Carlsberg to strengthen premium offerings

PETALING JAYA: Carlsberg Brewery (M) Bhd is seeking to strengthen its premium offerings next year, following the non-renewal of its distribution agreement with Asahi Group Holdings Ltd announced a couple of months ago.

To recap, earlier in June, the brewery and Asahi had mutually agreed not to renew the said agreement and the exclusive distribution of the Asahi brand or trademark in Malaysia that will expire on Dec 31, 2023.

Managing director Stefano Clini said the brewery does not see the end of the exclusive partnership as a risk.

“This is because there is an opportunity that we are going to come up with exciting, new premium offerings,” Clini told the media and analysts during the brewery’s briefing on the second-quarter and first-half results yesterday.

Meanwhile, on the outlook for 2023, Clini said the group anticipates higher inflationary pressures and geopolitical tensions, which are expected to continue to pose challenges and dampen consumer spending.

“However, the end of the prosperity tax will positively impact the group’s net profit.

“Guided by our SAIL’27 strategies, the group will continue to strengthen its mainstream beers, step up on premiumisation, drive alcohol-free brews as an alternative for consumers that prefer non-alcoholic beverages and stay focused on both revenue and cost-optimisation initiatives,” Clini stressed.

For the second quarter ended June 30, 2023 (2Q23), the group saw its revenue dipping by 11.8% year-on-year (y-o-y) to RM506.7mil.

This compared to the RM574.2mil registered in the corresponding quarter of last year.

Clini attributed the decline to the negative consumer sentiment observed during the quarter under review that restricted the sales volume.

He said revenue contribution from the Malaysian operations declined by 13.4% y-o-y to RM371.7mil, while Singapore operations observed a decline of 7% y-o-y to RM135mil.

Commenting further on this, Clini said the decline in the Malaysian operations was also due to the significant increase in market investment locally to support long-term growth.

Despite the drop in revenue, the brewery managed to sustain its net profit at RM88.2mil in 2Q23 compared to the RM88.9mil of 2Q22.

Clini attributed this to the group’s success in revenue management which bolstered its net profit.

For the cumulative six months ended June 30, 2023 (1H23), the group’s revenue decreased by 5% y-o-y to RM1.17bil, while net profit declined by 4% y-o-y to RM173.3mil against the same period last year.

“The subdued performance is due to the earlier timing and shorter sales period for the Chinese New Year celebrations this year as outlined in the 1Q23 announcement, as well as the weaker consumer sentiment.

“Earnings were also impacted by higher input costs and increased marketing expenses,” Clini explained.

Meanwhile, the group’s Sri Lanka-based associate company Lion Brewery (Ceylon) PLC saw a higher share of profit in 1H23.

This was due to the absence of the one-off surcharge tax expense of RM3.7mil.

The brewery has declared a second interim dividend of 22 sen per share.

This brings its total interim dividends declared for 1H23 to 43 sen per share, compared to the 44 sen declared in 1H22.