E-Malt.com News article: 3085

Japan, Tokyo: Kirin Brewery Co. Ltd. said on August 10 its first-half net profit rose 2.1 % as lower costs and solid earnings by affiliates offset sluggish beer sales at home, and it maintained its full-year profit forecast. Kirin, known for its flagship "Lager" beer, said it expected a full-year net profit of 43 billion yen ($389 million), unchanged from its May forecast.

It expects sales to hit 1.68 trillion yen in the year to December 31, up from 1.60 trillion in 2003, although its core market has shrunk due to a shift in consumer tastes, according to Reuters. The latest sales forecast was down slightly from its May estimate of 1.70 trillion yen.

"In addition to the hot weather (which boosted sales) in July, we are counting on planned event campaigns such as soccer games in the latter half of the year to lift sales," Kirin Managing Director Kazuhiro Sato told a news conference. "But a shift in consumer tastes and the lure of cheaper products are weighing on us."

Newer, cheaper drinks such as those based on shochu -- distilled alcohol made from materials such as sweet potatoes -- have lured customers from traditional brews, resulting in a 6.6 percent drop in Kirin's beer sales in the half year to June 30.

Its shipments of cheaper low-malt beer, or happoshu, slumped 9.9 percent as market leader Asahi Breweries Ltd. (2502.T: Quote, Profile, Research) snatched a 5.1 percentage point rise in its share of that market. Kirin still kept the biggest share with 42.6 percent.

First-half net profit was 14.23 billion yen, up from 13.9 billion in the same period last year, on sales of 759.45 billion yen.

The slowdown in beer sales was offset by robust earnings at soft drinks unit Kirin Beverage Corp., which posted a 158.6 percent rise in half-year net profit from a year earlier on sales of 177.6 billion yen.

Kirin's rivals are also struggling for market share. Among Japan's five major brewers, only unlisted Orion Beer Co., which has the smallest market share of just 0.9 %, expanded its half-year sales of regular beer plus happoshu.

Asahi remained on the top of the beer market with a 41.7 % share, up 2.5 percentage points from a year ago despite a loss in sales. Asahi alone among Japan's five brewers expanded its market share in the first half.

Number-two Kirin lost 0.1 percentage point of market share to 35.7 percent, while third-ranked Sapporo Holdings Ltd. slipped 1.4 point to 11.9 percent.

Fourth-ranked Suntory Limited also announced first-half results on Tuesday. The unlisted brewer's consolidated net profit rose 23.3 percent to 13.9 billion yen on sales of 625.60 billion. Its beer market share shrunk 1 percentage point to 9.9 percent.

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

The beer market was hit hard by Sapporo's cheaper, beer-like "Draft One" drink, whose sales exceeded its yearly goal of 10 million units within half a year of its introduction in February. "Cheaper drinks such as 'Draft One' attracted more customers than we expected away from the beer market," Kirin's Sato said. "But we don't believe price is everything."

Kirin shares ended down 1.15 percent at 1,027 yen after the earnings release. The Tokyo market's benchmark Nikkei average rose 0.41 percent.

Kirin shares rose nearly 20 percent during the first half, but underperformed those of Asahi, which gained 28 percent, and Sapporo, up 40 percent.


11 August, 2004