KUALA LUMPUR: Heineken Malaysia Bhd
is expecting stronger quarter-on-quarter results in the fourth quarter of 2022, owing to higher sales volume and an increase in selling prices that came into effect on Aug 1.
CGS-CIMB Research said sales volume will be driven by events such as the FIFA World Cup and the Christmas season – with the football set to start next week.
“We also expect the higher selling prices to aid Heineken in maintaining its margins as it passes on the recent cost hikes.”
Despite weakening consumer sentiment amid rising inflation, the research house said Heineken’s sales volume in the fourth quarter of this year will not be negatively impacted by its price hikes.
“Our view is premised on beer still being the cheapest form of alcohol in Malaysia and an increase in demand from a growing number of tourist arrivals, as well as an ongoing recovery in on-trade sales as night entertainment outlets resumed operations only in May 2022.”
Despite the difficult conditions, Heineken managed to more than double its year-on-year (y-o-y) net profit for the third quarter ended Sept 30, 2022 to RM108.7mil, from RM51mil in the corresponding quarter of 2021. Revenue, meanwhile, rose 84.8% y-o-y for the quarter to RM720.5mil.
Basic earnings per share stood at 35.99 sen, versus 16.89 sen a year earlier.
Cumulatively, for the nine months ended Sept 30 this year, the company posted a net profit of RM308.2mil, with RM149.8mil recorded in the previous corresponding period, which was marred by extended lockdowns.
Revenue registered a 60% climb to RM2.06bil, from RM1.29bil a year earlier.
Following the results, Kenanga Research said Heineken will continue to prioritise defending margins amid rising cost pressures.
“The group has already increased its inventory levels by 28% in the third quarter of 2022 to RM182.2mil, up from RM150mil in the fourth quarter of last year,” said Kenanga Research
“We believe the group has begun to reduce its net cash position built up during the first half of 2022 to increase inventory levels in preparation of increased raw material prices. While there may still be some impact, this could partially offset the rising cost of raw materials in the fourth quarter of 2022.”
Going into 2023, Kenanga Research said it expects y-o-y growth to remain flat based on macroeconomic indicators.
