Carlsberg rallies as investors welcome cost-cutting measures

Danish Brewer Carlsberg said it will book $1.4bn in impairment and restructuring costs and cut staff by around 15% as its third-quarter profit took a hit from its businesses in Russia and China.

The group said the new cost-cutting programme contains impairment and restructuring costs during 2015-2017 of 10bn Danish krone (£0.95bn), of which around DKK8.5bn will be charged in 2015.

Shares rallied as investors welcomed the programme, which is expected to deliver annual benefits by 2018 of DKK1.5bn-2bn. These will partly improve the group’s profitability and partly be reinvested into the business.

Chief executive officer Cees’t Hart 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. The strategy review process is on track to be communicated by the end of Q1 next year.”

Carlsberg said that due to the reclassification of one-off items in the UK and restructuring costs in the fourth quarter, organic operating profit is expected to be lower than previous guidance.

For the three months to the end of September the company posted a net loss of DKK4.5bn compared with a DKK.21bn profit in the same period last year.

Nomura, which rates the stock at ‘neutral’, said: “Despite a likely c.2% downgrade to F15 consensus, the significant impairment and some details around a new strategy would imply that this set of results represents ‘the kitchen sink’ and the company has a clean base on which to grow.”