Carlsberg’s Q1 net profit down 16.7%, quarterly dividend payment suspended

PETALING JAYA: Carlsberg Brewery Malaysia Bhd’s net profit for the first quarter ended March 31, 2020 slipped 16.7% to RM72.96 million from RM87.60 million a year ago impacted by the Covid-19 and movement control order (MCO) as operations were suspended and on-trade sales were affected in both Malaysia and Singapore.

It posted a 10.6% decline in revenue to RM589.87 million as compared to RM659.92 million in the same period last year.

In Malaysia, revenue was down by 11.3% to RM445.4 million and profit from operations dropped 18.3% to RM74.2 million in Q1’20 against the corresponding quarter last year, mainly due to an earlier Chinese New Year trade loading in December 2019, the absence of trade loading in March this year and lower sales following the MCO.

Carlsberg Singapore Pte Ltd (CSPL) also recorded lower revenue by 8.6% to RM144.5 million and lower profit from operations by 14.4% to RM17.7 million for Q1’20 as compared to same quarter last year due to the slowdown caused by the circuit breaker.

Earnings per share was 23.9 sen, lower by 16.7% compared with 28.7 sen for the corresponding quarter last year.

Given the unprecedented impact and levels of uncertainty and volatility globally stemming from the pandemic, the board of directors of the group has decided to suspend the quarterly dividend payments for the financial year ending Dec 31, 2020 to ensure a more prudent focus on preserving cash and liquidity, and with the intent to strike a balance between the long-term health of the organisation and dividends to shareholders.

Managing director Stefano Clini commented that the impact of Covid-19 in Malaysia and Singapore has generated a high degree of volatility and uncertainty.

“Hence, we believe it is a sound and timely call to suspend the quarterly dividend payments to ensure the group is financially and commercially healthy. The board has previously stated the group’s dividend policy is dependent on business prospects, capital requirements, expansion strategy and other relevant factors. We will revisit the policy later in the year when the landscape becomes clearer,” he said in a statement today.

He added that Covid-19 has severely impacted its operations in Malaysia and Singapore, as well as its investment in Sri Lanka.

“It will inevitably have an adverse impact on our business and financial performance in 2020. This unprecedented crisis has brought immense challenges for people, regulators, and businesses; it’s changing the way we live and work. In these uncertain times, our top priority has been and remains the health and safety of our people. All our full-time employees are on full salary throughout the MCO period in Malaysia and Singapore’s circuit breaker,” said Clini.

Commenting on the outlook, Clini said its Sail’22 corporate strategy remains unchanged. Additionally, during this crisis it is guided by the Carlsberg group’s Covid-19 leadership triangle that balances between “situational leadership”, “defend operating profit and cash” and “prepare for the rebound”.

In anticipation of uncertainties in macroeconomics and socio-politics, it is committed to be even more agile and disciplined in implementing its Sail’22 priorities, especially Fund the Journey initiatives, with an ever-increased focus on cost control.

“The regulations set during the conditional MCO in Malaysia and circuit breaker in Singapore took a heavy toll on on-trade sales and consumer sentiment. Though many eateries and restaurants have reopened with dine-in while observing social distancing and other health and safety guidelines, we anticipate a slow recovery in on-trade due to reduced capacity and shorter operating hours thus affecting consumer consumption in the coming months and deteriorating macroeconomic conditions,” Clini explained.