Hanoi Beer's profits drop sharply due to alcohol concentration control policy

Hanoi Beer's after-tax profit will fall 30% in 2023, to a 15-year low, due to falling purchasing power as localities strengthen alcohol concentration control.

The recent consolidated financial report shows that Hanoi Beer - Alcohol - Beverage Corporation (Habeco - BHN) had revenue in the fourth quarter of 2023 decrease by nearly 9%, reaching about VND 2,246 billion.

The management said the reason was due to increased control of alcohol concentration in the last months of the year. In addition, the decline in revenue was also due to the decline in consumer consumption trends amid many socio-economic fluctuations and fierce competition in the beer market.

In total, Habeco's pre-tax profit was over VND89 billion, down 7% year-on-year. Thanks to a decrease in corporate income tax expenses, after-tax profit increased by 23%.

Accumulated for the whole year, the company had revenue of nearly VND 7,760 billion and after-tax profit of VND 355 billion, down about 8% and 30% respectively compared to 2022. Excluding the peak of the epidemic in 2021, this is Habeco's lowest profit since 2008. However, this figure also exceeded 60% of the year's profit plan.

Not only Habeco, declining business results are a common denominator in the beer industry. Hanoi - Hai Duong Beer (HAD) suffered a loss in the last quarter of 2023, causing its full-year profit to nearly halve. The reason is that input material costs increased while consumption decreased sharply. Halico (HNR), which owns Hanoi Vodka, reported losses for 8 consecutive years as costs increased but revenue decreased.

The State's management measures to reduce the harmful effects of beer and alcohol are having a great effect. According to the Vietnam Beer - Alcohol - Beverage Association (VBA), after a long period of being affected by social distancing measures, the beer industry has been further affected by Decree 100 with very heavy sanctions, causing heavy damage to the production and business activities of enterprises. In the near future, if the amended Law on Special Consumption Tax, which includes changes in the calculation method and adjustment of tax rates for alcohol and beer, is implemented, the situation of enterprises will become even more difficult.

This year’s Tet season also did not record grocery stores, agents or supermarkets stockpiling beer, but only importing in moderation. Companies also coordinated to increase promotions, raise discounts to reduce prices, but overall purchasing power was much lower than usual.

Siddhartha

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