Japan: Asahi to reduce debt by 20% before seeking new investment opportunities

Asahi Group Holdings announced this week to reduce its debt by 260 billion yen ($2.36 billion), or about 20%, by December 2019, before seekinmg new investment opportunities. In the last two years the largest brewing group in Japan spent a total of about 1.2 trillion yen ($10.97 billion) to buy several European beer brands from AB InBev in two separate auctions. His has tripled liabilities of Asahi to more than 1.2 trillion yen (yen ($10.97 billion) at the end of 2017.

The brewer hopes to use its free cash flow, which is expected to be above 140 billion yen ($1.28 billion) to cut its debt to below 1 trillion yen (9.14 billion) by the end of 2019. Other cash inflow is expected from the sale of Asahi’s 19.9% stake in China's Tsingtao Brewery to Chinese investment group Fosun International for about 106 billion yen ($0.97 billion). (inside.beer, 21.12.2017) This is a little less than the expected $1.1 billion, when Asahi initiated the sales process in January 2017 (inside.beer, 29.1.2017)

Asahi is goint to "prioritize strengthening our finances while improving our flexibility for M&A and other growth investments," said Asahi’s Chief Financial Officer Kenji Hamada.

Last week Ashai released its latest sales figures for the ongoing year.  In the first four months in 2018, the brewery suffered from a deline of 6% of total beer sales in Japan. The flagship product Asahi Super Dry experienced a fall of -6.3% from January until April, while Clear Asahi, which is about two fifth of the volume of Super Dry, went down by incredible 10.6%.

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