Sabeco reports slight reduction in net profit for 2018

Sabeco has been beset by tax issues in 2018

Saigon Beer-Alcohol-Beverage Corporation has just published its financial report for 2018, showcasing a slight reduction in both revenue and after-tax profit.

Accordingly, in the fourth quarter of 2018, Sabeco’s revenue reduced by VND176 billion ($7.6 million), while the cost of goods sold increased, reducing gross profit by 11 per cent (VND235 billion – $10.21 million). The reason was cited as the high price of inputs.

Sabeco’s accumulated income for the whole year of 2018 increased by 5 per cent to VND36.035 trillion ($1.57 billion). This growth comes from beer and material packaging revenue, while the remaining segments including soft drinks and alcohol both posted declines. Selling and management expenses were reduced, however, the incurred additional financial costs and reducing interest in joint venture companies decreased after-tax profit by 11 per cent to only VND4.4 trillion ($191.3 million). This is the first year Sabeco was taken over and operated by foreign shareholders.

In addition, Sabeco’s shareholders are interested in the decision to suspend the enforcement of Sabeco’s tax arrearsissued by the Ho Chi Minh City Tax Department.

According to Sabeco’s website, on January 2, 2019, this corporation received eight decisions under which the Director General of the Ho Chi Minh City Tax Department suspended the enforcement by taking money from Sabeco's bank accounts (following decisions issued by the tax department on December 28, 2018).

In addition, Sabeco received Official Letter No.01IVPCP-KTTH dated January 2, 2019 of the Government Office under which Prime Minister Nguyen Xuan Phuc directs the Ministry of Finance (MoF) and the Ho Chi Minh City People's Committee to further direct the city Tax Department to suspend the enforcement against Sabeco in relation to overdue payment and monetary penalties for special sales tax for 2007-2015 pending review by ministries and state agencies in accordance with the PM’s instructions.

Sabeco’s board of management confirmed that there was no wrongdoing in the declaration and payment of taxes, and the corporation strictly followed the instructions of the MoF and tax authorities, so they do not agree with the amount of VND3.1 trillion ($134.78 million) in the financial report.

In 2018, Sabeco was charged with tax arrears and late payment fees of over VND9.68 trillion ($420.67 million). 70 per cent of this was special consumption tax on alcoholic beverages. The company also owes more than VND1 trillion ($43.48 million) in tax arrears from previous years, accounting for nearly 18 per cent of the total value of its short-term debts.

ThaiBev, after buying more than 53 per cent of Sabeco from the Ministry of Industry and Trade at the end of 2017, then officially took over and began operating this company from April 2018. Currently, most of the board of management and the board of directors are related to the Thai shareholder. Most recently, Sabeco has been approved by the State Securities Commission to lift its foreign ownership limit to 100 per cent.