E-Malt.com News article: 3067

Japan: Asahi Breweries Ltd., Japan's top brewer, posted an 87 % jump in first-half profit to its highest ever on Friday, August 6 on cost cuts that offset a drop in beer sales, and it raised its full-year forecast. The brewer, known for its "Super Dry" beer, posted a consolidated net profit of 15.46 billion yen ($138 million) for the January-June period, up from 8.25 billion yen a year earlier, on sales of 648.11 billion yen. Its first-half net, operating and recurring profits were the highest in the company's history.

It now expects a 28 billion yen net profit for the full year, up 7.7 percent from its previous forecast and also a new record. The company said it would pay a 15 yen dividend for the year to December, up from an earlier forecast of 13 yen, raising its dividend yield to 1.3 percent.

Last month Asahi announced a 3.4 % drop in its beer sales during the first half against a year earlier. Alternative alcoholic drinks such as Sapporo Holdings Ltd.'s low-cost, beer-like "Draft One" and those based on shochu, a distilled alcohol made from raw materials like sweet potatoes, have gained in popularity in Japan.

Asahi has added more low-malt beers, or happoshu, to its line-up and sales in this sector increased 7.1 percent in the period, but sales of beer and happoshu combined dropped 0.6 percent. Happoshu is much cheaper than regular beer because its raw materials are taxed less.

Against that, sales of shochu-based drinks and canned cocktails jumped 27 percent. "It is a fact that the beer market is shrinking," Asahi Managing Director Yoshihiro Goto told a news conference. "We are going to cut costs to be efficient in the market, but hopefully sales will grow too via the introduction of products that suit customers' tastes."

Asahi's rivals are also struggling to boost beer sales. Among Japan's five major brewers, only unlisted Orion Beer Co. Ltd., which has the smallest market share of just 0.9 percent, expanded its sales of regular beer plus happoshu in the first half.

The five companies' combined beer sales fell 6.4 percent during the period, with regular beer sales down 3.4 percent.

Sapporo's Draft One drinks, which exceeded the company's annual sales goal of 10 million units within six months of their introduction in February, have eaten into regular beer sales.

Sapporo, Japan's third-ranked brewer, also released first-half results on Friday. It posted a January-June consolidated net profit of 2.85 billion yen, a turnaround from its year-earlier 8.81 billion loss. Draft One contributed to a jump in sales, which hit 224.3 billion yen, up 4 percent.

Second-biggest Kirin announces first-half earnings on Aug. 10.

After disappointing sales in the first half, Japan's brewers have been enjoying thriving sales in the current quarter as hot weather stimulates alcohol consumption. The average temperature in July, 28.5 degrees Celsius, was the highest ever, according to the Japan Meteorological Agency.

Asahi said its regular beer sales went up 17 percent in July compared to a year earlier.

"It was really hot in July and quite a lot of beers were sold," Goto, who says he is a beer drinker himself, told the news conference. "It had been a long time since our sales rose year-on-year, and it feels very nice."

Kirin is expected to post first-half results similar to Asahi's as cost-cutting should have offset a 6.6 percent drop in beer sales during the six months.

Shares in Asahi closed down 1.49 percent at 1,123 yen on Friday before the release of the earnings, while the Nikkei average declined 0.80 percent.

They shot up 28 percent in the first half, underperforming Sapporo's 40 percent jump, but outperforming rival Kirin Brewery Co. Ltd., which gained nearly 20 percent. ($1=111.81 yen)


06 August, 2004