Tokyo, Feb. 5 - Japan's Asahi Breweries Ltd reported a 2 percent fall in operating profit for 2007, hit by a sharp rise in malt and aluminium prices, but it expects its profit to grow this year.
Japan's beer market has been in decline for more than a decade, hurt by an ageing population and diversifying tastes. Volume sales have shrunk more than 10 percent since peaking in 1994.
The maker of "Super Dry" beer and its rivals have started to look for growth in other areas such as non-alcoholic beverages and overseas markets, eyeing acquisitions as a quick way to reduce their dependence on the shrinking domestic beer market.
Japan's biggest beer company said its 2007 operating profit was 87 billion yen, marking the third straight year of profit decline, though the firm had managed to keep its domestic beer shipments at the previous year's level in the face of a continued fall in the overall market.
The rising cost of raw materials dented the profits of Asahi's alcohol and non-alcohol beverage business. Aggressive marketing spending at its soft drink unit also weighed on the firm's earnings.
Asahi and its competitors have decided to raise the price of their beer in Japan this year -- the first such hike in 18 years.
For 2008, the brewer forecast an operating profit of 92 billion yen, up 5.8 percent from last year and above an 89.6 billion yen consensus in a poll of 14 analysts by Reuters Estimates.
Asahi has said it expects the overall market will shrink by 3-4 percent this year and it set its annual beer sales target below its 2007 results.
While the firm expects a much bigger increase in raw materials costs this year, it said it will deliver profit growth by cutting costs and raising prices.
Prior to the announcement, Asahi ended down 0.2 percent at 1,841 yen, outperforming a 0.8 percent fall in the benchmark Nikkei average.