Profits of 'giant' Heineken in Vietnam continue to 'slide'?

To boost sales, Heineken tries to promote non-alcoholic beer - Photo: Heineken

The consolidated semi-annual financial report for 2024 of Saigon Trading Group (Satra) recorded revenue in the first half of this year reaching VND4,651 billion, down 7% over the same period last year.

The decline in net revenue was not large, but Satra's after-tax profit in the first half of the year decreased by 56% over the same period, reaching only 792 billion VND.

The main reason comes from the sharp decrease in profits in joint ventures and associates.

In the first 6 months of this year, profit from joint ventures brought Satra 1,470 billion VND, down 28%, equivalent to "evaporating" nearly 590 billion VND compared to the same period.

Satra's financial report for the first half of this year does not provide explanatory notes, so the detailed contributions from joint ventures and associates are unclear.

However, in recent years, Satra has recorded a huge profit from Heineken Vietnam.

Specifically, Satra owns 40% of the capital at Heineken Vietnam Brewery Company Limited and Heineken Vietnam Beer and Beverage Company Limited (Heineken Trading).

The two above-mentioned enterprises play a role in producing and distributing beer products for Heineken Group (Netherlands) in Vietnam.

The 2023 management report revealed that in this year, Heineken Vietnam Beer and Beverage Company Limited had a transaction with Satra of VND 1,080 billion, which was noted as "dividend payment". Similarly, Heineken Vietnam Brewery Company Limited had a transaction of VND 2,920 billion.

In 2022, the profit from the joint venture that Satra recorded was more than VND 5,022 billion. Thus, with the above dividend payment level, Heineken's contribution to the profit of the associated company could be about 75 - 80%.

The decline in profits from associated companies has not just begun with Satra. Last year, the audited consolidated financial report also showed that Satra's profits from joint ventures and associated companies decreased by 47% compared to the previous year, to only VND2,733 billion.

This will cause Satra's after-tax profit to only VND2,295 billion in 2023, while it will still reach VND5,086 billion in 2022.

	Interest
2020	4407
2021	3161
2022	5140
2023	2733
First 6 months of 2024	1470

The majority of Satra's joint venture and associate company profits come from Heineken Vietnam - Data: Financial statements

Regarding Heineken Vietnam's business activities, in June this year, a representative of the company also confirmed that it had announced the temporary suspension of operations at the Heineken brewery in Quang Nam.

Since the COVID-19 pandemic, many sectors in the Vietnamese economy have faced difficulties due to slowing economic growth, leading to a decline in consumer confidence and demand.

"On the other hand, Heineken Vietnam also believes that the implementation of Decree 100 on controlling alcohol concentration when participating in traffic has also contributed to changing consumer behavior and new habits. As a result, the Vietnamese beer market has seen a continuous decline in sales.

"To optimize production and business activities, Heineken has decided to streamline operations and temporarily suspend the factory in Quang Nam" - Heineken Vietnam's announcement sent to Quang Nam province mentioned.

Many other beer companies also saw profits decline.

In fact, not only Heineken, the first 6 months of this year were still difficult for many domestic beer companies as profits declined.

For example, Habeco - the owner of Hanoi Beer Company, net profit in the first half of the year reached 151 billion VND, down 18% compared to the same period. Or Saigon - Western Beer Joint Stock Company (WSB), after-tax profit reached 42 billion VND in the first 6 months of the year, down 18% compared to the same period.

According to many businesses, the common difficulties of the industry are the tightening of alcohol concentration control policies (Decree 100) and economic difficulties, people's incomes have decreased, so spending is tightened.

Source: https://tuoitre.vn/loi-nhuan-ong-lon-heineken-o-viet-nam-tiep-tuc-truot-doc-20241002202057373.htm