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Carlsberg Sees Sales Fall In Eastern Europe

Carlsberg (Other OTC: CABGY - news) has said it is struggling in Eastern European markets like Russia and Ukraine as it reported a 12% fall in profits.

The Danish brewing company, which has released its financial report for the three months to June, is responsible for premium beer brands such as Kronenbourg 1664 and Tuborg, along with its main offering and namesake, Carlsberg.

Announcing the drop in profits, the firm said it has seen a decline in demand for its beers in many parts of Eastern Europe in the first six months of the year and had closed two breweries in Russia in response.

It (Other OTC: ITGL - news) had hoped strong growth in Asia might offset the poor European performance, but has now admitted this is unlikely to be the case.

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Sales in Ukraine fell by an estimated 17% while in Russia the drop was 9%.

The company revised its annual profit forecast down, anticipating a small drop in profits against a previous prediction of a rise in the high single digits.

Share (LSE: SHRE.L - news) value for the Carlsberg Group dropped by 10% as a result of the news.

“The first half of 2015 has been challenging for the Group with weaker than expected results in Western Europe and market decline in Eastern Europe,” said chief executive Cees ‘t Hart.

“In Western Europe, we experienced bad weather in (Quarter 2) in northern Europe and did not achieve the full range of anticipated savings.

“For the full year, we therefore do not expect that the strong Asian performance will be enough to offset the weaker than expected results in Western Europe and the challenging market conditions in Eastern Europe.”

The Carlsberg Group has faced problems with increasing their market share, and also cited rising inflation in Ukraine as a factor in the profit drop.

The Kazak market, however, was one place where results improved.

The firm attributed a market share increase to a relaunch and repackaging initiatives (Other OTC: UBGXF - news) .