SUBANG JAYA (Aug 12): Heineken Malaysia Bhd cautioned that cost escalation is not over and may hit the company hard in 2023.
“We announced price increases in August, which were to recover some cost increases. As we move into the new year, the impact of cost escalation will hit us very much,” its managing director Roland Bala told a media briefing on the company's financial performance for the first half ended June 30, 2022 (1HFY22) on Friday (Aug 12).
As to whether there will be further price hikes, Roland said: "No one can guarantee what the future is, (but for now) we have taken appropriate measures.”
Heineken Malaysia’s net profit jumped 102% to RM199 million in 1H22 from RM99 million in 1HFY21, as revenue climbed 50% to RM1.3 billion from RM897 million.
“I want to remind everyone that this is against the weak comparison last year, (when) the brewery was closed in the whole of June and the on-trade business was closed," he said.
Having said that, Roland said the company was "recovering quite nicely" when compared with 2019 — when net profit was at RM119 million in the first half, with revenue of RM1.04 billion.
Nevertheless, Heineken Malaysia is cautious about prospects ahead with the fear of recession and diseases cropping up, and as consumer sentiment dipped slightly below the optimism threshold, according to the latest findings of a Malaysian Institute of Economic Research survey.
“After rebounding to 108.9 in 1Q22, the consumer sentiment index fell below the optimism threshold again in 2Q22, reducing by 23 points quarter-on-quarter to 85,” he said.
He believes consumer sentiment was impacted by inflationary pressures, the weakening of the ringgit and geopolitical tensions.
He added that the stronger 2QFY22 performance was also driven by good volume performance.
“In terms of volume performance, I can tell you it is also positive against 2019. Pricing was more of trying to recover back the cost, what we did was a lot of revenue management — such as improving our mix and making sure we do not simply throw discounts,” he said.
He also said Heineken Malaysia is currently running with a much leaner team compared with pre-pandemic times.
“We had a high double-digit staff reduction (during the pandemic). Now, in terms of the people we bring in, it is based on a real need basis,” Roland said.
On Friday, Heineken Malaysia’s share price closed two sen or 0.08% higher at RM24.40, valuing the group at RM7.37 billion.