KUALA LUMPUR (Aug 13): Heineken Malaysia Bhd incurred a net loss of RM18.19 million for its second financial quarter ended June 30, 2020 (2QFY20) — its first loss-making quarter — compared to net profit of RM65.7 million it made a year ago, as its business was impacted by the Movement Control Order (MCO) that was implemented to curb the spread of the COVID-19 pandemic.

Quarterly revenue halved to RM253.74 million from RM512.58 million a year ago.

In view of the current economic conditions, its board of directors did not recommend any dividend, saying it will re-evaluate the situation at the close of the financial year. In contrast, the group paid a dividend of 42 sen for the same year-ago quarter.

For the six months ended June 30, the group's net profit sank 67% to RM38.77 million from RM118.5 million a year ago, as revenue fell 26% to RM769.63 million from RM1.04 billion.

In a statement today, Heineken said although the company resumed its operations and business during the Conditional MCO from May 4, the group's business performance, particularly in the on-trade channel, continued to be adversely affected.

“This was mainly because some outlets with liquor licences such as pubs and entertainment outlets are still prohibited from operating whilst sales in on-trade outlets such as restaurants and coffee shops was slow due to shift in consumption patterns favouring takeout and at-home options amid public concern on the pandemic,” Heineken said.

The decline in revenue caused a significant reduction in gross profit contributions, which was insufficient to offset the fixed overheads, it added. Consequently, the group incurred an unprecedented pre-tax loss of RM24 million in the current quarter under review.

On its outlook for the second half of 2020, Heineken Malaysia managing director Roland Bala said the group has seen a gradual improvement of business activity as almost all business sectors have resumed operations.

However, he noted that some outlets with liquor licences such as pubs and entertainment centres, remain prohibited from operating, while other on-trade outlets - including restaurants, coffee shops and food courts - are required to adhere to strict standard operating procedures (SOPs) set by the government.

This, Bala said, will continue to have an adverse impact on the group’s overall business performance for the rest of 2020. “It is difficult to estimate the impact of the COVID-19 pandemic for the full year. Nonetheless, we will continue to prioritise our recovery by accelerating commercial execution and improving operational efficiency through more prudent cost control measures to ensure liquidity and effective working capital management,” he added.

Shares of Heineken closed 70 sen or 3.26% higher at RM22.20 today, giving it a market capitalisation of RM6.71 billion.