The Russian market remains "very difficult" and will not recover any time soon, the head of Carlsberg told CNBC as its third-quarter earnings were impacted by declining sales in the region.
"It's a very difficult market, as you know, we were in there for many, many years and there were strong hopes that things would improve," Cees 't Hart, the chief executive of Carlsberg Group, told CNBC Wednesday.
"But if you look at the coming 12 to 24 months, there is not a lot of expectations of growth. the market volume decline of 10 percent this year will probably continue for a number of percents next year."
The Danish brewer, that has long been struggling in Russia, said it would book $1.4 billion in impairment and restructuring costs and slash white-collar staff by 15 percent in a bid to return to growth. Investors cheered the restructuring with the share price rising more than 6 percent Wednesday morning.
Most of the 10 billion Danish crown ($1.44 billion) worth of the charges were booked in the third quarter, the company said. As a result it now expects its operating profit to decline by high single-digit percentages, compared to the growth it expected before.
Carlsberg has long faced problems in Russia and Ukraine, from where it derives over a quarter of its operating profit, but the company booked charges and said it would restructure its Chinese and British businesses also.
It said charges relating to Russia would amount to 5 billion Danish crowns, while those relating to the Chinese business would be 4 billion crowns and to the U.K. business would be 600 million crowns.
In the fourth quarter, around 1 to 1.5 billion crowns' worth of charges will be booked related to the impairments and restructuring, the company said.
"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," Hart said in a statement.
"The strategy review process is on track to be communicated by the end of Q1 next year."
Carlsberg reported a third-quarter operating profit before special items at 3.47 billion Danish crowns, above a forecast of a 3.19 billion crowns seen in a Reuters poll.
But the company made a loss of 4.6 billion Danish crowns before tax, after the charges had been booked in the quarter, compared to profits of 3.0 billion crowns a year ago.
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