This article first appeared in The Edge Financial Daily on February 15, 2018

KUALA LUMPUR: Heineken Malaysia Bhd, whose net profit fell 10.54% to RM93.64 million in the fourth quarter ended Dec 31, 2017 (4QFY17), hopes that consumer sentiment would improve to help boost its earnings in current financial year ending Dec 31, 2018 (FY18).

The brewery has proposed a single-tier final dividend of 50 sen per share.

“The ringgit is strengthening; we feel that it is a positive signal because it means that there is more confidence in Malaysia and that is good for the economy, said Heineken Malaysia managing director Hans Essaadi.

He also pointed to the upcoming football World Cup 2018 as a driving factor to improve its volume growth in 2018.

Nonetheless, Essaadi acknowledged that the consumer sentiment index (CSI) still remains significantly below the optimal level, although the index has been stabilising towards the end of 2017. Also, the rising consumer price index (CPI) has affected consumer spending.

Essaadi highlighted that the continued threat of a large contraband market, which is more significantly in East Malaysia, has been stifling its business, and on a wider scale, the country’s economy.

“We have been faced with this (contraband market) for a very long time, which evidently has been captured in our numbers,” he told reporters at a press briefing of its 2017 financial performance yesterday.

“On a positive note, we must commend the Royal Malaysian Customs Department on its ongoing enforcement efforts to address the contraband issue in the country. We are fully in support of the government’s approach and are committed to playing our role in combating this issue,” he said.

Heineken plans to widen its portfolio by introducing new products, focusing on efficiency and cost management, and improving strategic priorities to increase shareholder value, Essaadi said.

Some of the new products launched include the Apple Fox Cider, which has gained traction within the cider category, Guinness Bright, Anchor Smooth Draught, and a refreshed Tiger Radler.

Heineken attributes the lower net profit in 4QFY17 to higher taxation. Quarterly revenue, however, grew 6.09% to RM612.69 million from RM577.52 million.

Its annual revenue increased 2.6% to RM1.93 billion for FY17 from RM1.88 billion in FY16. Profit before tax went up 4.6% to RM363 million from RM347 million in FY16, while net profit totalled RM270.06 million. No comparison figure was provided for net profit.