December 20, 2010
Kirin Posts Impairment Loss and Revises Earnings Forecasts
Tokyo, DEC 20, 2010 — Kirin Holdings Company, Limited (Chuo-ku, Tokyo, Japan; President and CEO: Senji Miyake; hereafter "Kirin") announces that special expenses are expected to be posted in the form of impairment losses in the fiscal year ending December 31, 2010, as described below.
The earnings forecast for the fiscal year ending December 31 2010, released in conjunction with the second quarter report on August 16 2010, has been revised as detailed below.
1. Impairment losses — background
Goodwill and other assets generated in connection with Kirin’s acquisition of shares in the National Foods (NF) Group through the Australian holding company Lion Nathan National Foods Pty Ltd (LNNF) are expected to be written down as ¥38.8 billion of special expenses recorded as impairment losses in the current fiscal year.
LNNF was founded last year as a holding company, to bring together Kirin’s alcoholic beverages, soft drinks and food businesses in Australia. In line with Kirin’s integrated beverages group strategy, LNNF continues to progress with the integration of its food and beverages businesses, focusing on its brands in Australia.
LNNF conducted a full reappraisal of assets held by the NF Group and other umbrella operations at the end of the accounting period, under the International Financial Reporting Standards (IFRS) applicable in Australia.
The asset appraisal included the impact of both increasing input costs, which remain relatively high by historical standards, and changes in the Australian market, on NF brand value.It also closely examined the effect of factors such as strategic brand management on brand value.
Following the appraisal, Kirin expects to post special expenses of ¥38.8 billion as impairment losses in the fiscal year ending December 31 2010.
LNNF is making progress in improving NF’s profitability by concentrating brand investment in core ‘Power Brands’ to strengthen its portfolio, and by creating synergies through the optimization of NF’s manufacturing footprint, in line with Kirin’s integrated beverages group strategy.
The NF Group remains the core of Kirin’s integrated beverages group strategy in Asia and Oceania, and there is no change in the fundamental direction of the Kirin Group Vision 2015 (KV2015), the long-term business framework for the Kirin Group.
2. Revised earnings forecast for FY2010
(1) Revised consolidated earnings forecast for the fiscal year 2010 (January 1, 2010 to December 31, 2010)
Unit: million Japanese yen
| Sales | Operating income |
Ordinary income |
Net income | Net income per share (Yen) |
|
| Previously
announced forecast (A) |
2,180,000 | 133,000 | 125,000 | 35,000 | ¥36.72 |
| New forecast (B) | 2,170,000 | 143,000 | 135,000 | 10,000 | ¥10.48 |
| Change (B−A) | -10,000 | +10,000 | +10,000 | -25,000 | – |
| Change (%) | -0.5 | +7.5 | +8.0 | -71.4 | – |
| (Reference) Actual results for the previous fiscal year (ending December 31, 2009) |
2,278,473 | 128,435 | 144,614 | 49,172 | ¥51.54 |
(2) Reasons for the revision
With the continuing difficult market conditions, sales are expected to be less than previously forecast. However, it is anticipated that increases in operating income and ordinary income will occur as a result of costs control and efficiency improvements in the consolidated subsidiaries.
Also, as noted above, it is expected that there will be a decrease in net income during the current period, mainly due to the impairment losses arising from the reappraisal of assets in Kirin’s Australian consolidated subsidiary.
Net income for the current fiscal year on a consolidated basis is expected to fall to ¥10.0 billion, down 71.4% from the original forecast.
3. Other
There is no change in the dividend policy for the current fiscal year.