Business

Thaibev plans to reduce Sabeco’s profits by $44 million

By Tran Anh July 14, 2018 | 01:30 PM GMT+7

According to the business plan proposed by Sabeco's new Board of Management, its profit will drop from nearly $220 million attained last year to $176 million anticipated this year.

Saigon Special, a major product of Sabeco in recent years

Saigon Beer Alcohol Beverage Corporation (Sabeco), Vietnam's leading beer producer, has announced its modest business targets in 2018. Specifically, Sabeco targets revenue of nearly VND36.1 trillion ($1.56 billion), up 2.4 per cent year on year. The total volume of beer is expected to reach 1.8 billion liters.

Notably, Sabeco's profit is expected to fall to VND4 trillion ($176 million) compared to nearly VND5 trillion ($220 million) obtained last year. Sabeco's business plan is set out in the context that Vietnam's beer market tends to be saturated and there has been hardly an increase in beer consumption in Vietnam. Sabeco also acknowledged that it has faced with intense competition with foreign beer companies.

This is also the first year when Thai staffs who were allegedly nominated by ThaiBev Group have joined the Sabeco’s Management Board after the group spent more than $5 billion acquiring a 53-per cent stake in Sabeco last year. In the Extraordinary General Meeting of Shareholders held in late June, former Chairman Vo Thanh Ha resigned from his position and three new candidates from ThaiBev were nominated to the board.

Sabeco is Vietnam’s top brewer accounting for around 40 per cent of market share. By the end of 2017, the company had 26 breweries nationwide with a total volume of two billion liters per year.

In the first quarter of this year, Sabeco's revenue reached VND7.81 trillion ($339 million), up VND400 billion ($17.4 million) compared to the same period last year. However, the company reported a profit decreased by more than VND30 billion ($1.3 million) compared to the previous year.

According to Viet Capital Securities (VCSC), Sabeco’s net operating profit fell by 8 per cent mainly due to a decline in gross margin. Sabeco's profit margin is still lower than those of other leading beer companies in the region, and Thaibev's presence may help Sabeco improve long-term profit margin, besides expanding its business to Southeast Asia’s market.

However, Sabeco will at first witness the decline in profit this year. Particularly, dividend payout ratio will be maintained at 35 per cent. Another factor affecting the firm’s business is that the excise tax has been raised to 5 per cent since the beginning of this year.

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