Sabeco 2018 profits set to be lower than last year

12:03 | 17/07/2018
The backing of ThaiBev has not helped Saigon Beer, Alcohol and Beverage Corporation (Sabeco) to overcome fierce competition from foreign breweries, forcing Sabeco to decrease its profit target for 2018 to VND4 trillion ($173.5 million) - VND1 trillion ($43.38 million) less than 2017’s profits.
sabeco 2018 profits set to be lower than last year
Sabeco targets to decrease in profit in this year

Sabeco recently published its business targets for 2018, showing the company targets to earn VND36.092 trillion ($1.56 billion) this year, up 2.4 per cent compared to 2017. Beer sales only saw a light increase to 1.8 billion litres compared to the 1.79 billion litres of 2017.

This is the first year that ThaiBev has joined the Sabeco Board of Directors after completing the purchase of 53 per cent of the stakes in December 2017. However, Sabeco has lowered its profit target by 20 per cent year-on-year.

In early May, Sabeco released its consolidated financial statement for the first quarter of this year, reporting an increase in revenue but a decrease in profit.

In comparison with the price of VND320,000 ($14.09) that ThaiBev paid for Sabeco shares, ThaiBev is currently experiencing losses of VND35.01 trillion ($1.52 billion) from the deal.

Notably, its consolidated net revenue was VND7.81 trillion ($343.1 million), up 4.6 per cent year-on-year, and after-tax profit decreased by 2.7 per cent to VND1.16 trillion ($50.96 million).

As of March 31, the firm’s asset value reached VND20.76 trillion ($912.09 million), down 6 per cent against the beginning of the year.

Meanwhile, sales expenses decreased by 13 per cent to VND594 billion ($26.18 million) due to decreases in expenditures for administrative and marketing programmes.

Along with the decline in profit, Sabeco’s shares plunged after hitting a record VND334,500 ($14.69) in late November 2017. Notably, on July 13, Sabeco’s shares were at VND218,000 ($9.6).

With the existing share value, it is evident that ThaiBev is suffering a massive loss from the purchase of Sabeco.

Earlier on December 18, Vietnam Beverage (49 per cent controlled by ThaiBev), won an auction to acquire 343.6 million shares, equivalent to 53.5 per cent of Sabeco at VND320,000 ($14.09) per share.

This is the largest share sale in Vietnam to date, and was possibly the largest in Asia last year.

According to ThaiBev, the entirety of the funds used for the deal came from loans. The company borrowed $3.05 billion from local banks, including Bangkok Bank, Kasikornbank Public, Krung Thai Bank, Bank of Ayudhya, and Siam Commercial Bank, with two-year terms.

In addition, its wholly-owned subsidiary Beer Co. borrowed another $1.95 billion from Mizuho Bank and Standard Chartered Bank’s Singapore branch.

In total ThaiBev has accumulated losses of VND35.01 trillion ($1.52 billion) from the deal.

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