JAPAN: Kirin Holdings targets debt reduction in 2012
After several years of pursuing overseas acquisitions, Japanese food and drink firm Kirin Holdings' immediate priority is to consolidate its assets and cut debt.
The acquisition of Brazil's second largest brewer, Schincariol, for BRL6.3bn (US$3.4bn) in 2011 has taken Kirin's net debt to earnings ratio above one. While still small when compared to many other multinational brewers, Kirin said in its 2012 business plan, published this week, that it will seek to return to reduce the ratio "as rapidly as possible".
Today (17 February), Japan's Nikkei newspaper reported that the Japanese brewer plans to cut debt by JPY100bn (US$1.26bn) annually, starting in 2012. An expected rise in operating cashflow should help the group achieve this, it said.
The debt focus marks a general change of strategy for Kirin, which has spent the last few years in acquisitive mood. In beer, the Schincariol deal followed the firm's swoop for all of Australia's Lion Nathan and a 48% stake in San Miguel Brewery.
In 2012, Kirin said that it will concentrate on integrating acquired businesses. Its overseas beverages unit, which is led by Lion in Australia and Schincariol in Brazil, is expected to generate JPY27.5bn (US$354m) in operating profits in 2012, said Kirin in its full-year accounts. In the 12 months to the end of December 2011, the unit's operating profits were JPY15.3bn.
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