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Carlsberg Q2 earnings impacted by Covid-19

14 Aug 2020 / 17:49 H.

SHAH ALAM: Carlsberg Brewery Malaysia Bhd’s net profit for the second quarter ended June 30, 2020 declined by 83.7% to RM10.65 million from RM65.26 million a year ago as a result of lower sales in both Singapore and Malaysia, the RM6.4 million settlement with the Royal Malaysian Customs in Malaysia and a reduced share of profits by RM4.2 million from its associate company, Lion Brewery (Ceylon) PLC due to lockdown restrictions imposed by the Sri Lankan government.

After adjusting for the Customs settlement, the group’s net profit fell 76.3% to RM15.5 million for Q2’20 versus Q2’19.

The group posted a lower revenue by 40.2% to RM287.27 million RM480.52 million mainly due to the significantly lower sales and the absence of consumer-facing promotions and activities to drive consumption during the partial lockdowns in both Malaysia and Singapore.

Group earnings per share for the quarter was 3.48 sen, sharply lower by 83.7% compared with

21.34 sen for the corresponding quarter last year.

For the six months period, its net profit was down 45.3% to RM83.60 million against RM152.86 million a year ago, while revenue dropped 23.1% to RM877.15 million from RM1.14 billion, attributed primarily to the critical measures undertaken by both Malaysia and Singapore to counter the Covid-19 pandemic.

Among other initiatives, the group is focusing on cash flow and the optimisation of its trade working capital to ensure sufficient liquidity in the months ahead. Under such difficult circumstances, the board decided to suspend the quarterly dividend payments for the financial year ending Dec 31, 2020 as a more prudent focus on preserving cash and liquidity, and with the intent to strike a balance between the long-term health of the group and returns to shareholders.

Managing director Stefano Clini said the movement control order and circuit breaker had an adverse impact on consumption, hence a weaker performance as reported. It anticipates business recovery to be slow over the next few months because of the persevering effects of Covid-19 and the measures necessary to control them.

As a consequence, consumer sentiment will remain depressed, particularly in the on-trade sector due to reduced capacities and shorter operating hours, social distancing, health and safety restrictions, as well as various financial and operating challenges that many F&B businesses face in order to stay afloat.

“As a group, we have been and will continue to be even more disciplined in implementing our ‘Fund the Journey’ initiatives and to optimise our costs aggressively, reallocate our investments on e-commerce and off-trade, and extend various support to our business partners. In addition, we will review our business to ensure that our structures, processes and cost base are suited to a post-Covid-19 reality.

“With these strategies in execution, we are hopeful that the group will be able to sustain an acceptable performance despite this unprecedented crisis until such time that the Covid-19 pandemic is overcome, and businesses can operate fully,” Clini explained.

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