Japan: Asahi Breweries H1 profit falls 7%

Japan's Asahi Breweries Ltd. posted a 7 percent fall in half-year operating profit on August 04 due to sluggish sales, and slashed its full-year forecast to roughly meet market expectations, Reuters announced august 04.

Asahi lost its top spot in Japan's beer market to rival Kirin Brewery Co. for the first time in five years in the January-June period as it struggles to win customers in the low-malt "happoshu" and beer-like drink markets, where Kirin is strong.

Asahi, the maker of Super Dry beer, introduced a new beer-like drink, or so-called third-type beer, as well as a premium beer product to boost sales, but it failed to stop a slide in its domestic market share.

The company lowered its full-year group operating profit forecast to 95.5 billion yen ($830 million) from 105 billion yen, compared with a consensus projection of 94.3 billion yen in a poll of 12 analysts by Reuters Estimates.

It also cut its 2006 sales volume forecast to a 1.4 percent year-on-year increase from 3.4 percent.

Asahi's half-year operating profit came to 28.65 billion yen in the six months ended June, against 30.8 billion yen a year earlier.

Japanese beer makers developed beer-like drinks in an effort to jump-start the shrinking domestic market. Happoshu and third-type beers are made from ingredients such as bean protein and caramel and escape high taxation because their ingredients mean they are not classified as beer.

Thanks to this effort, the country's overall beer market showed its first year-on-year expansion in five years in the January-June period with a 1.1 percent increase.

Third-ranked Sapporo Holdings Ltd. separately reported a wider operating loss at 1.8 billion yen for the first-half and lowered its forecast to 10.2 billion yen from 16.8 billion yen for the year to December. Shares in Asahi rose 11.7 percent in the first half, in line with the Tokyo Stock Exchange's foods subindex . Sapporo shares dropped 12.4 percent in the same period.

Prior to the announcement, Asahi closed up 0.24 percent at 1,698 yen, while Sapporo was up 0.51 percent at 593 yen. The subindex lost 0.24 percent.

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