Japan brewers" foreign ventures fall flat Japan's top beer and beverage companies are under pressure to improve the profitability of their overseas businesses after another year of aggressive overseas expansion failed to generate higher profits. Kirin, Japan's largest beer and beverage group by sales, suffered a 33 per cent fall in its overseas operating profits in the year to December 2011, which contributed to a 35 per cent drop in net profits to Y7.4bn. Asahi, Japan's second-largest beer and beverage group, suffered a Y2.9bn loss in its overseas businesses, after amortising goodwill mainly related to its 2009 acquisition of Schweppes. Senji Miyake, Kirin president, vowed to boost profits from the group's overseas operations, saying "this is the year in which we aim to show positive results, one after another, of our [overseas] investments." Japanese beer and drinks makers are expanding their overseas operations to counter the downturn in their home market, which has suffered from a shrinking and ageing population. Both Kirin and Asahi are forecasting a sharp turnround in their overseas operations, helped by efficiency measures. Mr Miyake said Kirin would take a break from large acquisitions and focus on strengthening the foundations of its overseas operations. But he added that the group would still consider additional overseas investments if they "would generate synergies with existing businesses." His comments follow a period of aggressive overseas expansion for Kirin, which last year acquired Brazil's second largest beer group, Schincariol. Before that, Kirin acquired Australian beer group Lion Nathan and National Foods - subsequently merged into Lion - as well as soft drinks and beer group Fraser and Neave in Singapore, and a 48.39 per cent stake in San Miguel Brewery in the Philippines. Kirin said on Friday that it aims to raise overseas sales by 29 per cent to Y587bn this year and boost overseas operating profits by 79 per cent to Y27.5bn through greater group synergies and measures to improve the profitability of its Australian businesses, which have suffered from a weak market and a shift to retailers" own-brand products. Kirin also expects Schincariol to contribute significantly to profits this year. "The biggest [problem at Schincariol] was the friction between the minority shareholders and management, which made it difficult to have a solid, unified strategy," Mr Miyake said on Friday. With both the minority shareholders and the management gone following the acquisition, this problem had been addressed, he said. Asahi, which last year acquired three companies in Australia - Independent Liquor, Charlie's and P&N - as well as Malaysia's second-largest drinks group, Permanis, expects its overseas operations to bring in operating profits of Y12.2bn. Asahi expects its three Australian subsidiaries to contribute fully this year in addition to Mountain H20, an Australian water company it bought last month. Asahi also expects an agreement to manufacture some beers in China for Tsingtao Beer, in which its owns 19.99 per cent, to improve the profitability of its lossmaking Chinese businesses.