Danish beer maker Carlsberg (CO:CARLa) A/S said it would cut as many as 2,000 positions or 15 percent of its workforce in a bid to improve its profitability, after reporting a loss in the third quarter due to poor sales in Eastern Europe and China.
The company also lowered its outlook for operating profit in the fourth quarter, citing writeoffs in Russia, China and the U.K. -- markets where the company has shut down breweries -- but said the board would leave its dividend policy intact. Admitting that the company’s profits had not been satisfactory, CEO Cees ‘t Hart said the cuts were part of a short-term plan ahead of an ongoing strategic review to be revealed in the first quarter of next year.
The fourth largest beer brewer in the world said the cost-cutting program -- titled “Funding the Journey” -- will write off 10 billion Danish kroner ($1.44 billion) over the next two years of which about 8.5 billion kronor ($1.22 billion) will be charged in 2015.
Russia, which has generated nearly 20 percent of Carlsberg's profits, has seen a decline in shipments following Western sanctions, state attempts to curb alcohol consumption and a deepening economic crisis, which forced Carlsberg to write down about 5 billion kroner ($720 million) in 2015. The company also said sales in Asia were muted during the third quarter due to lower overall growth in China, and fierce competition from local brands.
Carlsberg reported a third-quarter operating profit -- before accounting for one-time writeoffs -- of 3.47 billion Kroner ($500 million), above a forecast of 3.19 billion Kroner ($460 million) according to a Reuters poll.
Shares of the company shot up nearly 7 percent on the Copenhagen stock exchange, touching a three-month high following the announcement of the job cuts.