Malaysia: Heineken Malaysia to embark on rightsizing its costs

Heineken Malaysia Bhd disclosed on February 18 that it plans to embark on rightsizing its costs, as well as its organisation in line with the plans of its parent company, Heineken NV, to cut 8,000 jobs.

Heineken Malaysia’s managing director, Roland Bala, said he has announced the decision to the company’s staff and will examine every department on how the organisation could be streamlined.

He remarked that the Covid-19 pandemic is the worst-ever experience in living memory, and there is a need to think deeply on how to adapt to the new market reality as Malaysia has been severely impacted given the rotating movement restrictions imposed to curb the spread of infection.

“However, It is not just a matter of rightsizing the organisation, but we will also be looking at how to grow the business as well. In terms of identifying growth opportunities and investing in technology and digital, as the way people connect today is different from what it used to be,” Bala told the media at Heineken Malaysia’s digital press briefing.

He said the rightsizing exercise will be done in phases and it is expected to be completed by the middle of this year.

On Feb 10, Heineken NV announced that it planned to cut around 8,000 jobs equating to 9% of its workforce at the end of 2019, as it seeks to restore operating margins to pre-pandemic levels after a sharp decline in profit because of coronavirus-related restrictions.

To illustrate the changing market landscape, Roland said the group’s on-trade to off-trade channels revenue ratio has moved to a 50:50 split from a 59:51 split previously, reflecting the pandemic’s impact on restaurant, bar and pub sales.

As for its e-commerce venture, the group said its e-commerce platform, drinkies.my, saw revenue growth of 208% in 2020 compared with the previous year, although the nascent segment still accounts for less than 1% of its total revenue.

For its fourth quarter ended Dec 31, 2020, Heineken Malaysia’s net profit fell 40.6% to RM54.17 million from RM91.17 million in the same quarter of the previous year on the back of lower revenue and a one-off provision of RM14 million in December 2020 for costs associated with the organisational restructuring exercise being implemented in 2021.

Revenue for the period declined by 23.7% to RM519.02 million from RM680 million reported previously.

For the full financial year, the group’s net profits fell 50.7% to RM154.2 million from RM312.97 million previously. Revenue stood at RM1.76 billion, a 24% decline from RM2.32 billion.

Given its financial performance for the year, Heineken Malaysia has proposed a first and final single-tier dividend of 51 sen per share for FY20 ended Dec 31. The dividend will be paid on July 28.

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