Malaysia: Carlsberg Brewery Malaysia’s Q2 net profit jumps more than three times

Carlsberg Brewery Malaysia Bhd’s net profit jumped more than three times to RM37.14 mln in the second quarter ended June 30, 2021 from RM10.64 mln a year ago, driven by higher revenue and the absence of bill-of-demand of RM6.4 mln paid last year.

In a statement issued on August 21, managing director Stefano Clini said the profitability for the quarter was boosted by the continuous improvement in cost control in its operations.

The group’s revenue increased 21.6% to RM349.21 mln in the quarter from RM287.27 mln in the corresponding period a year ago, supported by a rise in revenue from both Malaysia and Singapore operations, which saw better sales compared with the same quarter last year.

“In Malaysia, the easing of restrictions in February 2021 during the second round of movement control order allowing dine-in food and beverage operations, coupled with new product and packaging launches, helped deliver growth in the second quarter,” he added.

For its Singapore operations, sales grew 33.3% to RM105.6 mln as restrictions eased in the city-state.

It is important to note that under the full movement control order in Malaysia, the brewery halted its operations on June 2 and it had recently resumed operations on Aug 16.

“The full suspension of brewery operations took a toll on revenue for the quarter, which was partially mitigated by the group’s cost controls,” he said.

For the third quarter, Clini expects earnings to be weighed down due to the suspension of the 11-week operations due to the lockdown restrictions, saying that impact is only partially evident in the first quarter as the suspension was imposed from the last month of the quarter.

“It is not going to be a fantastic quarter (third quarter),” he said in a media briefing.

He explained the prolonged suspension in the country has had a major impact on its business operations since June as it is not able to adequately satisfy domestic market demand, maintain its regular supply to the Singapore market as well as meet export demand from regional and other foreign markets.

Meanwhile, Clini confided that the lockdown in the country has also led to the proliferation of illicit beer trade, which would result in further tax losses, serious health risks and severe impact to its export revenue and other associated taxes.

“There are risks to our position as an international investor if the group’s regional customers permanently switch to alternative sources from other countries,” he pointed out.

For this year, Clini is taking a conservative view on the outlook of the group, saying that there is still “uncertainty” in the short term due to uncertain market conditions

“For now, we are very hopeful the situation is going to improve with the announcement that dine-in can resume in phase one states including Klang Valley, but we still don’t know what is going to happen next in the coming months.

“So we need to keep a cautious outlook for the rest of the year,” he said.

The group has declared an interim dividend of 10 sen per share amounting to RM30.6 mln on the back of the “reasonable performance” in the second quarter.

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