Currency headwinds dent Suntory’s half-year profits
Suntory Beverage & Food Limited, the Japanese parent of the newly acquired GSK Consumer Nigerian Plc unit, said on Friday that half-year profits fell 4.8% to ¥17.9bn yen ($177m).
The beverage company which derived 38% of its half-year sales from overseas markets said that a stronger yen affected earnings growth. Net income would have risen 3.1% if it wasn’t for currency volatility, the company said. Suntory is forecasting further decline in profits for the rest of the year, with ¥40.5 billion yen forecasted for the 12-month period.
Despite the currency headwinds, revenue for the drinks company rose 9.1% to ¥679bn ($6.7bn). Much of it, $4.2bn or 62% of group sales came from its home market in Japan, where it saw 20.3% lift in sales. The company said that profit at home increased significantly helped by initiatives to improve profitability.
Suntory Beverages, which is a unit of Suntory Holdings (59.5% owned) is the third-largest soft drinks company in the world, after Coca-Cola and PepsiCo, but unlike its cola rivals, it is less dependent on the fizzy drink. Two-thirds of its Japanese product portfolio by volume is made up of mineral water, tea and coffee, compared to its main competitors.
In addition, the company still has room for growth and has been expanding into new markets such as in Africa where it already has footprints in countries like Morocco, South Africa, Kenya, Ghana and more recently Nigeria, where it acquired GlaxoSmithKline’s Nigerian drinks unit (Lucozade & Ribena) last month.