Kirin Holdings Co., Japan’s biggest beverage maker, cut its full-year net income forecast by 25 percent on costs to close two domestic breweries in the shrinking beer market.
Net income may be 45 billion yen ($497 million) for the year ending December, compared with its August estimate of 60 billion yen, the Tokyo-based company said in a statement.
Kirin, which completed the takeover of Australian brewer Lion Nathan Ltd. last month, has spent more than $7 billion in the past two years to reduce its reliance on the domestic market. Beer consumption in Japan has fallen as the nation’s population ages and younger consumers switch to wine and other beverages.
“Kirin is shifting its focus overseas as there’s no growth in Japan,” said Koichi Ogawa, Tokyo-based chief portfolio manager at Daiwa SB Investments Ltd., which manages $28 billion. “In Japan, consumers are shifting to cheaper drinks and that’s doing little to boost profit.”
The company raised its full-year operating profit forecast 4 percent to 130 billion yen because of higher earnings at its drug unit and cost cuts. The brewer maintained its forecast for annual sales of 2.3 trillion yen.
Kirin said Oct. 26 it will end production at its Tochigi and Hokuriku plants next year to reduce excess capacity.
Shipments by Japanese brewers fell 2.4 percent in the first nine months of the year, the lowest level for the period since records began in 1992.
Kirin boosted sales of Free non-alcohol beer and Nodogoshi Nama no-malt beer in Japan. The brewer maintained its top slot in the country’s beer market in the nine months to September, edging out Asahi Breweries Ltd. for the first time in three years.
Kirin rose 1.1 percent to 1,488 yen at the 3 p.m. close on the Tokyo Stock Exchange before the earnings were announced. The stock has gained 27 percent this year, compared with a 10 percent gain in the benchmark Nikkei 225 Stock Average.
Kirin and rival Suntory Holdings Ltd., Japan’s third- largest brewer, said in July that they aim to merge as early as this year. The move would create one of the world’s biggest beermakers that may challenge market leader Anheuser-Busch InBev NV.
Japan’s fair trade commission will decide whether the two companies need to submit additional information on their merger plan for its first stage of review by Nov. 9.