Asahi Group Holdings, Japan’s biggest beer maker by market value, advanced the most in five months after it said net income in the first half probably beat its forecast by 44 per cent on strong sales of non-alcoholic beverages in its home market and better-than-expected performance overseas.
Net income rose to 28.5 billion yen ($271 million) in the six months ended June 30, compared with the previous forecast of 19.8 billion yen given in February, Asahi said in a preliminary earnings statement Tuesday. Operating profit was 52.4 billion yen, 18 percent higher than the company’s forecast, while revenue was 863.7 billion yen, 0.4 percent above guidance, the company said. The company cited lower raw material costs and improved utilization of assets for the better-than-expected profit.
“This kind of upward revision is rare for Asahi so it is pretty positive for its shares,” said Satoshi Fujiwara, an analyst at Nomura Securities Co. The Tokyo-based brewer “is improving the product mix with a bigger focus on coffee and tea, which are more profitable than water, for example.”
Asahi is seeking expansion overseas to counter slumping beer consumption in Japan, and in April clinched a 2.55 billion euro ($2.8 billion) deal to buy the Peroni, Grolsch and Meantime beer brands in Europe from Anheuser-Busch InBev NV. Domestically, the Japanese brewer managed to sell more non-alcoholic drinks such as canned coffee and bottled tea, as well as “Clear Asahi,” a low-malt beer, said spokesman Takuo Soga.
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Asahi has been making great efforts to boost profitability, including by cutting costs, as it doesn’t expect a big increase in domestic demand, Nomura’s Fujiwara said. Low wage growth has led Japanese consumers to spend less on entertainment, travel and recreation, a setback for Prime Minister Shinzo Abe’s efforts to revitalize the economy.
Asahi’s improved first-half net income is still 28 percent lower than the 39.5 billion yen it booked in the same period a year earlier. The brewer of Super Dry beer will report first-half results Aug. 3 and will provide a full-year forecast then, it said in the statement.
News by Bloomberg, edited by Hospitality Ireland