TOKYO -- Kirin Holdings on Monday raised its full-year net income forecast for the year through December to 103 billion yen ($980 million), up 43.2% from a year earlier, after the drinks company announced its intention to extricate itself from joint ventures with a military-linked partner in Myanmar.
The Japanese brewer announced it expects its Myanmar business to pull in 16 billion yen in operating profit for 2021, up 15.5% from 2020. The company says "it is currently examining the impact" of consequences from the country's military putsch, which include a beer boycott, but its forecast is based on the assumption that business in the country will continue as usual, despite the uncertainties.
"The military actions are completely incompatible with our business standards and human rights policy," Kirin President Yoshinori Isozaki said at a news conference. "There is no choice but to dissolve with our joint venture partner."
Isozaki added that the detention of Aung San Suu Kyi, an internet shutdown and other military actions "are not based on the will of the people [and] cannot be overlooked."
Kirin, best known for its eponymous beer, has two joint ventures in Myanmar, and its local partner operates a welfare fund for the military. The Japanese company has attracted international criticism because of the military's alleged violations of human rights, particularly after it overthrew the democratically elected government. The coup spurred Kirin to announce the termination of its joint venture partnership early this month.
"We are not thinking of withdrawing from Myanmar," Isozaki said. "We are determined to continue contributing to the country."
The president added that the company intends to look for a private venture partner not affiliated with the military to replace Myanma Economic Holdings Public Company Limited. However, it is unclear whether MEHL will accept the termination of the ventures, or whether Kirin can find a new partner.
Analysts have also voiced concerns about the risk of turmoil in the wake of the coup.
Regarding the sanctions against Myanmar announced by the U.S. last week, Hiroshi Saji, a Mizuho Securities analyst, said: "At this point, we are not sure that [the effect on] Kirin's business will be negative." But he added that if the U.S. expands the sanctions, "it will affect the economy, and indirectly negatively affect Kirin's business."
Saji said MEHL "would not want to scrap the partnership because the business itself is growing, and it is unclear whether negotiations will be successful."
If the worst-case scenario plays out and Kirin is forced to withdraw from the country, "it would have a slightly negative impact on Kirin because the Myanmar business was successful," he added. But, Saji went on, "I can't remark on the possibility of withdrawal yet because negotiations remain in the early stage."
Kirin, which controls around 80% of the beer market in Myanmar, entered the Southeast Asian country by buying a stake in Myanmar Brewery in 2015, aiming to expand oversees as it deals with facing shrinking beer consumption in Japan.
The Japanese brewer's business in Myanmar has been growing. The company's net operating profit rose 7.2% in 2020 from the previous year. Kirin's business in the country contributed 8.5% of group's total profit in fiscal 2020.
Regarding Kirin's future business in Myammar, Isozaki said, "We need to talk to MEHL. Future developments will depend on those discussions."