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Carlsberg sees 2020 profit fall as lockdowns bite, suspends share buyback

COPENHAGEN (Reuters) - Danish brewer Carlsberg said on Thursday it expected operating profit to fall by as much as 15% this year as lockdowns will hurt sales in the second half in key markets of China and Western Europe, sending its shares more than 5% down.

The Calsberg's logo is seen on the jacket of an employee at the development center of the Carlsberg group at the K2 Kronenbourg beer brewery in Obernai, France, September 12, 2019. REUTERS/Vincent Kessler/Files

The world’s third-biggest brewer after Anheuser Busch InBev and Heineken suspended the second tranche of a share buyback and said it would cut an unspecified number of jobs at its head office in Copenhagen.

It said although drinkers had started to return to bars and restaurants in China and Western Europe over the summer, lockdowns are likely to keep sales subdued for the remainder of the year.

The Chinese market, its biggest by volume, started the third quarter well but sales had been hurt more recently due to renewed lockdowns in parts of the country, it said.

In Western Europe, sales at bars and restaurants were gradually recovering but were not expected to return to normal levels this year, it said.

“Recognising that we’re faced with a new market reality, including changed consumer preferences and a reduced level of on-trade activity, we’re taking measures to adapt our business accordingly,” Chief Executive Cees ‘t Hart said.

The company suspended guidance in April, but said on Thursday it expects a decline in organic operating profit this year of 10%-15%.

Shares in Carlsberg were 5.3% lower at 889 crowns each by 0744 GMT.

The shares have risen more than a third since mid-March but are still trading below an all-time high of 1,065 Danish crowns hit in January.

The price/mix, which indicates whether the company sold more or less of its expensive beer, was minus 7% in the second quarter, Carlsberg said in a statement.

Second-quarter sales fell 15% from a year earlier to 15.9 billion Danish crowns ($2.5 billion) on a fall in total volumes of 8%, in line with preliminary figures posted last month.

($1 = 6.3090 Danish crowns)

Reporting by Jacob Gronholt-Pedersen; Editing by Muralikumar Anantharaman and Emelia Sithole-Matarise