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Japan-Update

Sapporo's operating profit likely short on fizz

Marketing costs weigh on beverage maker's earnings

A lineup of Sapporo's beers, including the Yebisu and the Sapporo Black Label.

TOKYO -- Sapporo Holdings' operating profit in the January-June half appears to have edged higher on the year, but fallen short of analysts' forecasts as marketing costs offset the beverage maker's robust beer sales.

Operating profit likely came in above 3 billion yen ($26.2 million) in the first half, failing to reach market predictions of about 4 billion yen.

Sales apparently edged up 4% to 260 billion yen. Overall beer sales for the six-month period were solid, despite a slump in June. Consumers had rushed to purchase beer before stricter regulations on beer discounts took effect at the beginning of June, underpinning the ensuing decline. Sales volume through May for Sapporo's mainstay Sapporo Black Label climbed 4% to 6.36 million cases, while its Yebisu beers rose 9% to 3.23 million. The release of the Yebisu Hana Miyabi beer in March helped attract more customers.

Sapporo's overseas business was also solid, as sales grew at Canadian subsidiary Sleeman Breweries. The North American soft drink business benefited from a U.S. fruit sherbet company that it acquired last fiscal year.

But marketing costs took a toll on earnings, as the company commemorated the 40th anniversary of the Black Label in April with a big giveaway campaign. Promoting new products like the Hana Miyabi beer also contributed to larger advertising outlays.

Results are due out in early August. Sapporo probably will maintain its full-year forecast, expecting the marketing efforts to take root in the second half.

(Nikkei)

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