Beer brewers foresee 30-70 per cent drop in profit due to COVID-19

Beer brewers in Vietnam will have a tough 2020 with disruption from the COVID-19 pandemic and Decree 100

Contrary to previous years, all beer brewers in Vietnam are looking at a hard time in 2020 due to the COVID-19 pandemic and Decree No.100/2019/ND-CP outlining sanctions for drink-driving taking effect since early this year.

Under the new rules, all drinkdrivers shall be imposed a fine of VND2-8 million ($87-348) minimum and their licenses could be revoked for 22-24 months if tests confirm alcohol content in their blood or breath.

As soon as the decree came into force, well-known beer parlours and bars in Hanoi like Hai Xom and Prague Pub were submerged in silence and brewers have been forecasting a plunge in revenue. According to SSI Research, Sabeco will be hard-pressed to maintain double-digit output growth in 2020 due to Decree 100, with a forecast performance of 6-7 per cent in the whole sector instead.

The COVID-19 outbreak has made the situation even worse because a string of business establishments, including restaurants, bars and karaoke venues, have been ordered to halt operations. That also means beer makers may see little revenue during this closure.

As more infections are detected every day, major firms predict profits this year will plunge by 30-70 per cent.

Saigon-Mien Trung Beer JSC (HSX: SMB) targets VND1.472 trillion ($64 million) in revenue, down 5 per cent on-year. Besides, its pre-tax profit is forecast to be VND156 billion ($6.78 million), equal to 60 per cent of last year.

Saigon Beer Western (UPCoM: WSB) also predicts a 7 per cent fall in revenue, with expected earnings of VND967.3 billion ($42 million). Moreover, pre-tax profit will fall to VND111.9 billion ($4.87 million), equaling a 69 per cent drop on-year.

Under the pressure of Decree 100 and the health crisis, Hanoi Kimbai Beer JSC (UPCoM: BHK) estimated pre-tax profit to reach VND8.6 billion ($373,910), down 31 per cent on-year. Meanwhile, Saigon-Dong Xuan Beer Alcohol (UPCoM: BSD) expects to earn about VND9.46 billion ($411,300) in profit, equalling 72 per cent of last year's performance.

Giants like Sabeco (HSX: SAB) and Habeco (HSX: BHN) have yet to publish revised business plans for 2020. The latest information is that Habeco will organise a shareholders' meeting on April 28 while Sabeco announced delaying the meeting due to the COVID-19 outbreak. Accordingly, it will be held sometime before June 30.

In the stock market, SAB is now traded at VND121,000 ($5.26) per share, down 45 per cent against early this year. BHN also recorded a downturn of 30.5 per cent to VND52,900 ($2.30).