Carlsberg’s Q1 net profit up 33%

PETALING JAYA: Carlsberg Brewery Malaysia Bhd, which saw a 33.27% increase in net profit for the first quarter ended March 31, 2016, may again increase its product prices this year due to the impact of the excise tax hike which took effect on March 1.
The company had increased prices by an average 3% to 5% earlier, but it was just a “partial pass on” to customers and the higher excise duty has been exerting margin pressure on its operations.
“It’s not unlikely we’ve to adjust prices during the year. It’s something we will consider,” managing director Henrik Juel Andersen told a press conference in conjunction with the announcement of the first-quarter financial results here yesterday.
Nevertheless, he stressed that the company has to strike a balance between increasing prices and making beer products affordable to the mass market.
Carlsberg’s first-quarter net profit came in at RM62.94 million, a 33.27% growth compared with RM47.23 million in the previous corresponding period, underpinned by higher volume and contributions from both the Malaysia and Singapore markets.
Revenue for the quarter under review expanded 6.12% to RM455.72 million from RM429.45 million.
Andersen opined that the recent excise increase has dampened the company’s outlook and could trigger an influx of parallel import products and smuggled products.
Asked if he expects sales to drop, he acknowledged that the company does feel the impact of the higher excise duty.
“We hope we can continue to drive volume to mitigate this tax impact,” he said.
Andersen cautioned that the company could be facing margin compression.
“We’re monitoring the situation closely. Fortunately, because we’ve been able to drive revenue up and with efficient cost management, we’ve been able to mitigate the price difference that we’ve to pay,” he said.
In addressing market headwinds, Andersen highlighted that the company is looking to grow the premium beer segment, which fetches higher margins.
“Premium beers are more resilient to the macro economy andthey will improve our portfolio price mix,” he said.
Currently, premium beers contribute about 20% to Carlsberg’s total revenue.