Asahi Seeks to Expand Beyond Asia as Home Sales Weigh on ProfitMonami Yui
Company names beer chief Akiyoshi Koji its new group president
Japan's negative rates likely good for M&A funding, Koji says
Asahi Group Holdings Ltd., the Japanese brewer of Super Dry, said it seeks to expand beyond Asia after forecasting 2016 profit that trails analyst estimates as a slowing economy weighs on domestic sales.
Net income will probably be 80 billion yen ($697.4 million) for the year ending December 2016, up 4.7 percent from 2015, the Tokyo-based company said in a statement Tuesday. That compares with the average estimate of 89 billion yen from 10 analysts compiled by Bloomberg. Sales are expected to grow about 0.7 percent, it said.
A higher yen is expected to cut into the company’s profits in 2016 when it repatriates earnings from its overseas operations which make up about 13 percent of Asahi’s total sales, said Managing Director Yoshihide Okuda at a post-earnings press conference in Tokyo Tuesday.
Asahi is among Japanese brewers looking to expand abroad to counter falling domestic consumption amid a stagnant economy, shrinking population and changing consumer tastes. Japan’s central bank unveiled negative interest rates last month as it seeks to spark growth in the country.
The company also announced Tuesday that Akiyoshi Koji, the head of its beer subsidiary, will become group president, replacing Naoki Izumiya who has been appointed chairman. He will retain his post as chief executive officer. The changes will become effective in March.
The company said last month that it’s considering making an offer for SABMiller Plc’s Peroni and Grolsch brands in Europe. Okuda declined to comment on the deal Tuesday.
"We will do M&As that will enhance our corporate value regardless of whether or not they’re in or out of Japan,” he said at the briefing.
Koji said his ambition is to make Asahi a global player, taking advantage of the strength of the Japanese brand. "We’ve been focusing on Asia and Oceania but we need to further expand areas," he said in a separate press conference.
Koji also said the central bank’s negative rates will benefit the company’s plan to make acquisitions.
Negative rates "will likely create advantageous conditions for us in terms of funding,” he said. “Executing aggressive and speedy M&As, tie-ups and mergers requires funds.”
Asahi, which also sells spirits and non-alcoholic beverages and owns about 20 percent stake in China’s Tsingtao Brewery Co., said it is also considering buying U.S. soft drinks company Talking Rain and the Nikkei newspaper reported in December that it could cost about 50 billion yen,.
The company plans to target a dividend payout ratio of 30 percent by 2018 as well as at least 10 percent return on equity in the three years through 2018, according to the Tuesday statement.
Net income at the Japanese beer maker rose 11 percent to 76.4 billion yen in 2015, the company said.
Asahi’s shares closed 3 percent lower at 3,625 yen in Tokyo trading before the announcement. The benchmark Topix slumped 5.5 percent.