Kirin Forecast Misses Estimates on Australian, Japan Declines
February 10, 2012, 9:12 PM ESTBy Cheng Herng Shinn and Shunichi Ozasa
Feb. 10 (Bloomberg) -- Kirin Holdings Co., Japan’s largest brewer by market value, forecast annual earnings about 23 percent less than analyst estimates as falling sales in Australia and Japan crimp profitability.
Net income may reach 48 billion yen ($618 million) in the 12 months ending Dec. 31, the Tokyo-based company said today in a statement today. That compares with the 62.5 billion yen average estimate of 16 analysts based on data compiled by Bloomberg.
Earnings from its Lion unit in Australia will miss budget as discounting by the nation’s biggest retailers stymies its ability to raise prices, higher ingredient costs curb profitability and stalling consumer demand cuts sales. Declines in the Japanese drinks market will result in revenue missing target and limiting the benefit of overseas acquisitions such as Brazil’s Schincariol Participacoes e Representacoes.
“We want to take a medium to long-term view for Lion,” President Senji Miyake told reporters in Tokyo.
Kirin expects 2012 earnings from Lion of A$96 million ($103 million), lower than the A$350 million target set in 2010, it said in a presentation on its website. Kirin owns Australia’s second-largest brewer and largest milk processor.
Lion’s management will focus on more profitable products, such as cheese and flavored drinks, to reduce the impact of plain milk discounting by retailers.
Kirin and rivals Sapporo Holdings Ltd. and Asahi Group Holdings Ltd. have expanded overseas to offset a slump in demand at home. Industrywide beer sales in Japan fell 3.7 percent to 442 million cases last year, the lowest level since records began in 1992.
Schincariol, San Miguel
Among other acquisitions last year, Kirin agreed to buy out shareholders in Schincariol Participacoes e Representacoes in November 2011. The deal at that time valued the Brazilian company at about $3.6 billion excluding debt, when combined with the initial purchase of a 50.45 percent stake.
The brewer increased its stake in Manila-based San Miguel Brewery Inc. to 48 percent in 2009, bought a 14.7 percent of Singapore’s Fraser and Neave Ltd. in 2010 and purchased a majority stake in Vietnam’s Interfood Shareholding Co. for an undisclosed sum in March 2011.
Kirin’s 2011 annual profit dropped 35 percent as the value of its Sydney-based Lion unit and investments declined.
Net income fell to 7.4 billion yen in 2011 from 11.4 billion yen the previous year, the Tokyo-based company said today.
--With assistance from Robert Fenner in Melbourne. Editors: Anjali Cordeiro, Stephanie Wong
To contact the reporters on this story: Cheng Herng Shinn in Tokyo at hcheng52@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net
To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net; Frank Longid at flongid@bloomberg.net
