This article first appeared in The Edge Financial Daily on August 21, 2019

KUALA LUMPUR: Heineken Malaysia Bhd, announcing yesterday that its second-quarter earnings rose 19.66% year-on-year, has no plans for any further price hikes for its beer products for the rest of this year, according to managing director (MD) Roland Bala.

He told reporters yesterday the company had pegged the future prices of some commodities, therefore the brewer is “reasonably protected” from raw material cost increases. Still, he said Heineken Malaysia will continue monitoring commodity price movements.

“Earlier this year, we did selective price increases for some of our products as we were aware of and concerned about how consumers will receive it,” said Roland at Heineken Malaysia’s first half of financial year 2019 (1HFY19) results briefing.

“But for some of our products ... although we have some commodity price increases, we did not increase their (the former) prices. Instead, we absorbed the [additional] costs,” he added. With Budget 2020, slated to be tabled on Oct 11 this year, Roland is hoping the government will not increase the excise duty on alcohol further, saying the excise duty in Malaysia is already the third-highest in the world after Norway and Singapore.

He also hopes the country will still be tolerant of the group promoting its products. “For instance, [for] the Heineken 0.0, we should be able to advertise this openly because it is a zero-alcohol product.”

He also said Heineken Malaysia had previously engaged the government about this product, and that it was very well received. The product has also done very well globally and regionally, according to him. “We are happy to introduce this brand to Malaysian consumers.”

Heineken’s net profit grew 19.66% to RM65.7 million for the second quarter ended June 30, 2019, from RM54.9 million last year, as revenue climbed 21.59% to RM512.58 million from RM421.57 million, mainly due to a higher sales volume driven by all core brands.

The group declared a single-tier interim dividend of 42 sen per share for the financial year ending Dec 31, 2019 (FY19), payable on Oct 25.

For 1HFY19, the brewer’s net profit rose 14.32% to RM118.5 million from RM103.66 million. Revenue grew 21.32% to RM1.04 billion from RM855.38 million.

Roland said Heineken Malaysia hopes its earnings growth momentum will continue into 2HFY19 despite intense competition, the continued threat from contraband beers and dampened consumer sentiments.

“We continue to be cautious as we move into 2HFY19. I know we have very strong competitors, but we believe in what we are doing in terms of priorities and strategies.

“I also believe that we have strong talent in the company to drive the company’s agenda,” he said, adding that the group will continue looking at new product innovations with potential and scale as well.