E-Malt.com News article: Japan: Kirin, Sapporo cut forecasts as Japan drinks less beer

Kirin Holdings Co. and Sapporo Holdings Ltd., Japan's No.2 and No.3 beer makers, both lowered their full-year operating profit forecasts citing sluggish demand for beer, Reuters reported August 3.

Their downward revisions followed a forecast cut on Thursday by top brewer Asahi Breweries Ltd., underscoring a bleak outlook for the industry due to a declining population and a consumer shift to cheaper beer-like beverages.

Kirin said it now expects to post a group operating profit of 117 billion yen ($982 million)in the year to next March, down 3 percent from its previous forecast of 120 billion yen. The market consensus in a poll of 12 analysts by Reuters Estimates was also 120 billion yen.

Kirin has tried to reduce its reliance on the domestic beer market by diversifying its business portfolio and investing overseas, but its pharmaceuticals unit and overseas operations have failed to pick up the slack.

The maker of "Kirin Lager" and "Tanrei" said its domestic sales of beer and beer-like drinks declined 2.7 percent in volume terms during January-June, underperforming the industry, which suffered a drop of 1.9 percent.

Kirin said a big push by beer makers to launch new products may have backfired.

"There were as many as 20 or so new products introduced in the beer market, and that may have confused some consumers," Kazuyasu Kato, president and CEO, told a news conference.

For the six months ended June 30, Kirin posted a 5 percent fall in operating profit to 42.9 billion yen. It said earnings were also pushed down by higher costs of cans and cardboard used for packaging.

Kirin's non-alcoholic beverage unit and Lion Nathan, an Australian brewer in which it has a 46 percent stake, posted profit gains. The firm's pharmaceutical unit, however, booked a profit decline.

Sapporo, meanwhile, cut its full-year operating profit forecast by 9 percent to 12.5 billion yen.

Rival Asahi Breweries Ltd. reported a 19 percent fall in first-half profit on Thursday and cut its full-year outlook, blaming poor beer sales.

Prior to the announcement, shares of Kirin slid 1 percent to close at 1,619 yen. Shares of Asahi Breweries dropped 2 percent to finish at 1,676 yen. Sapporo's shares lost 0.9 percent to end the day's session at 693 yen before its announcement.


08 August, 2007