Suntory Beverage & Food Ltd., the soft-drink maker that raised $4 billion in Japan’s largest initial public offering this year, cut its profit projection on more competition, marketing costs and Europe’s economic slump.
Net income will probably be 31 billion yen ($314 million) for the year ending December, lower than its previous forecast of 35 billion yen, the Suntory Holdings Ltd. unit said in a statement to Tokyo’s stock exchange yesterday. That compares with a 35.9 billion yen average estimate from seven analysts compiled by Bloomberg.
The beverage company, which gets about 30 percent of its revenue from overseas markets, is accelerating its expansion outside of Japan as an aging population limits domestic growth. In Europe, where it gets 13 percent of its sales, it faces surging unemployment and weakening growth.
Suntory Beverage fell as much as 3.1 percent to 3,160 yen in Tokyo today, headed for the biggest loss since July.
The company’s profit jumped 57 percent in the nine months ended September to 24.5 billion yen, it said in the statement. Sales climbed 12 percent to 837 billion yen.
The European Union has trimmed its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggled to regain momentum after a record-long recession. Unemployment will be 12.2 percent in 2014, higher than the 12.1 percent predicted six months ago, according to the European Commission.
In Japan, sales of small-size products that provide high revenue, such as the 500-millilitre bottles, are expected to fall short of initial expectations amid intensified competition.
Tokyo-based Suntory Beverage agreed in September to pay 1.35 billion pounds ($2.2 billion) to buy the Lucozade and Ribena drink brands from GlaxoSmithKline Plc as it seeks to reduce its reliance on its domestic market.
Sales rose 3.5 percent to 542 billion yen in Japan during the nine-month period, while they climbed 32 percent to 295.2 billion yen in its overseas business, according to the statement.
The Japanese beverage group bought France-based Orangina Schweppes Group for 300 billion yen in 2009 and paid 600 million euros in the same year for New Zealand’s Frucor Beverages Group.
Suntory had a 20 percent share of Japan’s non-alcoholic drink market in 2012, the second-biggest after Coca-Cola Co.’s 28 percent, according to Inryosoken, a research company.
The company had said it plans to double sales to 2 trillion yen by 2020.