E-Malt.com News article: 4228

Japan: Asahi Breweries Ltd., Japan's largest beer maker, forecast a better-than-expected 50 % jump in 2005 profit on Tuesday, February 15 after hitting a record in the previous year, betting its new beer-like drink will help earnings at Japan's top brewery.

Asahi Breweries, known for its flagship "Super Dry" beer, posted a 31.8 % increase in net profit in 2004 to 30.6 billion yen ($291.4 million) thanks to cost cuts and favorable summer weather that spurred consumption of beer and soft drinks. Its 2004 sales came to 1.44 trillion yen, up 3.1 percent from a year earlier. Its sales volume of beer and its low-malt "happoshu" beverage was flat in the year ended Dec. 31.

The company said it expected a group net profit of 46 billion yen for the current year to December on sales of 1.53 trillion yen.

Eight analysts polled by Reuters Estimates produced a consensus 2004 profit forecast of 25.20 billion yen, and a projection of 41.60 billion yen for 2005. "Our sales grew little as you can see, but we were able to produce a solid profit rise because we have improved our earnings structure through cost cuts," said the company's senior managing director, Yoshihiro Goto.

Despite the profit increase in 2004, the brewer was hit by rival Sapporo Holdings Ltd.'s low-priced beer-flavoured "Draft One," which made its debut in February 2004. The product, along with unlisted Suntory Ltd.'s "Super Blue," which combines happoshu and shochu, a distilled alcohol made from raw materials like sweet potatoes, has been slurping away at the beer market due to its low price.

In a bid to regain market share, Asahi in April will introduce its new "Shinnama" product, which uses soybean peptides instead of malt and will be in the low-tax "other" category.

Asahi estimates the overall "third-type" beer market, in which second-ranked Kirin Brewery Co. is to debut another product in April, will increase by 84 % in 2005. With the new drink, Asahi expects its sales of beer-related products -- beer, happoshu, and beverages in the new category -- will increase by 2.9 percent in 2005.

Kirin and third-ranked Sapporo will announce their 2004 earnings results on Friday.

Besides the new beer-like beverages, alternative alcohol drinks such as shochu and cocktails are seen gaining in popularity and Asahi expects its alternative alcohol sales to jump 33.3 percent in 2005. Alternative alcohol includes wine and whisky.

The company is also keeping an eye on growth opportunities in overseas markets. It has been strengthening its presence in China, the world's biggest beer consuming country, and the firm is now aggressively investing in South Korea to lift its beer sales there.

After boosting its stake in South Korea's Haitai Beverage Co, the country's third-biggest beverage maker, in July, it acquired a 15 percent stake in Highstar Co, a wholly-owned subsidiary of Lotte Chilsung Beverage Co., in October.

Asahi also said on February 15 that it was considering a joint bid with South Korea's Lotte Group for liquor maker Jinro Co., know for its shochu, although it had not yet made a decision. Jinro has about a 55 percent share of South Korea's shochu market, according to its Japanese subsidiary.

Shares in Asahi Breweries jumped nearly 30 percent in 2004, outperforming the Nikkei average's 7.6 percent rise. Prior to the announcement, the shares ended Tuesday trading up 1.51 percent at 1,275 yen. The Nikkei average closed up 0.12 percent.

($1=104.99 yen)



16 February, 2005