KUALA LUMPUR (Aug 14): Carlsberg Brewery Malaysia Bhd's net profit for its second quarter ended June 30, 2020 (2QFY20) sank 83.69% year-on-year (y-o-y) as pandemic-driven lockdowns to curb the outbreak in Malaysia and Singapore severely impacted its production and sales.
The group also recognised a one-off RM6.4 million settlement with the Royal Malaysian Customs Department or RMC — with regard to a bill of demand of excise duties that was issued by the Selangor state director in 2014 — while its share of profits from its associate company, Lion Brewery (Ceylon) PLC, was lower by RM4.2 million due to lockdown restrictions imposed by the Sri Lankan government.
As such, 2QFY20 net profit sank to RM10.65 million — its weakest since 2QFY09 — from RM65.26 million in 2QFY19, while revenue dropped 40.22% to RM287.27 million from RM480.52 million. If not for the RMC settlement, the group's 2QFY20 net profit would have come in at RM15.5 million, down 76.3% y-o-y.
Like for 1QFY20, no dividend was declared for 2QFY20 as Carlsberg's board has decided to suspend quarterly dividend payments for FY20 to preserve cash and liquidity. In contrast, it declared a 21.5 sen payout in 1QFY19 and 16.1 sen in 2QFY19, for a total of 37.6 sen for the first half of FY19 (1HFY19).
In a statement, Carlsberg explained that the quarterly revenue contraction was due to significantly lower sales and the absence of consumer-facing promotions and activities to drive consumption during the partial lockdowns in Malaysia and Singapore.
For 1HFY20, Carlsberg's net profit fell 45.30% y-o-y to RM83.60 million from RM152.86 million, while revenue sank 23.1% to RM877.15 million from RM1.14 billion.
"In Malaysia, revenue for 1HFY20 declined by 22.4% to RM653.4 million and profit from operations reduced by 42.4% to RM86.2 million. On the comparable basis of 2QFY20 vs 2QFY19, revenue dropped 38.9% to RM208.1 million and profit from operation slipped 79.6% to RM12 million. Lower sales and the one-off RMC settlement were partially offset by lower sales, marketing and operating expenses.
"Singapore revenue dropped by 25% to RM223.7 million and profit from operations declined by 57.2% to RM19.3 million for 1HFY20 compared with the same period last year. For the quarter, revenue dropped by 43.5% to RM79.2 million whilst profit from operations took a hit of 93.7% to RM1.5 million for 2QFY20 against the same quarter last year," Carlsberg said.
Carlsberg managing director Stefano Clini said the Movement Control Order in Malaysia and the circuit breaker in Singapore had adverse impacts on consumption, resulting in its weaker numbers today.
"We anticipate business recovery to be slow over the next few months because of the persevering effects of Covid-19 and the measures necessary to control them. As a consequence, consumer sentiment will remain depressed, particularly in the on-trade sector due to reduced capacities and shorter operating hours, social distancing, health and safety restrictions, as well as various financial and operating challenges that many F&B (food-and-beverage) businesses face in order to stay afloat," he noted.
The group, meanwhile, will continue to optimise its costs aggressively, and reallocate its investments towards e-commerce and off-trade channels while extending support for its business partners.
"In addition, we will review our business to ensure that our structures, processes and cost base are suited to a post-Covid-19 reality. With these strategies in execution, we are hopeful that the group will be able to sustain an acceptable performance despite this unprecedented crisis until such time that the Covid-19 pandemic is overcome, and businesses can operate fully," Clini added.
Shares in Carlsberg settled 1.44% or 34 sen lower at RM23.20 today, valuing it at some RM7.09 billion. It saw 110,200 shares traded.