Brewer Habeco predicts lower profit in 2022

Habeco, a leading Vietnamese brewer, has revised down its after-tax profit forecast for the third year in a row, to VND221 billion ($9.7 million).

The figure is a decline of over $3.9 million from last year, according to the company’s document prior to its upcoming shareholder meeting.

Habeco, or Hanoi Beer Alcohol Beverage Corp., expected to sell 300 million liters in 2022 and earn $289 million, up 6.5% and 15.1% from the 2021 results, respectively.

The company’s leaders said that Covid-19 fallouts, Europe's energy crisis, and the Russia-Ukraine tension signaled a difficult year for businesses.

The company’s leaders said that Covid-19 fallouts, Europe's energy crisis, and the Russia-Ukraine tension signaled a difficult year for businesses.

In the first quarter, supply disruptions drove up the price of input materials. The price of petrol and malt in the first quarter climbed 50%, cans and lids 30-40%, and shipping costs and other raw materials 15-20%.

Despite the gradual withdrawal of anti-Covid restrictions, consumers limited their dining out and travel due to the surge in community infections across the country, leading to a 10% year-on-year decline in Habeco's sales in the quarter.

While being heavily affected by the pandemic, brewers are not eligible to the government's stimulus package as are other consumer goods producers.

Given the rapidly rising input costs and weak purchasing power, the Vietnam Beverage Association (VBA) stated that “it will take many years for even businesses with potential and large scale to return to the pre-pandemic performance.”

Habeco is also under competitive pressure from its rivals like Sabeco and Heineken, in terms of marketing, promotion, and sales in all product segments.

The corporation intends to strengthen its position in the northern region, expand in the north central region, and gradually build foundations to enlarge its market share in the south.

Last year, Habeco also set a relatively low business plan on concerns over Covid-19, but the actual results exceeded its target. Particularly, revenue in 2021 climbed 6.4% over the plan, reaching $251 million. Profit after tax was $13.6 million, up 22% over the target, while dividend rate was 8%, 1.5% higher. However, earnings after tax were 46.9% lower than in 2020, marking the company's worst performance since 2009.

Of its 26 subsidiaries, 16 have Hebeco's ownership of over 50% of the chartered capital.