Carlsberg Malaysia Q2 results buoyed by better product mix, higher sales

PETALING JAYA: Carlsberg Brewery Malaysia Bhd’s net profit expanded 18.6% to RM60.92 million for the second quarter (Q2) ended June 30, 2017 against RM51.36 million in the previous corresponding period, thanks to better product mix and higher sales. Revenue rose 4.1% from RM395.83 million to RM412.14 million.
The group has proposed an interim dividend of 10 sen per share for the quarter under review.
Carlsberg said Malaysia operations saw a 2% drop in revenue in Q2 from RM257.3 million to RM252 million against the same quarter last year due to trade loading in June 2016 prior to price adjustment on July 1, 2016.
Adjusted for this impact, revenue and profit from the operations grew 4.8% and 20.4% respectively, driven by better product mix as well as “Fund the Journey” efficiency initiatives.
Reported revenue of the Singapore operations increased 15.6% to RM160.1 million in Q2, partly due to a one-off trade discount adjustment of RM7.2 million. Adjusted for this impact, revenue and profit from operations grew 10.4% and 18.1% respectively, contributed by higher sales and favourable foreign exchange development.
At a media briefing yesterday, Carlsberg managing director Lars Lehmann sees continued growth in its premium brands.
“We’re going big on premium. We continue to control costs and drive efficiency,” he said.
Premiums make up a substantial part of Carlsberg’s profits with a 22% growth in the volume of premium brands in the first half of the year. The group’s portfolio of premium brands include Kronenbourg 1664 Blanc, Asahi Super Dry, Somersby cider and Connor’s Stout Porter.
Despite the change of legal purchasing age of alcohol in Malaysia from 18 to 21 in December this year, Lehmann said it is not expected to have a huge impact on the group’s earnings, possibly less than 2% of sales.
Meanwhile, Carlsberg CFO Yee Chin Beng said associate company Lion Brewery (Ceylon) PLC, which has resumed production in November after halting production for seven months due to floods in Sri Lanka, has not broken even operationally, but stressed that it is still the market leader there.
Lion saw a higher share of profit in Q2, mainly on insurance compensation of RM4.2 million. The Carlsberg group owns a 25% stake in Lion.
Looking ahead, Carlsberg expects 2017 market conditions to remain challenging.
“Nevertheless, the group is confident of meeting the challenges and delivering a satisfactory performance,” it noted.
In anticipation of the upcoming National Budget announcement in October, Lehmann is urging the government not to impose any further increase on excise duties as any increase will lead to more influx of contraband beers.
For the first half of the year, Carlsberg’s net profit soared 12.3% from RM114.3 million to RM128.31 million. Revenue came in at RM914.78 million, 7.4% higher than the RM851.55 million it made a year ago.
The stock fell two sen to close at RM14.70 yesterday on some 16,500 shares done, giving it a market capitalisation of RM4.49 billion.