Sabeco cuts projected profit by a fifth

The Saigon Beer-Alcohol-Beverage Corporation (Sabeco) is targeting a lower post-tax profit in 2018 due to the increase of production costs and stronger competitiveness in the industry.

sabeco cuts projected profit by a fifth hinh 0

Its management board said at the company’s annual shareholder meeting recently that it had cut its projected post-tax profit by 19% year on year to VND4 trillion (US$178 million) in 2018.

Its total revenue is forecast at VND36 trillion in 2018, up 2.4% from 2017, and a 35% dividend payout, level to the previous year.

In 2017, the company recorded VND35 trillion in total revenue and VND4.95 trillion in post-tax profit. The 2017 figures increased by 11.2% and 9.6% year on year, respectively.

This was the first annual shareholder meeting after the Thai beer firm ThaiBev via its Vietnamese legal entity had spent around VND5 billion to purchase 53% of capital in Sabeco at the end of last year.

Sabeco’s management board said the domestic market was going to be tough in 2018 as competition among brewers in Vietnam rises. Meanwhile, production cost was estimated to grow as input material prices were expected to increase due to bad weather conditions and seasonal changes.

In addition, alcohol and beer products have been affected by a 5% increase in special consumption tax from the beginning of this year. The new rates for alcohol products range from 35% to 65% and the rate for beer products is 65%.

However, there are also advantages for Sabeco and the beer industry in 2018. According to studies of international organisations, Vietnam is among rapidly developing economies with increasing per capita income, fast urbanisation and young population that accounts for 60% of the country’s total.

According to Sabeco’s management board, those will be the factors that are benefiting the local industry to grow strongly in coming years.

At the moment, Vietnam ranks among top 10 countries with the largest beer production in the world, top among ASEAN countries with the highest consumption and ranks third in Asia in terms of per capita consumption with around 43 litres a year. With an annual growth rate of 5%, Vietnam’s beer market will attract more and more foreign brewers from overseas, Sabeco said.

Sabeco debuted on the HCM Stock Exchange with code SAB on December 6, 2016 at VND128,280 (US$5.7) per share. Its share price rose to the highest of VND334,460 per share on November 29, 2017 but has fallen 40% since then to end last week at VND200,000 per share.

VNA

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