The Japanese third-largest brewing force, Sapporo Breweries Ltd., has cut its 2002 group net profit forecast by 23.8% to Y1.6 billion ($13.55m). Sapporo ascribed the downgraded forecast to slumping sales of beer and low-malt “happoshu”. The maker of Yebisu premium lager cut its group sales forecast by 1.9 percent from its August outlook to 512 billion yen, as slow sales of regular beer and a price-cutting campaign on low-malt happoshu continued to take their toll on its results, according to Reuters. "Sales of beer and happoshu are falling....and we are seeing reduced profitability in our alcohol, beverage and drinking water operations," Sapporo said in a statement.
The new forecasts would mark a significant drop from the beer maker's 2001 results, when it posted a group net profit of 4.39 billion yen on 557.23 billion yen in sales.
Happoshu, similar to beer in taste and appearance, is taxed at half the rate of normal brews due to its low-malt content.
The popularity of the alcoholic drink has eaten into beer sales and brewers' profitability, but has also helped the brewers weather an otherwise saturated and slumping domestic beer market.
Higher taxes for happoshu are expected to be implemented in May, forcing beer makers to raise prices on the low-malt brew just as happoshu's growth has started to show signs of slowing.
Sapporo said on Friday that a 3.6 billion yen valuation loss on its shareholdings, as well as falling sales at its restaurant operations, had also contributed to the revisions.
Alcohol and other beverages account for around 87 percent of Sapporo's annual sales, while its restaurant and hotel operations are responsible for around eight percent.
PARENT PROFIT UP Despite the downward revisions on a group basis and falling sales, Sapporo raised its parent-only net profit forecast by 80 percent to 1.8 billion yen on the back of cost cuts, real estate sales within the group and other factors.
All three of Japan's major brewers, including top-ranked Asahi Breweries Ltd 2502.T and Kirin Brewery Co Ltd 2503.T, in August cut their full-year net profit forecasts as revenues from happoshu took a hit from price-cutting campaigns.
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