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Company Quarterly Earnings Update – SAB VN – Q1 2024
Summary of Q1/2024 results and outlook of Sabeco JSC (SAB VN)
- Following 4 consecutive quarters of decline, both net revenue and net profit showed y/y growth, Net revenue increased by 15.6% to VND7,184bn, and net profit rose by 3.1% to VND997bn, driven primarily by a 14.3% increase in beer sales volume, which countered the previous year’s destocking effects by beer distributors. While restocking in Q1 boosted sales volumes for beer producers, the Ministry of Industry and Trade reported a 4.1% y/y decline in total local beer production volume, reflecting soft consumer environment and the ongoing impact of alcohol-free driving restrictions.
- In Q1, the leading 4 beer producers, commanding ~95% of the market share, performed well. Notably, SAB outperformed, with Heineken and Habeco (BHN) achieving growth rates of 11.0% and 12.0% y/y respectively, while Carlsberg’s results remained flat. Rural consumers, who highly favor SAB’s mainstream beers for budget management, increasingly purchasing online for home drinking. This trend was further bolstered by SAB’s expanded presence on e-commerce platforms.
- Despite Q1’s decreased gross margin from 30.8% to 29.2% due to high input material prices such as aluminum and malt procured at high prices since H2/2023, SAB’s operating profit grew by 20.5% y/y thanks to reduced selling expenses. Net financial income dropped by 20.0% y/y to VND270bn due to lower deposit rates. Overall, Q1’s net profit grew by 3.1% y/y.
- For the remaining 9M2024: We anticipate the beer industry to continue facing slight impacts on sales volume. This forecast is based on ongoing adjustments in consumer behavior to the new normal throughout the year, and soft consumer demand. During this period, we forecast the gross margin to improve, driven by lower average input costs. All in all, we project net profit to grow from last year’s low base and improved gross margin.
- SAB’s management plans to reduce ineffective advertising and marketing, leading to a projected decline in SG&A expenses. Lower deposit rates will decrease net financial income for the rest of 2024
- For 2025, we project top line and bottom line to rise as the beer industry adjusts to new market conditions, returning to its trajectory growth.
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Photo image credit: https://www.sabeco.com.vn/
