Big changes brewing at Vietnam’s top beer maker

By Minh Nguyen   July 19, 2018 | 12:07 am PT
Big changes brewing at Vietnam’s top beer maker
Last year Sabeco produced nearly 1.8 trillion litres of beer. Photo: VnExpress
After acquiring a majority stake in Vietnam’s top brewery, Sabeco, last year, Thailand’s TCC Group is set to appoint a Singaporean chairman, Koh Poh Tiong, and a new board of directors.

Under a proposal seeking shareholder approval at the firm's annual meeting on July 21, Koh has been selected as chairman in place of Vo Thanh Ha. The 72-year-old, who is a director of Fraser & Neave and chairman of ThaiBev and F & N Beer Group, is also on the boards of several other organizations in Singapore, Malaysia, Thailand, and China.

He is to head a new seven-member board that will have another Singaporean, a Thai and four Vietnamese, according to the proposal.

Last May the company had replaced three foreign deputy general directors, who had in turn replaced a Vietnamese trio just a month earlier, with Singaporeans Neo Gim Siong Bennett, Teo Hong Keng and Melvyn Ng Kuan Ngee.

TCC Group, led by Thai tycoon Charoen Sirivadhanabhakdi, had paid VND110 trillion ($4.89 billion) for a 53.59 percent stake in Sabeco.

According to a report prepared for the company’s next general shareholders meeting on July 21, its profit target for this year has been revised to VND4 trillion (about $173 million), a reduction of 19 per cent from last year’s results.

The dividend target has been kept unchanged at 35 percent.

The report says foreign brewers would continue to expand their production capacity, intensify brand promotion and sales support to gain more market share, exerting “great pressure” on Sabeco, especially when the special consumption tax rate has increased from 60 per cent to 65 percent since early th.

It also says that Sabeco is confident about maintaining its No 1 brewer position in Vietnam, and expects to boost its exports to African and Asian markets (especially East Asia and Southeast Asia), North America, Russia, the Middle East and Europe (Italy, Netherlands).

Vietnam’s stable growth, increase in average income and rising demand are favorable conditions to stimulate and stabilize consumption while creating good growth in rural markets, where its Saigon Beer brand has reasonable product positioning and a widespread distribution network, the report says.

Meanwhile, the prices of main items like malt, hops and aluminum have decreased, allowing the brewer reduce production costs.

Last year Sabeco produced nearly 1.8 trillion litres of beer, recording sales of VND35.2 trillion ($1.56 billion) and a profit of VND4.95 trillion ($199.5 million). It exported 28.6 million liters of beer for over $15 million. This year, it targets to produce the same 1.8 trillion litres of beer, and increase export volume to 30 million liters.

In April this year, the Ministry of Industry and Trade (MoIT) had asked Sabeco to pay about VND2.5 trillion ($111 million) in undistributed profits to the state budget.

The demand was made after a government audit report said that money was part of the brewer’s VND2.7 trillion ($120 million) in undistributed profit, which belonged to the government as the major shareholder with an 89.6 per cent stake as of December 31, 2016.

Local media reported that although Sabeco claimed such a request did not correspond with the Law of Enterprises and Sabeco’s charter, it had already paid the sum. This sum is not mentioned in the report prepared for shareholders, however.

Currently, Sabeco owns 26 breweries, 10 trading subsidiaries and has 37 branches nationwide.

In the first quarter of 2018, Sabeco’s sales reached $7.8 trillion ($347 million), about 5 per cent higher than same period last year; while profits of VND1.94 trillion($86.2 million) represented a 4 per cent decline.

On July 18, more than 641 million shares with the sticker SAB declined slightly to VND217,900 ($9.47) each on the Ho Chi Minh stock exchange, for a market value of VND139.7 trillion ($6.07 billion).

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