Asahi Group lifts profits forecast for 2011, despite earthquake costs

Asahi Group lifts profits forecast for 2011, despite earthquake costs

Asahi Group Holdings has raised its profits forecast for 2011, with cost savings and tax benefits expected to outweight damage caused to facilities by the Japanese earthquake.

Asahi said earlier today (26 July) that it expects net profits to reach JPY16.3bn (US$208.7m) for the year to the end of December. The new estimate is 30.4% higher than the brewer's previous forecast, issued in February, and would represent a 5% slide on 2010's profits.

Damage costs and lost sales related to the earthquake and tsunami that struck Japan in March will be outweighed by efficiency savings, lower advertising expenses and the lack of a tax write-down, which the company had previously expected to incur, Asahi said today (26 July).

It has predicted that operating profits for the year will be JPY36.4bn, up by 23.4% on its previous forecast and, if proved correct, up 47% on 2010.

However, the effects of the earthquake and of Japan's sluggish alcoholic drinks market in general will hit the top-line. Asahi lowered its full-year net sales forecast, by 4.5%, to JPY651.6bn. This would represent a 2.4% drop on 2010.

Yesterday, Asahi received Government approval for the purchase of Charlie's Group in New Zealand, as part of its overseas expansion strategy.

Asahi will release its half-year results on 2 August.