Malaysia: Guinness brewery posted a rise in Q1 net profit

Brewery company Guinness Anchor Bhd has recently announced its first-quarter net profit rose by almost a quarter, driven by substantial price increases of its products after higher taxes imposed by the Government under Budget 2004, The Business Times Malaysia posted on November 10.

The Government further raised tax charges under Budget 2005. This means that prices of beer and stout will go up by 32 per cent due to the yearly tax rises. “The full impact of the resultant price increase as a result of the new tax impositions (under Budget 2005) is not reflected in the above results.

“It is pertinent to note that at present, the duties on beer in Malaysia are the second-highest in the world after Norway,” Guinness said in a statement to Bursa Malaysia Bhd on November 9. Smuggling of alcohol products is expected to worsen because of this, Guinness said. “This, unfortunately, will have a continuing significant negative impact on the industry’s turnover and profitability and the Malaysian Government’s substantial revenue,” the company said.

In addition, profit margins will come under increasing pressure due to intense competition in the market. As such, the company expects an unprecedented challenging time in maintaining results at a satisfactory level in the years ahead.

Guinness made a net profit of RM36.33 million in the quarter to September 30 2005 compared with RM29.31 million in the same quarter a year ago. Revenue rose 8 per cent to RM304.6 million in the first three months of fiscal year 2005.

For its financial year ended June 30, 2005, Guinness Anchor recorded a pre-tax profit of RM140.52 million, up by 8.7 percent from RM129.25 million in the previous year. Revenue was up 7.4 percent to RM952.11 million from RM886.21 million previously.

Guinness Anchor planned to bring in more Heineken five-litre draught keg to the market by the end of this year, de Rond said. He said the company had tested the product at six selected retail outlets and the response was good although the price was slightly higher.