Japan: Asahi Group withdraws earnings outlook on impact of coronavirus crisis

Asahi Group Holdings Ltd. withdrew its earnings outlook for the current fiscal year, hit by the impact of economic shutdowns due to the coronavirus in the Japanese beer maker’s overseas business and the domestic market, Bloomberg reported on May 11.

The brewer of “Super Dry” beer said measures taken to prevent the coronavirus’s spread has created too much uncertainty to quantify a business impact, but it aimed to release its new forecast by the end of the second quarter and would keep its annual dividend.

Asahi joins a string of global companies, including Anheuser-Busch InBev NV, that have pulled financial guidances due to uncertainty from the global pandemic.

“We think people will eat out and travel more as Japan’s state of emergency is slated to end at the end of May and restrictions ease in Europe,” said Chief Executive Officer Akiyoshi Koji in a conference call to announce the results. “But we need to think about how the second wave and continued social distancing will impact business.”

Koji has been expanding Tokyo-based Asahi’s global footprint via deals, spending more than $20 billion in recent years buying brewing operations and brands in Europe and Australia as it seeks to reduce its dependence on a fiercely competitive and dwindling beer market in Japan. Most recently, Asahi purchased Australia’s Carlton & United Breweries from AB InBev for $11 billion, a deal that is expected to close next month.

That expanded presence, especially in Europe, dealt a blow to Asahi as the region became one of the hardest hit areas by the coronavirus, resulting in social restrictions that dented demand for alcohol and beer. For the three months ending in March, operating profit fell 72% in the company’s overseas business. Overall, the company’s sales were down 4.7% and operating profit decreased 44% for the quarter.

Koji said the company is still committed to its strategy of making its flagship Super Dry a global premium brand, and that it did not foresee issues with cash flow or financing in the current environment. Chief Financial Officer Atsushi Katsuki expressed confidence in the company’s cash on hand and financing, and said there was no need to take on a committed credit line.

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