KUALA LUMPUR (Feb 17): Carlsberg Brewery Malaysia Bhd said it has allocated RM110 million of its capital expenditure (capex) to upgrade its brewery facilities, which is expected to be completed by the end of this year, according to its managing director Stefano Clini.

During a virtual media briefing on the group’s financial performance for the fourth quarter ended Dec 31, 2021 (4QFY21), Stefano dubbed the investment as the group’s “highest investment regarding the brewery in 30 years”, adding that this is a long-term move aimed towards the group’s innovation and sustainability.  

“The board has approved for the company to have a capex of RM110 million, this is additional to our normal yearly maintenance capex level.

“We are going to improve the filling capacity of our bottling line, but it is not only about capacity, it is also about allowing operations to be much more flexible, which means more efficiency, with higher automation," he added.

Stefano added that the facility upgrade would result in a more conducive work environment as well as enable the group to continue on its sustainability journey with further improvement on energy, water and waste management.

“We are very proud of this investment, it is clearly a sign of Carlsberg’s commitment to Malaysia for many years to come,” he said.

Commodity price pressure in 2022

However, during the briefing, Carlsberg also noted that it could potentially face commodity price headwinds in 2022, which could in turn affect the group’s bottom line.  

Carlsberg chief financial officer Vivian Gun said that the commodity price impact in 2021 was muted as the group addressed commodity prices increase via “leveraging on the hedging and negotiation of fixed price of some of the commodity”.

“For us, the commodity that increased the most is actually aluminium, and for the year 2021, we had a hedge on aluminium way before the escalating increase in commodity costs. So the impact for 2021 was in a way muted through the hedges.

“The other commodity, barley/malt, which also increased last year, before the start of 2021 there was already a fixed price that was agreed.

“So with these two strategies that were put in place before the escalating increase in commodity [price], we have benefited from this, hence we don’t see a substantial impact to our cost base in 2021."

Gun noted that the commodity price in 2022 is increasing and will eventually impact the group’s bottom line, but added that it plans to address this by employing the same strategy it used in 2021.

“For 2022, unfortunately, the commodity price remains high and in fact we are seeing it increasing. So we anticipate that this will have an impact on our bottom line eventually.

“But similarly, we will continue to hedge and negotiate for a fixed price, same strategy as per previous year,” she said.