Carlsberg A Ord Share Price (0AI3)

Carlsberg: red tied: Carlsberg’s half year report, released on Wednesday, amounts to a nasty headache. And the company’s stock chart since the bet was made shows how little merriment preceded the pain. Russia represents about a third of Carlsberg’s profit. It owns Baltika, the country’s largest brewer, and has held a stake since 1992. Thus, when Carlsberg increased this stake in Baltika, first when it bought the eastern half of Scottish and Newcastle in 2008, and again 2012, one might have thought it knew the risks. Apparently not. The situation in Russia and Ukraine is bad enough that the 2014 goal for operating profit growth has been cut to low from high single-digits. In the period 2004-06, when Russia did not regulate beer as an alcoholic beverage, Baltika’s volumes leapt 43%. A recent campaign against alcoholism has removed the lampshade from the heads of revellers, and the shine from local brewers. Its shares have outrun Carlsberg’s by nearly 19 percentage points this year; until recently the two traded at roughly the same valuation. This is a reminder that big bets on emerging markets are very risky. Development does not follow a straight line. Carlsberg needs to rebalance its portfolio again.