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Brewers eye plummeting profits as coronavirus hurts sales

By Dat Nguyen   June 25, 2020 | 07:25 pm PT
Brewers eye plummeting profits as coronavirus hurts sales
Sabeco beer cans are displayed for sale in a market in Hanoi. Photo by Reuters/Kham.
Vietnam breweries have slashed their profit targets by up to half this year due to coronavirus impacts and a swelling clampdown on drunk driving.

The country’s biggest brewer Sabeco has dropped its revenue target to an eight-year low of VND23.8 trillion ($1 billion). Post-tax profit is set to fall to a six-year low of VND3.2 trillion ($138 million). The decreases are 37 and 39 percent respectively from last year.

Its soft drink subsidiary Chuong Duong Beverage expects a year-on-year revenue drop of 3 percent to VND259 billion ($11 million) and a post-tax profit fall of 26 percent to VND12 billion ($517,400).

Habeco, dominating the northern beer market, expects a revenue fall of 44 percent from last year to VND4.2 trillion ($181 million), and a 50 percent drop in post-tax profit to VND248 billion ($11 million).

The companies attributed the fall to the coronavirus pandemic, which caused restaurants and bars to shut down in March and April this year.

A new decree on drunk driving, effective from January 1, that doubles fines has also caused revenues from alcoholic drinks to plummet, they said.

Habeco in the first quarter posted its first loss in over a decade, while Sabeco saw post-tax profit fall to a seven-year low.

Both companies do not expect a quick recovery in demand this year as rising unemployment and declining income slows consumption of beverages.

SSI Research, a unit of top brokerage SSI Securities Corporation (SSI), has lowered the prospects of beer stocks from "neutral" to "negative."

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