Kirin Holdings Co. (2503.TO) said Thursday that its net profit for 2010 tumbled 77%, due to amortization of goodwill related to M&As in 2007.
The Tokyo-based beverage company, which wholly owns Australia’s Lion Nathan Ltd. (LNN.AU) and 48% of San Miguel Brewery Inc. of the Philippines, posted a net profit of Y11.39 billion for the full year, compared with Y49.17 billion in profit in 2009.
The company booked a special loss of Y38.8 billion in the just-ended business year, reflecting amortization of goodwill related its purchase of its Australia-based National Foods Ltd., which Kirin bought in 2007. Goodwill is an intangible asset to be amortized when the purchase price exceeds what is considered fair market value.
Given higher input costs among other changing business conditions in Australia, Kirin made a conservative assessment on National Foods’ brand value and booked the loss to comply with International Financial Reporting Standards, which Australia introduced in 2005.
Kirin’s sales came to Y2.178 trillion, a 4.4% fall from Y2.278 trillion a year earlier. But operating profit grew 18% to Y151.61 billion thanks to benefits of cost cuts.
For 2011, Kirin is predicting a net profit to grow five-fold to Y58 billion. It expects a 0.3% gain in operating profit to Y152 billion and a 1.7% decline in revenue to Y2.140 trillion.
Kirin’s earnings are based on Japanese accounting standards.