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Asahi Group Drops in Tokyo as Profit Forecast Misses Estimates

Asahi Super Dry Beer
Cans of Asahi Breweries Ltd. Asahi Super Dry beer are arranged for a photograph in Kawasaki, Kanagawa Prefecture, Japan. Asahi faces a shrinking demand for beer in Japan, where the population is falling and the economy is expected to slump after sales taxes rise to 8 percent in April from 5 percent. Photographer: Akio Kon/Bloomberg

Feb. 13 (Bloomberg) -- Asahi Group Holdings Ltd., Japan’s second-largest beermaker, fell by the most in more than a week after forecasting annual profit that missed analysts’ estimates, citing a planned sales-tax increase in April.

The maker of Super Dry beer dropped 4.5 percent, the steepest decline since Feb. 4, to 2,692 yen at the close in Tokyo trading. Net income will probably rise 8.5 percent to 67 billion yen ($654 million) this year, the Tokyo-based brewer said in a statement yesterday. That compares with the 77.4 billion yen average of 14 analysts’ estimates compiled by Bloomberg.

Asahi faces a shrinking demand for beer in Japan, where the population is falling and the economy is expected to slump after sales taxes rise to 8 percent in April from 5 percent. Domestic shipments all types of beer dropped 1 percent in 2013 to a record low a ninth straight year of decline, according to announcements by Japanese beer makers in January.

“We have a conservative profit forecast because of the increase in the sales tax,” director Yoshihide Okuda said at a press conference in Tokyo yesterday. He also said increasing competition will prompt higher marketing spending.

Japan’s gross domestic product will shrink 4.1 percent after adjusting for inflation in the three months through June, according to the median estimate of economists surveyed by Bloomberg. Still, the economy will continue its recovery, Bank of Japan Haruhiko Kuroda told reporters on Jan. 22.

Suntory, Toyota

Asahi joins Suntory Beverage & Food Ltd. and Toyota Motor Corp. in saying the tax increase will damp growth. Toyota plans to cut domestic output this year as it projects local demand to shrink because of the tax, while Suntory Beverage is responding by holding off on acquisitions.

Asahi forecast operating profit to rise 4.7 percent to 123 billion yen, compared with the average estimate of 127.6 billion yen of 15 analysts compiled by Bloomberg as of yesterday.

Net income rose 8 percent to 61.7 billion yen last year, the company said yesterday, less than the 68 billion yen average of 14 analyst estimates compiled by Bloomberg.

Sales from the soft-drink business rose 91 percent to 466.2 billion yen in 2013, and those for alcoholic beverages gained 4.5 percent to 948.6 billion yen.

To contact the reporters on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net; Emi Urabe in Tokyo at eurabe@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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