Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on May 18, 2016.

 

KUALA LUMPUR: Danish brewer Carlsberg Brewery Malaysia Bhd is likely to follow rival Heineken Malaysia Bhd (formerly Guinness Anchor Bhd) and raise prices of its products this year in response to a hike in excise duties on March 1.

Carlsberg Malaysia managing director Henrik Juel Andersen said however, the increase in prices is still being evaluated.

“We are still evaluating the move. In the last tax increase just two months ago, we did not pass on the tax entirely to consumers. [But] we have to balance between income and cost,” he told a media briefing to announce the group's financial results for the first quarter ended March 31, 2016 (1QFY16) yesterday.

“We have to deliver to our shareholders. At the same time, we have to make sure our beers are being chosen in the market. So I cannot give a definite yes or no [to raising prices] now. I would say that it is not unlikely that we would have to adjust our prices during the year,” he added.

On March 1, the Malaysian government revised the excise tax structure, which saw levy on beer increased to RM175 per litre of alcohol content from RM7.40; while abolishing the existing 15% ad valorem tax.

Subsequent to the “aggressive” excise tax increase, Andersen said Carlsberg Malaysia increased prices of certain products by 3% to 5%.

Nevertheless, Andersen said the group remains optimistic that there are plenty of opportunities lying in the Malaysian and Singapore markets.

“Some of the categories within our product range such as cider is actually growing. It is gaining traction among consumers. There are still many pockets in the market that we see potential growth in,” he added.

In Malaysia, Andersen noted that Carlsberg will grow its premium brands further, saying that this range of products is more resilient against adverse macroeconomic challenges.

Currently, premium brands contribute approximately 20% to the group’s revenue.

“We will continue to invest in our brands. We expect to spend more than we did last year into our brand,” he said, but did not provide any guidance.

Carlsberg Malaysia saw its net profit rise 33.3% to RM62.94 million or 20.59 sen a share in 1QFY16 from RM47.23 million or 15.45 sen a share a year ago, mainly driven by higher volume and value contributions from both the Malaysian and Singapore operations. Revenue also grew 6.1% to RM455.72 million from RM429.45 million.

Carlsberg shares closed 10 sen or 0.77% lower at RM12.84 yesterday, with a market capitalisation of RM3.9 billion.

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