Japan: Asahi Group lifts 2017 net profit forecast thanks largely to its European brands

Asahi Group Holdings expects a 141 billion yen ($1.29 billion) group net profit for 2017 in upgraded projections announced on January 30, up 58% on the year to a record high, thanks largely to beer brands acquired in Europe, the Nikkei Asian Review reported.

This amounts to 31 billion yen more than the Tokyo-based beverage maker had forecast when upgrading the year's outlook for the first time last August. Revenue is now seen at 2.08 trillion yen, up 22%, to top the previously forecast 2.03 trillion yen, up 19%.

Asahi has spent a total of 1.2 trillion yen in recent years to buy multiple European beer brands from Anheuser-Busch InBev. 2017's unusually hot summer in Europe led to stronger-than-expected sales of pricier beers there. Asahi's sales of Peroni rose in Italy. Beer demand also grew among restaurants and bars in the Netherlands.

Asahi upgraded its operating profit forecast by 8.3 billion yen to 196.3 billion yen, up 32% on the year. It had assumed average exchange rates of 122 yen to the euro and 83 yen to the Australian dollar, but the Japanese currency weakened further than expected, lifting revenue in yen terms. Streamlining production facilities and logistics centers in Oceania reduced fixed costs.

For 2018, the QUICK Consensus survey has Asahi logging 2.09 trillion yen in revenue and a 141.7 billion yen net profit. Respondents expect continued growth in earnings, but at a slower pace. QUICK is a Nikkei group company.

Shrinking demand for alcoholic beverages in Japan is pressing Asahi to improve its earnings structure at home. It has even raised wholesale prices of beer for the first time in a decade. Whether the group can further bolster its operating profit ratio remains to be seen.

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