Beer giants Heineken and Carslberg join exodus from Russia

  • Heineken and Carlsberg leave the Russian market
  • The InBev joint venture remains
  • Russia accounts for 10% of Carlsberg sales
  • Heineken seeks to transfer its business but will not benefit from the sale

AMSTERDAM/COPENHAGEN, March 28 (Reuters) – Brewing giants Carlsberg (CARLb.CO) and Heineken (HEIN.AS) said on Monday they would leave Russia, joining an exodus of Western companies as pressure mounts on Moscow following its invasion of Ukraine.

Ukrainian President Volodymyr Zelenskiy has urged international companies to turn their backs on the Russian market after the launch last month of what Moscow called a “special military operation” against its neighbor. Read more

For Carlsberg, the Western brewer with the most exposure to Russia, the exit would result in a “substantial non-cash impairment charge” this year, he said without providing further details.

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The company holds 27% of the local market through its ownership of the country’s largest brewer, Baltika.

“We have made the difficult and immediate decision to seek the full divestiture of our Russian business, which we believe is the right thing to do in the current environment,” Carlsberg said. “Once completed, we will no longer have a presence in Russia.”

Shares of the company, which have fallen about a quarter since the invasion began, traded up 4.2% on Monday, heading for their best day since November 2020.

Heineken, Russia’s third-biggest brewer, said earlier it was aiming for an ‘orderly transfer’ of its local business, which accounts for just 2% of total sales, reducing operations during a transition period to minimize risk of nationalization.

The Dutch brewer expects to book related charges of around 400 million euros ($438 million) and said it will guarantee the salaries of its 1,800 employees in Russia until the end of the year.

“We have concluded that Heineken’s ownership of the business in Russia is no longer enduring or viable,” the company said in a statement, adding that it would not benefit from any transfer of ownership.

Its shares were up 0.3% at 2:23 p.m. GMT.

Last year, Carlsberg generated 10% of its total revenue and 6% of its operating profit in Russia, where it has eight breweries and 8,400 employees. It took full control of Baltika in 2008 but struggled with sluggish sales amid economic sanctions and regulations aimed at tackling alcohol abuse.

“The announcement of Carlsberg’s departure from Russia should help clear the air and remove the risk of overhang,” Jefferies analysts wrote in a research note.

The Danish brewer’s non-current assets in Russia amounted to 19.2 billion Danish kroner ($2.83 billion) at the end of 2021, around 15% of total assets or 44% of its total capital own, according to its annual report.

The second Russian brewer is a joint venture owned by Turkey’s Anadolu Efes (AEFES.IS) and Belgium’s InBev (ABI.BR).

InBev said earlier in March it would stop selling Bud beer in Russia and give up profits from the joint venture, which has 11 breweries and 3,500 employees in the country.

($1 = 0.9125 euros)

($1 = 6.7802 Danish kroner)

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Reporting by Sarah Morland, Philip Blenkinsop, Toby Sterling, Stine Jacobsen and Jacob Gronholt-Pedersen; edited by John Stonestreet, Kirsten Donovan

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