More cheers for Heineken with Chinese New Year

More reasons to cheer: Essaadi (right) and Heineken Malaysia finance director Szilard Voros at the financial results briefing.

PETALING JAYA: Heineken Malaysia Bhd expects good earnings prospects for 2018, driven by the timing of the Chinese New Year (CNY) celebrations and FIFA (football) World Cup later this year.

Managing director Hans Essaadi said the later timing of CNY this year (the festival falls in February rather than January) meant than earnings would be better realised in the beer company’s first quarter ending March 31, 2018.

“It will have a positive impact on our (first quarter) earnings,” he told reporters following a briefing yesterday on the company’s fourth quarter and full-year financial results for the period ended December 2017.

He noted that CNY was a traditional sales driver for the malt liquor market.

Essaadi also said the FIFA World Cup, which kicks off in Russia in June, will see outlets like coffee shops and pubs stocking up on their supply ahead of the event.

“We will have some campaigns in conjunction with the World Cup. The timing of the games, especially the preliminary matches earlier in the night, is good.”

He said the gradual strengthening of the ringgit bodes well for the company.

“The ringgit has been strengthening gradually. However, we are hedged so the effect is lagged, so we’re not seeing any real effect.”

In terms of challenges, Essaadi said the upcoming general election could have consumers adopting a cautious approach, adding that whatever the outcome could ultimately have an impact on consumer sentiment.

Separately, he said the raise in the legal drinking age to 21 from 18 will have a limited impact on the company’s earnings.

“We will be working closely with our stakeholders to mitigate it,” Essaadi said.

The change in legal drinking age follows an amendment to the Food Regulation Act 1985, which was gazetted in May last year.

For its fourth quarter ended Dec 31, 2017, Heineken, which is the market leader in the local malt liquor market, posted a net profit of RM93.64mil on revenue of RM612.69mil.

The company had changed its financial year-end from June 30 to Dec 31 and as such there are no comparative figures for the preceding year corresponding periods.

In a filing with Bursa Malaysia yesterday, Heineken said profit during the quarter was supported by sequentially stronger revenue, timing of higher commercial spend in the prior quarter and continued efficiency gains in the current quarter under review.

For the full year ended Dec 31, 2017, Heineken reported a net profit of RM270.06mil on revenue of RM1.93bil. In a statement, the company said performance last year was driven by volume growth led by its Tiger Beer brand, complemented by other core brands and favourable mix.

“The successful execution of strategic initiatives as well as efficiency gains through cost optimisation across the organisation were also factors in the strong performance in 2017,” it said.

Heineken also proposed a single tier final dividend of 50 sen per stock unit for the year ended Dec 31, 2017 – to be paid on June 6, subject to approval at a forthcoming AGM.

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