Japan: Asahi Group lowers annual sales and profit forecast again

Asahi Group Holdings Ltd. lowered its annual sales and profit forecast again as its $22 billion push into overseas markets makes Japan’s largest brewer more vulnerable to currency swings, as consumption weakens at home, Bloomberg reported.

Operating profit will probably be 202 billion yen ($1.9 billion) for 2019, the Tokyo-based company said on November 5, citing currency fluctuations and domestic headwinds. That compares with its prior forecast of 215.5 billion yen, and the average analyst estimate of 215.9 billion yen.

Asahi also lowered its sales forecast to 2.09 trillion yen, compared with the average estimate for 2.12 trillion yen. Its annual planned dividend was cut to 100 yen per share, from the prior 106 yen per share. The company had previously lowered its forecasts in August.

The maker of Super Dry beer is under pressure from both its string of overseas acquisitions in the last four years and intense domestic competition for a shrinking number of drinkers. Asahi’s expansion abroad has made it more vulnerable to swings in foreign exchange rates.

Chief Executive Officer Akiyoshi Koji has been ramping up the brewer’s overseas business through deals, most recently spending around $11 billion to purchase Australia’s largest brewer from Anheuser-Busch InBev in July. Overseas sales made up about 33% of revenue in the last fiscal year, most of that from Europe.

Growth in global beer consumption is flat-lining as younger drinkers are choosing local craft brews and lower-calorie drinks, or even opting for cannabis-infused beverages for relaxation with no hangovers. Euromonitor predicts that beer consumption volume will grow only around 1.4% annually on average in the next five years.

Although his peers are trying to diversify out of beer into businesses such as cannabis or cosmetics, Koji has said that his aim is to grow Super Dry into a global brand, and build up the brewer’s worldwide presence to four or five hubs from its current three of Japan, Europe and Australia.

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