Malaysia: Carlsberg Brewery Malaysia committed to further investments to future-proof its business

Carlsberg Brewery Malaysia Bhd, having invested approximately RM200mil in capital expenditure (capex) over the past three years, is committed to further spending to future-proof its business.

Managing director Stefano Clini acknowledged that for the second quarter ended June 30, 2024 (2Q24) the group saw an increase in its operating expenses owing to the marketing expenditure to push for its premium beers, which is in line with its strategy to accelerate premium products.

“I don't call it all expenses but I like to call them investment because we are investing in the future of our brands to grow the business. We will spend more money in marketing and in growth activities,” he said during the brewery’s 2Q24 financial results briefing yesterday.

This year, the company has allocated about RM92mil for capex, including the installation of a new canning line and the upgrade of its beer filtration plant, aimed at increasing production flexibility and reducing energy and water consumption.

This new canning line will also provide the flexibility to produce cans in different dimensions.

This development is slated to be completed by the third quarter of this year.

Looking ahead, the company remains cautious about the global economic outlook due to ongoing inflationary pressures, high interest rates and currency fluctuations.

“The group will stay vigilant on cost management and cost optimisation opportunities in our supply chain while ensuring sustained growth and delivering value for our shareholders,” Clini said.

For 2Q24, Carlsberg Malaysia’s revenue increased marginally by 0.1% to RM507.5mil from RM506.7mil in 2Q23.

However, net profit for the quarter under review dropped by 10% to RM79.4mil from RM88.2mil in 2Q23, following higher sales in 1Q24 ahead of the price hike in April and increased marketing expenses for new product launches in both Malaysia and Singapore.

“The 2Q24 was somewhat depressed because we overshipped in 1Q24 as customers stocked up ahead of the price increase,” Clini noted.

For the first half of 2024 (1H24), the brewery saw its topline increase by about 5.7% to RM1.23bil from RM1.17bil in 1H23.

However, net profit for 1H24 dipped by about 3.4% to RM167.3mil from RM173.3mil in 1H23.

“The net profit drop was due to the recognition of a deferred tax liability arising from foreign withholding tax, which amounted to RM11.2mil. We decided to take a more conservative approach to tax treatment on this deferred tax liability, and that impacted our first-half results,” Clini explained.

He added that without this tax impact, net profit would have grown by 3%.

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