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Company Quarterly Earnings Update – SAB VN – 9M 2024
Summary of 9M/2024 results and outlook of Sabeco JSC (SAB VN)
- Net revenue rose by 4.6% YoY to VND22,940bn, with beer contributing 88.2%. In Q3, SAB’s beer sales grew by 4.3% y/y, outperforming the average industry growth of 1.1% including Heineken (-2.0% y/y), Habeco (+3.3% y/y), and Carlsberg (+4.0% y/y). Combined with H1’s results, 9M’s beer sales rose 4.1% y/y to VND20,224bn, which was driven by a 1.5% rise in selling volume to 1,110 million liters and ~2.5% hike in average selling price. Additionally, SAB launched a new Pilsner (mid-price beer with lower-alcohol degree targeting young consumers) in Aug 2024 which is priced lower than competitors like Tiger Crystal and Heineken Silver. The company also enhanced distributor promotions like an increase of payment term to support sales growth.
- Net profit rose 6.1% y/y to VND3,365bn. 9M’s gross margin declined slightly to 29.7% from 30.2% due to high input costs for aluminum and malt; however, we observed that quarterly gross margin improved consistently from Q4/2023 to Q3/2024 supported by the gradual replacement of high-cost raw materials with lower-priced input costs. SAB actively reduced marketing costs and the number of promotional staff for on-trade channels, and partially shifted to cost-effective online marketing. As a result, SG&A expenses were reduced by 16.8% y/y, accounting for 14.0% of total sales. Consequently, operating profit rose 23.7% y/y to VND3,597bn, offsetting the decline in net financial income due to the lower deposit rate.
- For Q4/2024: Net sales are forecast with moderate growth in beer sales. Lower input costs for Q4, including aluminum and malt, are expected to further improve gross margin, offsetting a modest rise in SG&A costs from marketing activities and promotions targeting year-end festivities (Christmas & New Year).
- For 2025: Top line is forecast to grow in line with industry growth. We expect the local beer sector to resume growth adjusting to new market dynamics established in 2023-2024 period, which will be driven by rising middle-class spending and a shift toward premium and diverse flavors. SAB has capitalized on these trends through its dual strategy: expanding mid and premium beer in urban areas and leveraging its dominance in rural mainstream markets. Net profit is projected to be driven by gross margin’s improvement as lower input material costs combined with enhanced production efficiency through reduced material waste and decreased beer outsourcing from associates.
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Photo image credit: https://www.sabeco.com.vn/
