Malaysia: Carlsberg Brewery Malaysia invests in capacity expansion and optimisation of energy usage

Carlsberg Brewery Malaysia Bhd has invested RM200 million to upgrade to its bottling and canning lines alongside high-precision filtration systems, The Edge Malaysia reported on November 13.

On top of that, the brewery spent over RM143 million on energy-efficient and resource-optimising production technologies, as well as workplace safety upgrades, its managing director Stefano Clini showcased the newly upgraded facilities.

The upgrades on the canning line, according to him, are expected to result in an increase of 33% to its production capacity, reduction of water waste by 47%, and a cut in energy consumption by 42%, according to Carlsberg Malaysia.

Meanwhile, the bottling line is expected to reduce water usage by 14% and energy usage by 21% with the upgrades.

For its beer filtration plant, the upgrades are expected to result in enhanced production capability of 33%, reducing water wastage by 18%, and a complete 100% improvement in energy savings.

Speaking to the media, Clini highlighted that the new lines have already resulted in improved production speed and capacity, allowing the company to better meet demand, especially during peak periods like Chinese New Year, which will fall in January 2025.

The improved efficiency, the managing director added, also reduces the need for excessive stockpiling, which in turn has a positive impact on working capital and cash flow.

The brewery’s inventories amounted to RM108.58 million as at Sept 30 compared with RM97.53 million as at end-2023.

"When it comes to manufacturing costs, we are well in control and we are decreasing it year-on-year. The lines are already operating so the impact in terms of cost saving is immediate. It's happening as we speak," he said.

The large investments were funded by internal generated funds over three years between 2022 and 2024.

Clini expects the minimum wage hike and fuel subsidy rationalisation to have minimal material impact on its bottom line as the brewer continues its efforts on cost optimisation and operational efficiency to protect profit margins.

Clini, who is supportive of the hike in minimum wage, said the company’s employees are already paid above the new threshold. As a result, the rise in the company’s direct labour costs will be minimal.

"First of all, increasing the minimum wage is the right thing because people deserve to be able to make a living. So we are supportive of the government policy," he told the media.

"Of course that may increase the cost of some of our providers, suppliers or merchandisers, people that have employees (who are paid) at minimum cost, so indirectly it may impact us but we don't expect the impact to be material," Clini added.

Despite the rationalisation of diesel subsidies, which could lead to higher operating costs for some sectors, Clini remained confident that Carlsberg Malaysia can manage these changes without having to resort to significant price increases to offset rising costs.

"So far we don't expect any material impact [from rationalisation of diesel subsidy] or something that we cannot work out somehow. So no, we're not going to call the profit down because there is removal of subsidies. It's part of managing the business. We have managed through much bigger issues since Covid-19, I think we can manage through a bit of subsidy removal. So we're not too worried about that.

"Our objective is never to raise price, it's to protect our margin and there's many ways to do it. We can optimise costs, optimise promotions, and premiumise the business," he added.

Shares in Carlsberg Malaysia gained 26 sen or 1.3% to close at RM20.28 on Wednesday November 13, giving the brewer a market capitalisation of RM6.20 billion.

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