Malaysia: Heineken Malaysia reports 8.3% in Q1 net profit

Heineken Malaysia Bhd announced on May 23 that net profit for its first quarter ended March 31, 2019 (1QFY19) came in at RM52.81 million, up 8.3% from RM48.76 million a year ago, on higher sales.

Revenue rose 21.1% to RM525.14 million from RM433.81 million in 1QFY18, mainly driven by higher sales volume from the effective execution of commercial campaigns during Chinese New Year, as well as the increase in sales revenue, prior to the price adjustment on April 1.

The increased sales, as well as efficient management of commercial spend, helped Heineken achieve better profitability, the group said in its exchange filing on May 23.

Heineken said the group will leverage on its solid 1Q growth and continue to focus on executing the right strategies on its brands, as well as on driving operational efficiency to deliver satisfactory performance this year, whilst being cautious of softening consumer sentiment and intensifying competition.

Managing director Roland Bala said in a separate statement that the group has kept price increase to a minimum, and pointed out that the group has not increased the prices of some of its products.

He said the price increase in April was necessary, due to higher cost of packaging and raw materials, following increased global commodity prices.

“We are mindful of the challenging market conditions and that the Consumers Sentiment Index fell further below the confidence threshold of 85.6 in 1Q.

“On a positive front, I take this opportunity to thank the government and the Royal Malaysian Customs Department for their efforts in intensifying enforcement to clamp down on illicit alcohol, as this represents revenue leakages to both the government, as well as the beer industry.

“We have witnessed positive results from enforcement actions and will continue to work closely with relevant authorities in support of their initiatives to address this issue,” Bala added.

Shares of Heineken closed eight sen or 0.34% lower at RM23.70 on May 23, for a market capitalisation of RM7.16 billion.

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