Malaysia: Heineken Malaysia’s net profit down 3.7% in Q1

Heineken Malaysia Bhd saw its net profit fall 3.7% to RM48 million in the first quarter ended March 31, 2017 (1QFY17) from RM50 million a year ago, on lower revenue, The Edge reported on April 12.

Quarterly revenue declined 12.5% to RM401.1 million from RM458 million in 1QFY16, mainly due to the timing of festive Chinese New Year sales and the effect of subdued demand from soft market sentiment.

“Global economic uncertainties combined with currency volatility continue to exert pressure on the market, adversely impacting consumer sentiment. The earlier sell-in for the 2017 Chinese New Year, which mainly took place in the previous quarter, also contributed to the lower revenue in this quarter (under review)," Heineken Malaysia managing director Hans Essaadi said in a separate statement.

He added that the soft consumer sentiment was reflected in the Consumer Sentiments Index reported by Malaysian Institute of Economic Research, which fell to 69.8 points in 4Q16 from 73.6 points in 3Q16.

"Local consumers have been negatively impacted by global factors including increasing protectionist sentiment in developed economies, Brexit and the economic slowdown of the nation’s major trade partners including China and Japan. These factors have held back the national economy’s growth, and increased consumer focus on value," said Essaadi.

Essaadi also said contraband remains a major concern for the brewery industry.

"Contraband products continue to enter the country representing a significant revenue loss to both the industry and the government as a whole.

“Contraband products are a real threat to the economic growth of the country and Heineken Malaysia fully supports all government initiatives that curb the influx of contraband,” he added.

Going forward, Essaadi said to address changing consumer demand, the group is focusing on investing in innovation to continue to deliver the highest quality products to meet changing consumer preferences.

"With an iconic portfolio of brands and access to the best practices and expertise of the world’s most international brewer, we are confident that Heineken Malaysia will continue to lead the market,” he said.

In a filing with Bursa Malaysia on April 12, the group said it continues to be wary of the current economic climate, which has seen a further downward shift in consumer sentiment and a tightening domestic economy.

Heineken shares closed up 10 sen or 0.55% at RM18.38 on April 12 for a market capitalisation of RM5.55 billion.

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