Despite the positive business results in the first quarter of 2021, the beverage industry still has to face more challenges in the near future.
In May some provinces imposed social distancing measures to contain the new wave of COVID-19, including restrictions in gatherings and dining out.
This led to the index of industrial production (IIP) of the beverage industry to fall by 0.5 percent month-on-month in May. However, the index increased 12.8 percent over the year in the first five months of 2021, while the IIP declined 14.6 percent in the same period last year. Beer output was more than 1.7 billion litres, up 11.7 per compared to the first five months of last year.
Saigon Alcohol Beer and Beverage Corporation (Sabeco, SAB), one of the leading companies in producing beer, reported a significant improvement. Its financial results showed that as of March 31, the company’s net revenue rose 19 percent year-on-year to more than 5.86 trillion VND (253.6 million USD), resulting in a gain of 38 percent in profit after tax to 986.2 billion USD.
At this year’s General Meeting of Shareholders, the company passed the business plan with a target of nearly 33.5 trillion VND in net revenue and nearly 5.3 trillion VND in profit. According to this plan, Sabeco has accomplished 17.5 percent of the revenue plan and 18.6 percent of the profit plan.
Similarly, Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco, BHN), another big beer producer in Vietnam, also recorded a good performance in the first quarter.
In its first quarter’s financial statement, Habeco said its revenue reached nearly 1.4 trillion VND, up 78 percent over the same period of last year. Consequently, the company posted a profit after tax of 47.6 billion VND while it had lost 98.3 billion VND last year.
With this year’s target of nearly 5.4 trillion VND in net revenue and 255 billion VND in profit after tax, Habeco has completed 25.5 percent and 19 percent of its plan, respectively.
On the stock market, there have been reductions since the beginning of the year. Even though summer is a perfect season for beverage stocks to reverse course, it is difficult to witness a positive break through.
SAB shares closed on June 18 at 171,200 VND per share, down 4.3 percent compared to April and 16.5 percent since the beginning of the year.
Meanwhile, BHN shares were traded at 64,000 VND per share on the last trading day of the week, down 16.3 percent compared to earlier this year.
Stocks of SAB and BHN’s subsidiaries reported a similar trend. For example, Ha Noi Beer Trading JSC (HAT) fell 17.4 percent, and Ha Noi – Nam Dinh Beer JSC (BBM) down 17.3 percent.
On the contrary, investors are looking at companies producing soft drinks, mineral water, healthy drinks because these products are not affected by Decree No. 100/2019 (on administrative penalties for alcohol users driving traffic).
Sanna Khanh Hoa Beverage JSC (SKN) shares, which listed on UPCOM, surged 101 percent since the beginning of the year, rising from 9,200 VND to 18,500 VND.
In 2021, the company will build a Sanna beverage factory in Song Cau Industrial Complex with a capacity of 5,000 products per hour. The goal of the project is to use good quality groundwater with large reserves, to reduce the cost of transporting products from factory to markets.
The Khanh Hoa Sanest Beverage JSC shares (SKH) posted more modest growth, up 11 percent for the year, from 20,900 VND to 23,200 VND on June 18.
With the current developments of the pandemic, the expert team of SSI Research cautiously forecast that the recovery of the whole industry will be slow, and demand will only recover in 2022. For the beer industry, besides the epidemic, the price of raw materials may affect consumption demand and product prices.
The lack of tourists is also affecting the industry products’ consumption./.
Source: Vietnam News Agency