In line with our move to a pure holding company structure on July 1, we have realigned our business segments and transferred some costs to the holding company in our 2011 earnings forecasts.
Up through the recently ended first half, we only split our main operating companies into individual segments. All the rest were grouped together in the “Others” segment. However, we have now established separate segments for manufacturing subsidiaries, such as Nikka, and subsidies engaged in support operations, according to the management approach. While these moves do not impact overall consolidated results, the breakdown of operating income will now include internal eliminations of profits from transactions among Group businesses in the “Others, adjustments” line item as well as 8.4 billion yen in holding company group management costs that have been transferred along with related functions from Asahi Breweries.
Our full-year sales forecast assumes that sales growth from the Soft Drinks Business and the Food Business will not be enough to cover a decline in the core Alcoholic Beverage Business. As a result, we forecast a 30.5 billion yen drop in sales to 1,459 billion yen.
However, we expect all businesses to achieve profit growth and are targeting full-year operating income of 107 billion yen, 11.7 billion yen more than in 2010 and our first achievement of a new all-time high profit level since 2004. On a year over year basis, the Alcoholic Beverage Business’s profits are up a sharp 12.8 billion yen but this includes the 8.4 billion yen in administrative expenses transferred to the holding company.
While we maintain our start-of-year estimate of a 0.4 billion yen decrease in equity-method income, we now expect non-operating income to increase by 2.2 billion yen, thanks in part to an increase in forex gains during the first half. As a result, we are targeting full-year ordinary income of 115.0 billion yen.
Among extraordinary items, we have added 2.0 billion yen from the sale of China’s Hangzhou Beer and other factors, but we also expect to post 16.0 billion yen in disaster-related costs. In aggregate, we now expect a 12.0 billion yen deterioration in extraordinary items. On the other hand, we expect to pay less corporate tax. Consequently, we maintain the 57.0 billion yen net income target in our start-of-year plan and look forward to a second straight year of record net income.
Finally, the recently announced acquisitions of beverage companies in Asia and Oceania, namely P&N Beverages, Charlie’s Group, and Permanis, have not been included in our full-year estimates as these deals have yet to close.