Heineken to combat soft
market with efficiency focus

PETALING JAYA — Heineken Malaysia Bhd will focus on delivering resilient performances going forward by strengthening its operational efficiency and execution, in light of uncertainties in the global economy and a challenging domestic environment coupled with soft consumer sentiment.

Group managing director Hans Essaadi said the external environment remains challenging, due to subdued consumer sentiment, which was compounded by the increase in excise duties for alcohol products in March.

“New regulations like the change to the Legal Purchasing Age (LPA) for alcoholic beverages from 18 years to 21 years, which takes effect in December 2017, have led the group to be more cautious of policy changes that may lead consumers to easily-available contraband beers,” Essaadi told reporters here yesterday at the group’s results announcement for the 2016 financial year ended June 30.

He cited security threats including terror attacks as another challenge faced by the brewer, as these may indirectly affect sales and revenues. “If there are continued attacks, it may affect the influx of tourists into Malaysia and thus, lead to lower beer and stout sales,” Essaadi said.

He said the group will continue to work with and support the Royal Malaysian Customs to counter the contraband beer problem, which has been plaguing the industry as well as causing losses to government revenue.

“With regards to the change in LPA, we urge the government to consider a holistic approach, including stronger enforcement, coupled with consumer education and outreach,” Essaadi said.

Over the past five years, Heineken Malaysia has invested over RM3 million to encourage responsible drinking.

The group posted double-digit growth in the quarter ended June 30, driven by effective commercial strategies as well as investment behind Heineken Malaysia’s brands and channel executions in challenging environments.

Heineken Malaysia recorded revenue growth of 15.6% in the quarter, increasing to RM459.5 million from RM397.6 million in the previous corresponding quarter.

Meanwhile, pre-tax profit for the period jumped 21.5% in the quarter to RM79.6 million from RM65.5 million in the quarter ended June 30, 2015.

The company saw net profit skyrocket 38.3% from RM44 million to RM60.8 million in the quarter, while earnings per share increased from 14.57 sen to 20.15 sen.

For the cumulative 12-month period ended June 30, the group posted net profit of RM265.7 million on the back of RM1.85 billion in revenue, representing growth of 24% and 5.7% in net profit and revenue respectively.

This took earnings per share from 70.90 sen to 87.94 sen within the same period.

Essaadi said the group had performed well by executing strategies to drive higher sales while improving cost efficiencies.

“We aim to build further on the solid foundation that we have laid down by continuously focusing on innovating our product portfolio to meet the evolving needs of consumers,” he said.

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