This article first appeared in The Edge Financial Daily on November 1, 2018

KUALA LUMPUR: The increase in the sales volume ahead of the reintroduction of the sales and service tax (SST) has boosted Heineken Malaysia Bhd’s net profit by a fifth to RM78.9 million in the third quarter (3Q) ended Sept 30, 2018 compared with RM65.9 million a year earlier.

Earnings per share rose to 26.11 sen from 21.8 sen, the brewer said in a filing to Bursa Malaysia yesterday.

It said revenue rose by 3.3% to RM512 million from RM495.5 million previously due to an increase in sales volume ahead of the implementation of SST in September.

For the cumulative nine-month, Heineken Malaysia’s net profit grew by 3.5% to RM182.5 million from RM176.4 million a year ago, on the back of a 6.5% improvement in revenue to RM1.4 billion.

In a separate statement, Heineken Malaysia managing director Roland Bala (pic) said the company’s performance in 3Q 2018 reflected improved consumer sentiment in the market. The reintroduction of SST and subsequent price adjustments resulted in higher sales volume,” he said.

“In the nine-month period, we steadily improved our performance through effective execution of commercial strategies, supported by a sharper focus on cost management initiatives within the group,” he said.

Looking ahead, Heineken Malaysia expects the business environment to remain challenging given the intense competition, the implementation of SST on Sept 1, and the continued presence of contraband beer in the market.

“We commend the extensive efforts of the government and its agencies, in particular, the Royal Malaysian Customs Department, for stepping up enforcement against contraband alcohol and illicit trade, which represent a significant loss of revenue to both the government and industry. We urge that there be no increase in excise duties on beer to ensure the price gap between duty-paid products and contraband is not widened further,” he said.

The group said it will continue to strengthen its commercial strategies and execution to drive performance with a focus on improving operational efficiencies across the business to achieve a commendable performance for financial year 2018.

Heineken Malaysia yesterday closed unchanged at RM18, valuing the company at RM5.44 billion.