Carlsberg beer sales hit by China’s shuttered karaoke bars

LONDON: Carlsberg A/S forecast slower earnings growth as the coronavirus outbreak threatens to crimp beer consumption in Asia.

The Danish brewer extended the shutdown of some breweries in China, where the authorities lengthened the Lunar New Year holiday in an effort to contain the outbreak. The virus has killed at least 425 people.

“It’s a very sad situation for China and its people, and the virus will affect our business negatively,” Chief Executive Officer Cees ‘t Hart said on a call with reporters.

Late-night entertainment venues and about half of dining establishments are closed in the cities where the company has a presence, he said.

Carlsberg is the first major European brewer to report earnings, with its forecast setting a subdued tone for rivals Anheuser-Busch InBev NV and Heineken NV, which have prioritised Asia for growth in recent years.

Carlsberg’s business in that region accounts for about one-quarter of overall sales and boosted earnings by 23% last year.

Operating profit should rise by a mid-single-digit percentage this year on an organic basis, the Danish brewer said Tuesday. That’s after earnings rose about 11% in each of the past two years, reaching the highest in at least a decade in 2019.

The shares rose as much as 1.7% early Tuesday in Copenhagen. They’ve gained 30% over the past 12 months.

More volatile

“We are facing a more volatile business environment including the current coronavirus outbreak in China, of which the full impact is not yet known,” Carlsberg said.

The maker of Tuborg tends to give a conservative forecast early in the year and has often adjusted the outlook upward later.

In addition to the disease outbreak, competition remains tough in Russia, and a new drunken-driving law in Vietnam is also weighing on beer consumption.

The brewer raised its share buyback 11% to 5 billion kroner as earnings per share reached a record in 2019. Carlsberg also said currency shifts should boost earnings by about 50 million kroner this year, based on recent exchange rates.

The company has benefited from growing demand for its more expensive craft and low-alcohol brews such as Grimbergen and Carlsberg Nordic.