Revenue Growth and Profitability Rise for Sabeco in Q1 2024
Saigon Beer-Alcohol-Beverage Corporation (Sabeco – SAB ticker) has recently announced its consolidated financial statements for Q1 2024, showcasing a 15.6% revenue increase to 7,184 billion VND compared to the same period last year. The gross profit reached over 2,100 billion VND, representing an almost 10% growth from Q1 2023.
After deducting expenses, Sabeco’s net income after tax amounted to 1,024 billion VND, a slight 2% increase year-over-year and a nearly 6% increase compared to the previous quarter. This positive result marks an end to the “beer giant’s” five consecutive quarters of negative growth. The net income attributable to the parent company’s shareholders in Q1 2024 reached over 997 billion VND, also a 3% increase compared to the same period in 2023.
According to documents related to the 2024 Annual General Meeting of Shareholders scheduled for April 25th, Sabeco will present its business plan for 2024 with a targeted revenue increase of 12.9% to 34,397 billion VND, and a profit increase of 7.6% to 4,580 billion VND compared to 2023. With the results achieved in the first quarter, Sabeco has already met 21% of its annual revenue target and 22% of its profit target.
2023 was a challenging year for Sabeco, with a 13% decrease in revenue to 30,461 billion VND, lower than even the results of 2016. The company’s profitability was also affected. Despite remaining above the 4,000 billion VND mark, this figure was still lower than in 2016 and a 23% decrease compared to 2022.
The primary reason for Sabeco’s weaker performance in 2023 was attributed to both softening consumer demand and the impact of stricter enforcement of alcohol-related traffic violations. However, Sabeco reports that consumer demand has shown signs of improvement in the first quarter of 2024 despite the continued strict implementation of Decree 100.
In addition to increased volume, Q1 2024 revenue growth was also driven by the favorable impact of price increases implemented last year. The revenue growth helped offset the decline in interest income and income from associates, resulting in positive profit growth for Sabeco in Q1, albeit still modest.
Aside from regulations on alcohol concentration, the beer industry is also likely to be affected by the Ministry of Finance’s proposed adjustments to excise tax rates for certain products that are harmful to health, including beer and alcohol in the latest draft of the Law on Excise Tax. This is expected to put significant pressure on businesses in the industry.
The Vietnam Beer-Alcohol-Beverage Association (VBA) believes that tax increases will place a greater financial burden on businesses. Therefore, businesses need sufficient time to prepare and plan their operations accordingly. Thus, they urge against rushing, shortening, or omitting any necessary steps in amending such an important tax law.
Despite these challenges, Sabeco remains optimistic about 2024, citing three main reasons for the continued opportunities in the Vietnamese beer industry. First, the favorable population structure and rapidly rising incomes. Second, the growth potential in the non-alcoholic beer segment. And third, the export market potential.
