Danish brewer Carlsberg announced Wednesday that its second quarter net profit declined 22 percent from the same period a year ago due mainly to an increase in alcohol taxes in Russia.
The company said that three-month earnings amounted to 2.1 billion kroner ($407 million), down almost 22 percent from 2.6 billion kroner ($504 million) a year earlier.
The company said operating profit for the period amounted to 3.7 billion kroner ($715 million), down nearly 13 percent from 4.2 billion kroner ($810 million) in the second quarter of 2010.
Sales for the three-month period rose 4 percent to 18.7 billion kroner ($3.1 billion), the company said.
CEO Joergen Buhl Rasmussen said that results in Russia had been "below expectations" and that a recovery would take longer than expected as Russian consumers adapt to an approximate 30 percent increase in the price of beer.
He said the results have prompted Carlsberg to revise its outlook, projecting full year earnings growth of 5-10 percent as opposed to a previous forecast of 20 percent.
Carlsberg shares plummeted on the news, dropping 15.5 percent to 380 kroner ($73.48) in midday trading in Copenhagen.
Jens Houe Thomsen, an analyst with Jyske Bank, said the reason for the second-quarter result was "primarily the sharp price increases we have seen since last year's tax increases that now likely affects the consumption."
Another analyst, Bjoern Schwartz from Sydbank, agreed, saying Russian consumers had "put their foot down, hence affecting Carlsberg."
The group's international beer brands include Carlsberg, Tuborg and Baltika, which is the leader on the Russian market.
The company said it had a 38.4 percent share of the Russian beer market in the second quarter.