Sabeco hikes profits, dividend targets

Sabeco planned a total net profit of almost VND3.11 trillion ($143.3 million) for the whole year, up just 2 per cent over last year's result, and the dividend was projected at 25 per cent.

Its dividend rate was also adjusted upward to 30 per cent from the old 25 per cent.

This decision was in line with the requirement of the state, the largest shareholder with a 90-per-cent stake in the corporation, Sabeco's annual shareholders' meeting yesterday announced.

In its previous plan, Sabeco planned a total net profit of almost VND3.11 trillion ($143.3 million) for the whole year, up just 2 per cent over last year's result, and the dividend was projected at 25 per cent.

However, the target of total sales was kept unchanged at VND31.721 trillion ($1.5 billion), equivalent to 1.425 billion litres of beers, up 2 per cent over 2014, of which Saigon Beer will account for 1.388 billion litres.

However, Sabeco's executives warned that the impending hike in the special consumption tax on products like beer and tobacco, proposed by the Ministry of Finance (MoF) in a draft decree on the tax, would have an adverse impact on the corporation's profit and dividend.

In a proposal to the government to amend the law on the special consumption tax, the ministry suggested raising the tax charged on beer and alcohol by 10 to 20 per cent from July 1, 2015.

According to Sabeco's chairman Phan Dang Tuat, if this draft law is approved, Sabeco's profits will be trimmed to VND900 billion ($41.5 million), equivalent to 10 per cent of its total profits.

In addition, if the regulation of labelling stamps on beer cans was valid, it would lose another VND800 billion ($36.9 million) in profit, Tuat said.

Last year, Sabeco sold nearly 1.4 billion litres of beer, surpassing its target by 2 per cent, while sales of alcohol reached 3.4 million litres, equivalent to 65 per cent of its goal, and beverage was 35 million litres, up 5 per cent over the plan.

Its total revenues reached VND30.674 trillion ($1.4 billion), a year-on-year increase of 6 per cent and up 4 per cent over its target, while the after-tax profit attained nearly VND3.05 trillion ($140.6 million), up 9 per cent year-on-year and beating its goal by 11 per cent.

The 2014 dividend was decided at 23 per cent.

Sabeco's General Director Pham Thi Hong Hanh said fierce competition from foreign brewers and the rise in transport costs last year had an undesirable impact on the company's business. Consumption of major flagship products like beer 333 cans, 355 bottles saw a decline compared to the previous year.

The situation this year was likely to remain difficult with strong competition in the domestic market, accompanied by higher prices in materials remaining the negative factors affecting sales, Hanh said.

The corporation this year would promote sales of its premium beer in the local market while boosting exports to other countries including China, South Korea and Cambodia along with Laos and Myanmar.

Tuat said Sabeco has developed two new beer flavours including lemon and tequila which suits Vietnamese tastes while coffee and tea flavours would go on sales soon.

Concerned over the possible co-operation with foreign partners, Tuat said this issue must be approved by the Ministry of Industry and Trade. However, he also said that such business ties, particularly with a financially strong partner, should be watchful on concerns of losing the brand to foreign company risks.