Malaysia: Carlsberg Brewery Malaysia’s Q2 net profit increases 2.1%

Carlsberg Brewery Malaysia Bhd's second quarter ended June 30, 2019 (2QFY19) net profit was 2.1% higher at RM65.26 million or 21.34 sen per share, compared with RM63.91 million or 20.9 sen per share a year ago, which the group attributes to effective execution of consumer promotions, the Yahoo Singapore News reported on August 15.

The boost also came from the "continuous premiumisation of [its] portfolio in both Malaysia and Singapore", it said in a stock exchange filing today. Revenue climbed 15.7% year-on-year (y-o-y) to RM480.52 million from RM415.45 million.

The stronger quarterly earnings helped lift its net profit for the first six months of FY19 (1HFY19) by 5.6% y-o-y to RM152.86 million from RM144.73 million, as revenue grew 18.3% to RM1.14 billion from RM963.92 million.

On prospects in Malaysia, Carlsberg expects consumer sentiment this year to remain dampened amid uncertainties in the macroeconomic situation, adding the "continued presence of contraband beer remains an issue in the Malaysian market that significantly depresses the legitimate tax paying beer market". Nevertheless, it acknowledged efforts made by Customs and other law enforcement agencies in stepping up enforcement against contraband beer.

As for Singapore, Carlsberg said the anticipated introduction of the European Free Trade Agreement in the fourth quarter of 2019 will pose a further challenge to the group from cheaper imports.

"In the group's pursuit to continue investing on product innovations, quality and consumer promotions, Carlsberg has just launched its new Danish inspired brand identity, which balances simplicity with contemporary design, applied across its products, packaging, visibilities and amenities in Malaysia and Singapore.

"To overcome the challenging market conditions as well as intense competition, we are confident that our focus in executing the SAIL'22 strategy will enable us to continue delivering growth in 2019," it said, referring to Carlsberg's global corporate strategy that sets the group's strategic direction till 2022.

In a statement, Carlsberg's managing director Ted Akiskalos said the group is also hopeful that the government will not impose any further increase on the excise duties in the upcoming Federal Budget announcement on Oct 11, 2019 as any increase will lead to influx of contraband beers and losses to government tax revenue.

"We are pleased to continue delivering growth in top and bottom line across Malaysia and Singapore. Our consistent focus on product innovation and quality execution, supported by targeted investments, boosted the growth of our mainstream brands Carlsberg and Carlsberg Smooth Draught as well as premium brands Kronenbourg 1664 Blanc, Somersby cider, Connor's Stout Porter and Asahi.

"We are investing in the launch of the new Danish inspired identity for our flagship brand Carlsberg applied across products, packaging, visibilities and amenities in Malaysia and Singapore. In its progressive pursuit of Just Keeps Getting Better, Carlsberg pilsner now delivers practical improvements that [see] a new Fresh Cap on its bottles, its same great brew served in premium-looking stem glasses, and 320ml cans that come in Easy-to-Open packs," he said.

And the overwhelming response to Carlsberg Red Barley has also led the group to import additional cartons of the limited-edition brew into Malaysia to celebrate the new season of the Premier League with the local Liverpool FC fans in September, he said. "Consumers can also expect consumer promotions by our premium brands Kronenbourg 1664 Blanc and Connor's Stout Porter in the coming months," he added.

Carlsberg shares fell 48 sen or 1.96% to close at RM24.04 today, giving it a market capitalisation of RM7.4 billion. In the past one year, the stock has climbed near 32%.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .