- Company sees 56 billion yen net loss vs 58 billion yen profit
- Kirin cuts operating profit projection, keeps dividend
Kirin Holdings Co. will impose temporary pay-cuts on senior executives, including reducing the salaries of its chairman and president by 30 percent, after the Japanese beermaker predicted its first annual loss since 1949 as its Brazil unit was hurt by an economic slump.
Tokyo-based Kirin forecast a net loss of 56 billion yen ($461 million) for 2015, reversing its expectations of 58 billion yen in profit made in October, it said Monday. Its Brazil Kirin unit is expected to result in special losses about 114 billion yen, after deducting 27.2 billion yen in goodwill from the 2011 acquisition, citing deteriorating Brazilian economic conditions and stagnated consumption, as well as a drop in the local currency.
“Assumptions we made upon the acquisition were optimistic,” Kirin Senior Executive Officer Ryosuke Mizouchi said in a media briefing held in Tokyo. “The Brazilian economy was strong when the takeover happened in 2011 and we thought it would last for a long time.”
The company said it would lower the salaries of 11 senior executives for the months of January to March 2016.
Kirin has been among Japanese beermakers seeking acquisitions abroad to offset falling consumption at home. Kirin in 2011 acquired Brazil’s Schincariol Participacoes e Representacoes in a deal valuing the brewer at about $3.62 billion at the time. The company bought a controlling stake in Myanmar Brewery Ltd. for $560 million in August.
While it will strive to rebuild Brazil Kirin so it will turn a profit from 2018, the company doesn’t exclude the option of selling off the unit, Director of Group Finance Akihiro Ito said at the briefing. Myanmar Brewery will also become the pillar of Kirin’s overseas operations, he said.
Kirin shares rose 3.1 percent to 1,771 yen by the close of trading in Tokyo, reversing from a decline of as much as 3.8 percent after the Nikkei newspaper reported the potential loss earlier.
Kirin also cut its operating income projection to 122 billion yen from 130 billion yen, while maintaining its planned full-year dividend of 38 yen, according to the statement.