A corner of the beer transport system at Sabeco (Source: VNA)

HCM City (VNS/VNA) – The Saigon Beer-Alcohol-Beverage Corporation (Sabeco) is targeting a lower post-tax profit in 2018 due to the increase of production costs and stronger competitiveness in the industry.

Its management board said at the company’s annual shareholder meeting recently that it had cut its projected post-tax profit by 19 percent year on year to 4 trillion VND (178 million USD) in 2018.

Its total revenue is forecast at 36 trillion VND in 2018, up 2.4 percent from 2017, and a 35 percent dividend payout, level to the previous year.

In 2017, the company recorded 35 trillion VND in total revenue and 4.95 trillion VND in post-tax profit. The 2017 figures increased by 11.2 percent and 9.6 percent year on year, respectively.

This was the first annual shareholder meeting after the Thai beer firm ThaiBev via its Vietnamese legal entity had spent around 5 billion VND to purchase 53 percent of capital in Sabeco at the end of last year.

Sabeco’s management board said the domestic market was going to be tough in 2018 as competition among brewers in Vietnam rises. Meanwhile, production cost was estimated to grow as input material prices were expected to increase due to bad weather conditions and seasonal changes.

In addition, alcohol and beer products have been affected by a 5 percent increase in special consumption tax from the beginning of this year. The new rates for alcohol products range from 35 percent to 65 percent and the rate for beer products is 65 percent.

However, there are also advantages for Sabeco and the beer industry in 2018. According to studies of international organisations, Vietnam is among rapidly developing economies with increasing per capita income, fast urbanisation and young population that accounts for 60 percent of the country’s total.

According to Sabeco’s management board, those will be the factors that are benefiting the local industry to grow strongly in coming years.

At the moment, Vietnam ranks among top 10 countries with the largest beer production in the world, top among ASEAN countries with the highest consumption and ranks third in Asia in terms of per capita consumption with around 43 litres a year. With an annual growth rate of 5 percent, Vietnam’s beer market will attract more and more foreign brewers from overseas, Sabeco said.

Sabeco debuted on the HCM Stock Exchange with code SAB on December 6, 2016 at 128,280 VND (5.7 USD) per share. Its share price rose to the highest of 334,460 VND per share on November 29, 2017 but has fallen 40 percent since then to end last week at 200,000 VND per share.-VNS/ VNA