Heineken in talks with govt on easing of anti-profiteering law

PETALING JAYA: Heineken Malaysia Bhd, which posted a 15.2% profit growth for the three months ended Dec 31, 2016, is in talks with the government on the relaxation of the Price Control and Anti-Profiteering Act, which limits businesses’ freedom to raise product prices.
“We continue to engage with the government and make sure they understand our position. Hopefully, there will be some inputs on that,” finance director Teo Hong Keng told a press conference here yesterday in conjunction with the release of the group’s financial results.
Despite rising commodity prices, he said, any price increases will be based on business considerations.
“If there is a commodity price increase, of course we have to see whether the market can accept or not. If the market can, then we would rather pass on the costs to the consumers.
“If the market cannot accept it, then we will tighten our own belt and absorb the costs,” he explained.
Heineken’s last price hike was in last July following an increase in excise duty.
Teo noted that raw material prices account for less than 10% of the group’s product costs under its global procurement, which helps stabilise the cost movement.
Meanwhile, he said, forex impact makes up only 20% of its costs and there has always been natural hedge for its exports.
Heineken’s three-month net profit ended Dec 31, 2016 rose 15.2% to RM104.68 million from RM90.84 million in the previous corresponding period, thanks to the increase in revenue, efficient and effective commercial spend and supported by supply chain cost efficiencies through global procurement initiatives.
Revenue expanded 10% from RM524.55 million to RM577.52 million.
The group has proposed to declare a final dividend of 60 sen per share for the quarter under review, bringing a total payout of RM1.45 per share for FY16, which is in line with its committed 90% to 100% payout ratio.
Heineken’s 18-month net profit stood at RM427.26 million against RM2.81 billion in revenue.
As for 2017, managing director Hans Essaadi is of the view that the business environment remains challenging with cautious consumer spending, increase in regulatory requirements and rising demand for contraband products.
However, growth will be driven by strong brand portfolio, effective sales execution, improved production and robust commercial strategy, he added.