Vietnam: Sabeco’s post-tax Q1 profit the lowest since 2013

Post-tax profit of Vietnam’s largest brewer Sabeco in the first quarter nearly halved year-on-year to less than VND720 billion ($31 million), the lowest since 2013, VnExpress International reported on May 1.

In its latest consolidated financial report, the brewer confirmed a net revenue of VND4.9 trillion ($210 million), down 47 percent year-on-year. Beer still accounts for an overwhelming proportion of revenue at 88 percent, the rest stemming from packaging, other beverages and wine.

The firm's management board ascribed the sharp revenue drop to "unexpected pandemic effects". Sabeco has been forced to cut 15-20 percent in sales and administrative expenses to minimize the impact on profits. The budget for advertising during this period was also reduced by over VND100 billion ($4.3 million), packaging halved to VND33 billion.

However, post-tax profits still dropped by 44 percent compared to the same period last year, reaching less than VND720 billion ($31 million). This is the lowest quarter profit since 2013.

Sabeco's total assets have been valued at VND24.2 trillion ($1.04 billion), a decrease of over VND2.7 trillion ($116 million) against the beginning of 2020.

Securities companies in their recent reports said that 2020 is a challenging year for the top brewer in Vietnam.

Heavy fines for drinking alcohol while driving under a new decree, effective from January 1, 2020, affected sales. In addition, the Covid-19 pandemic caused the demand for alcohol to decline as consumers were restricted from gathering at bars and restaurants.

In the most negative scenario, if output declined by 20 percent, Sabeco's revenue and profit could be VND31.69 trillion ($1.36 billion) and VND 4.11 billion ($177 million), respectively.

Sabeco's stock price fell to the bottom of VND112,000 ($4.8) per share when the market strongly fluctuated, and remained put for 14 consecutive sessions before rising to VND183,000.

Analysts said the rise is due to a new decision to postpone tax collection. Sabeco had received a letter from the Ho Chi Minh City Tax Department which announced the decision to enforce tax at the end of 2018 no longer applied to it. The brewer was not forced to recover the special consumption tax from 2007 to 2015 worth over VND2.65 trillion ($114 million) and VND494 billion ($21.2 million) plus administrative fine.

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