Heineken expects outlook to be tough

Heineken Malaysia Managing Director Roland Bala (right), Finance Director Szilard Voros (left) and Corporate Affairs & Legal Director Renuka Indrarajah during their 2019 full-year financial results announcement, February 21, 2020. - GLENN GUAN/The Star

PETALING JAYA: Heineken Malaysia Bhd expects the business environment to remain challenging for the rest of the year amidst uncertainties in the economy, continuous competitive pressure and illicit trade.

The brewer’s net profit for the fourth quarter (Q4) ended December 2019 came in 8.83% lower year-on-year (y-o-y) at RM91.17mil on the back of the phasing of marketing expenses for the launch of Tiger Crystal and Heineken 0.0 and the earlier Chinese New Year festive sell-in.

The group’s quarterly revenue came in 2.68% higher y-o-y at RM680mil, driven mainly by improved sales performance across all core brands and new product launches.

Heineken Malaysia managing director Roland Bala said the ongoing trade tensions between the United States and China and the effect from the coronavirus (Covid-19) outbreak may have some impact, coupled with the rising cost of living and sluggish income growth.

Nevertheless, he said it is still too soon to determine the impact of Covid-19 as there has yet to be any immediate impact on the company.

“Our business performance so far is still holding quite steady against what we planned to do. It’s too soon to tell the impact.

“We continue to see the business environment as challenging but the competition keeps us awake and fit as a business and of course with all that, we also have various other economic and political uncertainties, ” he said at a briefing on the group’s Q4 results.

Roland added that the group is confident about its strategy, going forward.

The contraband market is still a challenge for the brewer but Roland said the group had started to see improvements since 2018 with the heightened enforcement by the government.

On a full financial year basis, Heineken Malaysia recorded a 10.78% higher net profit y-o-y at RM312.97mil on the back of improved cost efficiencies and a 14.32% growth in revenue.

“Heineken Malaysia again delivered a commendable performance, showing sustained y-o-y growth across the company’s revenue, pre-tax profit and net profit.

“In 2019, our focus was on winning with our core brands and big innovations. With the launch of Heineken 0.0 and Tiger Crystal, we are well positioned to address the needs of both today and tomorrow’s consumers, ” Roland said.

On the price increase on selected products, finance director Szilad Voros said it would only be for products in the keg format, which will be adjusted beginning March 1.

The increase would be 4% to 6% and the group’s priority is to ensure the increase does not impact consumption.

On the bill of demand by the Royal Malaysian Customs, Voros said the group has all grounds to object the demand of payment of excise duties of RM34.17mil from Aug 28,2012 to Oct 31,2013 and the amount would still be kept as contingent liability in its books.

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