7 Feb 2024 14:46

Carlsberg recognizes $1 bln impairment of assets in Russia, 'historic' loss of another $6 bln

MOSCOW. Feb 7 (Interfax) - Carlsberg has recorded an impairment loss of 7 billion Danish kroner ($1 billion) on its Russian assets, the brewer said in its 2023 financial reporting.

The results of the Russian business were deconsolidated from the company's accounts in Q3 after its Russian asset, Baltika Breweries, was placed under temporary management by Rosimushchestvo.

In addition, the group recognized accumulated foreign exchange translation and hedging losses from 2004 through 2023 of 41.5 billion Danish kroner ($5.98 billion).

In total, the group recognized a loss of 47.75 billion kroner (about $7 billion) from discontinuing operations in Russia.

The report notes that the Russian business generated revenue of 4.3 billion kroner ($620.2 million) before deconsolidation from the reporting (i.e. for H1 2023).

Carlsberg Group, the largest foreign investor in the Russian brewing market, announced plans to exit Russia in March 2022. At the end of June 2023, the concern announced that it had signed an agreement on the sale of the Russian business, without announcing either a future owner of Baltika or the parameters of the deal.

However, the sale failed: soon, on July 16, President Vladimir Putin signed a decree according to which 100% of Baltika (98.56% owned by the Swedish legal entity Carlsberg, 0.09% by the German legal entity Carlsberg and 1.35% by Hoppy Union LLC) was transferred to the management of Rosimushchestvo. The Carlsberg concern was forced to state that after the decree was issued the prospects of the sale became "extremely uncertain", and at the end of October, commenting on the results of the quarter, announced "illegal seizure of business in Russia" and plans to protect its assets, the accounting write-off of which the company has tentatively estimated at almost $1 bln.

Baltika is the second largest brewing company in Russia, operating 8 breweries. The company's revenue in 2022 increased to 100.7 billion rubles from 82.6 billion rubles in 2021, while net profit increased 1.9 times to 9.952 billion rubles. Last year, Baltika produced 197.42 million decaliters of products, which is 4.7% less than in 2021.