Heineken posts RM25.2mil profit in Q2

“For this year, by mid-August we have gone into lockdown for 11 weeks effectively,” said Heineken Malaysia managing director Roland Bala at its Q2 ended June 30, 2021 results briefing yesterday.

PETALING JAYA: Heineken Malaysia Bhd posted resilient second quarter (Q2) earnings but noted that the operating environment remains challenging amid a number of developments, including the ongoing Covid-19 pandemic.

“The lockdowns continue to have an impact on consumer sentiment. And we are going through one of the toughest periods (in history).

“For this year, by mid-August we have gone into lockdown for 11 weeks effectively,” said Heineken Malaysia managing director Roland Bala at its Q2 ended June 30, 2021 results briefing yesterday.

“We are very concerned about our business partners, as despite the green light to resume dine-in operations, many outlets are not able to operate immediately because they would need to find workers. These are big concerns moving forward. We don’t know the total impact of this pandemic on our business yet,” Roland added.

He explained that the full impact from the bankruptcies and closing of businesses will only be known after the market fully reopens.

Additionally, the company also has to contend with rising input costs and challenges to the global supply chain.

“Lockdowns have caused logistical challenges. Freight costs have actually shot up a lot because the turnaround for containers has been very slow.

“Commodity prices have moved up a lot as well. We were still able to contain this for the first half of this year on our hedging for the year. But moving forward this is a big concern for us,” Roland added.

He said increasing input cost is a headwind that will hit the industry “big time”.

“While we have hedged as much as we can, looking at the coming months, you can’t really hedge freight or logistics costs.

“We would need to look at how we can manage these input costs moving forward,” Roland said.

“One would be to streamline our own costs but in the event that we are up against the wall for survival, we would really need to pass this on to the consumers. Some suppliers have also defaulted on contracts as well,” he added.

He also noted that there is a concern that consumers would tighten their overall discretionary spending amid the tough economic environment.

On this note, Roland said he hopes the government would not increase excise duties for alcohol any further, noting that Malaysia already has the second highest tax regime for alcohol in the world.

“With the lockdowns, illicit volumes have also grown.

“Illicit alcohol is a growing concern and our appeal to the government is for no further excise duty increase as this will only widen the price gap between legal duty paid products and illicit products,” Roland said.

In Q2, Heineken Malaysia turned in a net profit of RM25.27mil compared to a net loss of RM18.19mil in the same quarter a year ago. Its revenue also grew year-on-year by 38% to RM349.42mil.

The group said its improved performance was driven by effective revenue management, optimisation of marketing spend and cost savings initiatives that were implemented, as well as the one-off settlement of the Customs’ Bills of Demand of RM7.2mil in June 2020.

The board also declared an interim dividend of 15 sen per share for the financial year ending Dec 31, 2021 that will be paid on Nov 18 with an ex-date of Oct 27.