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Japan: Kirin Brewery Co, Japan's No.2 beer maker, said on February 18 its net profit levelled off in the 2003 business year after asset write-downs and other reforms, but it sees profit jumping 32 percent in 2004. Japanese brewers, faced with shrinking beer and low-malt "happoshu" markets at home, are pushing structural reforms and diversification of their revenue base. "The contraction of the markets is expected to continue into 2004, but at least the makers have given up cutthroat price competition and the worst (for the industry) may be over," said Naomi Takagi, an analyst at HSBC.

Kirin, which also produces beer in China and Australia through joint ventures, posted 32.40 billion yen ($304 million) in net profit in the year ended in December, down 0.4 percent from 2002. Revenues rose 0.9 percent to 1.6 trillion yen. "The structural reforms implemented in the past few years are beginning to take effect. We see 2004 as the start of a new growth era," Managing Director Yoshikazu Arai told a news conference. The results were well-flagged as the company earlier this month said it expected to book a group net profit of around 32.5 billion yen on revenue of 1.6 trillion yen for 2003.

Kirin expects net profit to zoom to 43 billion yen in 2004, on sales of a record 1.7 trillion yen. The expected improvement in profit is seen mainly due to the absence of the 20.9 billion yen special loss it booked in 2003 to cover the costs of structural reforms including those at parent Kirin Brewery and unit Kirin Beverage Corp.

But it expects sales of beer and happoshu, a low-malt beer substitute, which account for nearly 60 percent of its total sales, to recover in 2004, rising 2.1 percent. Hit by a cool summer and a tax hike in May, its beer and happoshu sales slumped 5.2 percent in 2003.

Total Japanese shipments of beer and happoshu fell 6.3 percent in 2003, after a 2.6 percent fall in 2002, according to an industry group.

Japan's top brewer Asahi Breweries Ltd and third-ranked Sapporo Holdings Ltd are expected to defy waning thirst for beer in Japan and report higher profits for 2003 on Friday after slashing costs and diversifying their revenue base.
Kirin is the top maker of happoshu, which overtook beer as the favoured evening drink in Japanese households for the first time last year. Kirin produces beer in China through a joint venture with a Taiwanese company in Guangdong and through its 46 percent-owned Australian brewer Lion Nathan Ltd, which has plants in Suzhou and Wuxi. It also owns 15 percent of San Miguel Corp of the Philippines.

Shares in Kirin rose 18.5 percent in 2003, outperforming the Tokyo Stock Exchange's food sector subindex, which rose 10.77 percent.


20 February, 2004