: “the Russian beer profit pool offers the best five-year upside of any major market.”