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No cheers from World Cup for Vietnam’s top local brewers

No cheers from World Cup for Vietnam’s top local brewers

Created 10 August 2018
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Sabeco and Habeco, Vietnam’s two largest brewers, reported dismal results in H1 despite some highly favorable factors.

No cheers from World Cup for Vietnam’s top local brewers

 

Generally, for fast-moving consumer goods, the first half of the year is usually good because demand skyrockets during Tet, the Lunar Year national holiday.

This year the beer industry would have hoped to make a killing since the World Cup football tournament began on June 14.

Yet the two brewers saw profits actually decline.

Sabeco, as Saigon Beer Alcohol Beverage Corp. is called, saw pre-tax profit fall 4 percent year-on-year to VND3 trillion ($127 million) on sales of over VND17 trillion ($722 million), up over 8 percent. This was the first time its profits had declined since 2013.

Its gross margin ratio, which compares gross profit to sales, fell to 23.8 percent from 27.4 percent in the same period last year.

In July Sabeco's new chairman, Koh Poh Tiong, told shareholders at its annual general meeting that net profits might fall by 19 percent this year due to increased costs, tax hikes and higher branding expenses.

Habeco, or Hanoi Beer Alcohol and Beverage Joint Stock Corp., reported revenues of VND4.3 trillion ($183 million) and VND413 billion ($17.5 million) in pre-tax profit, almost unchanged from a year earlier and only 40 percent of its full-year target.

But, unlike Sabeco, its marketing and advertising spending increased by 15.5 percent in the second quarter to VND167 billion ($7.1 million).

The slowdown for the biggest brewer in the northern market started three years ago. Even as its rivals were growing steadily, Habeco saw annual sales stagnate at around VND10 trillion ($425 million).

Its market share is showing signs of shrinking amid expansion by foreign rivals in the high-end segment, according to securities analysts.

The stocks of both brewers are suffering due to their modest showing.

On Friday 19 morning, Sabeco traded at VND208,000 ($8.8), 40 percent down from its peak late last year. Habeco has fallen by half to below than 83,000 dong ($3.5 each).

According to a study on the Asia-Pacific beer market by Euromonitor, Vietnamese consumption is forecast to rise in the coming years despite the stagnation and even decline in China and some European countries.

Last year Vietnam consumed over 4 billion liters, or 45 liters per capita, the local Beer, Alcohol and Beverage Association estimated.

The country targets production of 4.1 billion liters in 2020 and 5.5 billion liters in 2035.

 

Source: VNE

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