A growing thirst for premium lager in Russia and parts of Asia helped Carlsberg, the Danish brewer, offset declines in Britain and Denmark to report better-than-expected first half results.

The group, which this year teamed up with Heineken to carve up Scottish & Newcastle (S&N), said today that it had also managed to overcome the steep rise in the cost of raw materials by pushing through aggressive price rises and changing the product mix.

In the first six months, it achieved organic beer volume growth of 6 per cent helped by a 12 per cent increase in Eastern Europe and 14 per cent in China. Volumes in Northern and Western Europe were flat, although prices rose by 5 per cent.

The company, which also owns Tetley’s bitter, said its market share in the UK was unchanged. It said it had lost share in pubs and clubs, where the beer market fell by 9 per cent, but had won share in the off-trade, where volumes rose by 6 per cent.

Jørgen Buhl Rasmussen, chief executive at Carlsberg, which is 30.3 per cent owned by the charitable Carlsberg Foundation, conceded that the UK market was "very challenging", although he was relieved that the company had "relative strength in the off-trade".

He said that while Carlsberg had just over 13 per cent of the UK beer market, its share of the off-trade beer market was nearer 20 per cent. it pushed through price rises of about 5 per cent.

The company was working hard to create a "better and more profitable business" in Britain, but he refused to comment on persistent rumours that it will close the Tetley's brewery in Leeds.

However, he confirmed that brewery closures would continue to be considered across its international operations as it sought to become more efficient.

Carlsberg highlighted the steady first half growth of its Russian business as a key factor, given the stellar growth experienced in the first half of last year.

In the second quarter, its volumes in Russia grew by 6.5 per cent against a market up 2.8 per cent, and it said it was on track to achieve full-year growth of 5 per cent.

Mr Rasmussen said: “Yes, market growth has come down this year compared to last year but, overall, Russia is a growth engine.”

He added: “We are doing well and I believe we can keep growing market share step by step. It is a very profitable market, so the total contribution from Russia to Carlsberg’s performance and business is extremely important.”

Under the S&N deal, Carlsberg acquired the British group’s 50 per cent share of Baltic Beverages Holding (BBH), giving it full control of the Eastern European brewer. BBH’s biggest market is Russia, where its Baltika operation sells 38 per cent of all beer.

During the half, BBH pushed through a 10 per cent price rise on the back of a Russian consumer preference for premium lager and a strong economy.

Mr Rasmussen said that Russian consumers were very brand conscious and "prepared to pay a little bit more" for strong international brands. The Tuborg, Carlsberg and Kronenbourg brands were selling well and further speciality brands would be added to the Russian portfolio.

The S&N purchase, which cost Carlsberg DKr57 billion (£6.05 billion), also included Kronenbourg, France’s biggest brewer, although the French beer market has fared poorly by comparison. It said the market had been “significantly more negative than expected”, falling by about 6 per cent.

The group said it it had started work on a “major strategic alignment of the brand portfolio” in France to reverse the loss of market share seen in recent years. This would involve a rejuvenation of the brand protfolio and the extraction of cost synergies following the S&N deal.

Carlsberg reported a 25 per cent increase in net revenues to DKr27 billion in the first half, with operating profits up 57 per cent to DKr3.54 billion. Net profit rose by 19 per cent to DKr1.29 billion. In the second quarter, net revenues rose by 7 per cent.

The company said it expected full-year net revenues to grow by 10 per cent to about DKr62-63 billion, while organic operating profits would rise by about 12 per cent to DKr5.9 billion.

The market, which had been concerned that the S&N deal might have overstretched the company, welcomed the figures, sending the shares more than 15 per cent higher in afternoon trading to DKr439.50.

Michael Hybholt, analyst at Nordea, said: “Some people have been worried about market development in Russia, but these apprehensions have been put to rest by the results because the Russian numbers look good.”

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