Carlsberg: fools Russian - FT.com There is always one that gets carried away at a party. But for Carlsberg all of its shareholders were overdoing it. Shares in the brewer have gained 18 per cent over the past six months - the most among all peers except Heineken. The hope was that things in Carlsberg's second-biggest market, Russia, which had been wracked by temperamental barley harvests and regulation, were finally stabilising. Yet forecasts given during Thursday's 2012 results announcement proved a bit of a party pooper. Shares fell 7 per cent. Granted, Carlsberg's net profit picked up 6 per cent in 2012 on 3 per cent growth in organic sales. But the Danish brewer finally ditched its medium term operating margin targets for Russia of 26-29 per cent. This is some form of admission that the region, which makes up two-fifths of Carlsberg's operating profit, is still volatile. High taxes on beer and new sales and marketing restrictions ensure that the environment remains a challenge. In 2012, Carlsberg's operating profit margin fell for the third consecutive year in Russia to 21 per cent. Thus a problem is Carlsberg's lack of big exposure to other emerging markets. Although Asia has done well (net revenue grew by one-third in 2012), fast growing regions still make up just 17 per cent of the brewer's operating profit, compared with 70 per cent at SABMiller, for example. And while Carlsberg is investing heavily over the next three years to improve its supply chain in Europe, this is not expected to feed through to margins until 2014. As a result, Carlsberg shares are cheap versus peers. On 13 times forward earnings, the Danish brewer now trades at a one-fifth discount to Heineken and a one-third discount to SABMiller and ABInBev. Carlsberg may now be under-promising to curb the enthusiasm of overexcited investors. It will need to over-deliver in order to narrow that gap.