Danish brewer Carlsberg warned operating profits would stall this year, hurt by falling beer markets in northern and western Europe while its biggest market, Russia, would only show a slow recovery.

The world's fourth biggest brewer, which brews Carlsberg, Tuborg, Baltika brands said its 2012 results would be dented by the euro zone crisis hitting beer drinkers and also by a low single-digit percentage rise in its input costs.

We have taken a cautious view for northern and western Europe, and assume a slightly declining market in 2012, Chief Financial Officer Jorn Jensen said at an investor presentation.

Consumers in Europe are assumed to remain under pressure from the macro economic situation, Jensen added on Monday.

Carlsberg said it expected the Russian beer market to return to modest growth this year after a 3 percent fall in 2011 following big tax hikes, high inflation and tighter regulations.

The brewer gets nearly a third of its sales in Russia, the world's fourth biggest beer market after China, the United States and Brazil, with a market share of close to 40 percent.

We lost market share in Russia, which is not satisfactory and we continue to take actions to address that, Chief Executive Jorgen Buhl Rasmussen said in a conference call.

Part of Carlsberg's plan to reverse the falling market share in Russia would be to take full control of Russian unit Baltika through an offer to buy the 15 percent it does not already own, and Rasmussen said the net cost of the deal in 2012 would be up to 4.4 billion crowns.

Carlsberg said buying out Baltika minority stakes would be immediately earnings-enhancing once completed, and it expected the delisting of Baltika to happen not later than May 2012.

Rasmussen said the step would strengthen the business and bear fruit in 2012, though the group would still face a challenging environment in northern and western Europe where it has big operations in Scandinavia, France and Britain.

In Russia, inflation, especially on food products, would likely be significantly lower this year than in 2011, and the outlook for the economy was fairly positive, Rasmussen said.


Fourth-quarter operating profit rose in line with forecasts to 1.83 billion Danish crowns from 1.13 billion a year earlier, but Carlsberg said 2012 underlying operating profits would be flat, which disappointed some analysts.

2011 ended on a good note, on the earnings side it was due to the effects of cost cutting. On the other hand, their expectations for 2012 are on the weak side. I had hoped they would be able to raise operating profits in 2012, Sydbank analyst Morten Imsgard said.

Group sales rose to 14.85 billion crowns in the fourth quarter from 13.40 billion a year earlier, exceeding a 14.30 billion average forecast.

Carlsberg shares reversed initial losses to trade up 3.3 percent at 443 crowns by 1110 GMT, outperforming a flat STOXX Europe 600 food and beverage index <.SX3P>. Shares in the Copenhagen-based brewer fell by 27 percent in 2011.

In the Russian market, Carlsberg's volume market share declined to 37.4 percent in 2011 from 39.2 percent previously.

Russia resulted in market share loss due to a high level of promotional activities from competitors, the brewer said.

(Additional reporting by Teis Jensen and Kristian Mortensen; Editing by Hans-Juergen Peters and David Jones)