Danish brewing giant Carlsberg is set to fade out production at its facility in Stockholm. The move is expected to result in 300 job losses. The company claims that one-time costs related to the restructuring cannot yet be specified.
The decision, taken by the board of Carlsberg Sweden, means that the production of beer and soft drinks will be transferred to plants at Falkenberg and Copenhagen. Carlsberg says that around 60 new jobs are likely to be created at the Falkenberg plant.
The transfer will take place gradually, with the process scheduled for completion in October 2004. It is expected that this decision will improve Carlsberg Sweden's operating profit with approx. €7.8 million annually with full effect from 2005.
Carlsberg says that the decision to rationalise its Swedish operations was reached after a disappointing year of results. Sales and earnings were badly affected by high levels of excise duties on beer, substantial parallel import and increasing consumption of discount beer. The company says that any decision to rationalise the administration of its Swedish business is likely to be made in December 2003.
There is better news for the company in Eastern Europe however, where the company has increased its shareholding in the Bulgarian brewery Shumensko Pivo to 89 per cent through the acquisition of a further 29.6 per cent of the share capital. The shares have been acquired from Ferroal and the parties have agreed not to disclose the purchase price.
Carlsberg Breweries also owns 98 per cent of the Bulgarian brewery Pirinsko Pivo and the increased shareholding in Shumensko is part of Carlsberg Breweries' plan to integrate the two breweries and to strengthen its position in Bulgaria. The history of the Shumensko brewery dates back to 1882. The total market is 4.5 million hl beer and the Bulgarian annual per capita consumption is 54 litres.
These strategic decisions follow the publication of disappointing financial results in the first 9 months of 2003. The company reports that net revenue rose by 4 per cent at unchanged exchange rates, but converted at actual exchange rates net revenue declined by 3 per cent. Carlsberg says that apart from adverse exchange rate developments, the decline is mainly due to divested business units in Switzerland (soft drink and wine) and the sale of the Hannen brewery in Germany.
The Eastern European and Asian markets have performed only slightly better. At unchanged exchange rates, operating profit in Q3 was 22 per cent up on last year, whereas the 9 month-period was about level with last year. Operating profit for the period at actual exchange rates amounted to €392.6 - down 11 per cent - while Q3 showed some progress by increasing 15 per cent on last year.
Carlsberg says that unfavourable exchange rate developments account for the major part of the decline. Other minor deviations are mainly attributable to Q1 with the weak volume and sales price trend in Russia as well as the global decline in sales within the on-premise sector due to the war in Iraq and SARS.