Dive Brief:
- Danish brewery Carlsberg A/S cited issues with Russian currency fluctuations as a reason for the net loss the company unexpectedly reported in the first quarter.
- Operating profit excluding acquisitions, however, increased 8% from the same period last year, and revenue also rose 4.4%.
- Because of its poor sales performance, Carlsberg closed two of its Russian breweries, one in Chelyabinsk and the other in Krasnoyarsk. It is unclear if Carlsberg will close any more breweries in the country as of yet; its CEO Jørgen Buhl Rasmussen has made no definitive decisions regarding this.
Dive Insight:
Carlsberg's reported revenue in the Eastern Europe market was down 30% for the quarter as compared to last year's first quarter. The dive of the Russian ruble to its all-time low in December greatly affected Carlsberg's dealings in the country before the ruble slowly increased again in this past quarter.
Rasmussen said in a conference call, "The currency impact is less negative now than we had thought at the beginning of the year, but it is still negative year on year," The Wall Street Journal reported.
But Carlsberg's problems in Russia stretch beyond currency issues — also hindering the company's performance are sanctions from Western countries and strict regulations in Moscow.