Danish brewer Carlsberg on Thursday (January 29) closed two of its 10 breweries in sanctions-hit Russia as a weak market blighted by the economic downturn has dented demand there.
Production at the Chelyabinsk and Krasnoyarsk breweries was suspended due to declining demand. Carlsberg said in September the Russian beer market had dropped 24 percent between 2008 and 2013 and an additional 7 percent in the first half of 2014.
Workers queued for separation papers at the Baltika-Pikra brewery in Krasnoyarsk, where flags of the Baltika brand, sold across the countries of the former Soviet Union, flew in the breeze.
Some employees said they would take advantage of company-sponsored seminars to help employees find new workplaces.
Although its Russian problems caused the brewer to cut profit targets twice last year, it said the closures would not impact its 2014 operating profit or its adjusted net result.
Despite revenue falling 15 percent in Russia and a rouble that has lost 57 percent against the euro in 2014, the world's fourth largest brewer has said it would wait for an economic recovery.
Brewery representative Olga Yegorova said the decision to shutter the brewery was unfortunate.
"The procedure of the liquidation of the branch of Baltika-Pikra will affect 308 people. Of those, unfortunately 265 persons will have to leave the company," she said.
Carlsberg, which earns a third of its operating profit from Russia, said the closures will reduce its Russian capacity by approximately 15 percent and will impact 500-600 employees in total.
It said closing the plants would lead to a pre-tax, non-cash write-down of approximately 700 million Danish crowns ($106 million), which will be included in special items for 2014. It will report full fourth-quarter results on Feb. 18.