Carlsberg Goes Flat As Russian Sanctions Hit

Carlsberg (Other OTC: CABGY - news) has issued a profit warning after sanctions against Moscow hit its vast Russian lager market.

The Danish brewer currently controls 38% of the lager sector in Russia, and said it expects a further deterioration in sales as the year progresses.

It said its eastern European markets are "increasingly challenging and uncertain," with consumption declines likely in both Russia and Ukraine.

The warning from the world's fourth biggest brewer comes as it revealed its second-quarter results.

It said net profit grew slightly to 2.2bn kroner (£23.6m), up from 2.1bn kroner in the same period a year ago.

It saw revenue increase slightly from 19.2bn kroner (£2.06bn) for the three months ending June 30, from 19.06bn last year.

It said the full-year net profit was expected "to decline by mid- to high-single-digit percentages".

The Danish warning comes as Dutch rival Heineken (Other OTC: HEINY - news) saw its half-year pre-tax profit up 9%, boosted by football World Cup sales.

Heineken is the world's third biggest brewer and expects sales to remain strong for the rest of 2014.

Earlier this week the European Commission said it would offer compensation for EU fruit and vegetable producers after Russia banned imports, in retaliation to EU-US asset freezes against Kremlin insiders.

The tit-for-tat economic actions were prompted by western claims that Russia was stoking a separatist rebellion in the eastern portion of Ukraine.