Monday 22 Apr 2024
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KUALA LUMPUR (Feb 7): Despite recording lower sales for the financial year ended Dec 31, 2023 (FY2023), Carlsberg Brewery Malaysia Bhd’s full-year net profit was up 5.11% to a record high of RM333.24 million against RM317.05 million a year ago, mainly in the absence of the RM21.6 million prosperity tax incurred last year.

Looking ahead, the brewer expects a 2% increase in the sales and service tax (SST) to increase costs when it comes into effect later this year.

According to the group’s bourse filing on Wednesday, its bottom line was also boosted by the higher share of profit in associate Lion Brewery (Ceylon) PLC as well as recognition of RM11.3 million in deferred tax income relating to investment allowance of its new bottling line installed last year.

Carlsberg’s revenue however declined 6.28% to RM2.26 billion compared with RM2.41 billion in FY2022, dragged by lower sales on the back of softer market sentiment and inflationary pressures.

The group has recommended a final dividend of 31 sen per share subject to shareholders' approval at its upcoming 54th annual general meeting.

“Upon approval, this will bring total declared dividend for FY2023 to 93 sen,” it said in a separate statement. A dividend payout of 93 sen per share would be the group's highest yearly payout since FY2019, eclipsing the 88 sen paid in FY2022.

Quarterly, Carlsberg’s net profit for the fourth quarter ended Dec 31, 2023 (4QFY2023) rose 39.75% to RM84.02 million from RM60.12 million a year ago, on the absence of the one-off loss recorded from the disposal of its old bottling line and prosperity tax, as well as recognition of deferred tax income.

Likewise, the rise in quarterly earnings came despite a 5.26% slip in revenue to RM580.53 million versus RM612.75 million previously, amid lower sales in both Malaysia and Singapore.

A 19.9% increase in share of profits from Lion Brewery to RM7.79 million versus RM6.5 million a year ago also contributed to the increase in quarterly net profit.

Impending SST hike to weigh on costs

On FY2024, Carlsberg noted that this year’s Chinese New Year season has commenced on a positive note with market activations behind its limited edition festive can in full swing.

“Looking ahead, the group remains mindful of the uncertain economic outlook but is hopeful of an economic recovery,” it added.

Delving on recent economic developments, Carlsberg chief financial officer Vivian Gun expects an increase in SST to drive up costs when it comes into effect later this year.

In Budget 2024, the government proposed raising the SST to 8% from 6% currently, but exempted food and beverages and telecommunications services. Putrajaya projected a RM3 billion increase in revenue from the higher tax rate.

“The increase in SST will impact us on areas that are subject to SST, but the full quantum of the impact we cannot disclose yet because there are grey areas and we are waiting for the authority to firm up the guidance. However, it would have an impact on our overall cost, especially in the area of logistics costs,” Gun said at the brewer’s result briefing.

Apart from the impact of SST, Carlsberg managing director Stefano Clini is mindful of uncertainty in the economic landscape, encompassing high interest rates, continued inflationary pressures and currency fluctuations, that may snag economic growth and consumer sentiment, which may in turn give rise to volatility in group earnings in FY2024.

Given these challenges, Clini said the brewer's strategy is to increase investment in brands to grow its top line and market share.

The group has allocated RM92 million to build a new canning line and beer filtration plant for higher production flexibility, and lower energy and water consumption. The construction of a new canning line and beer filtration plant is targeted to be completed by the end of this year.

Shares of Carlsberg closed up six sen or 0.31% at RM19.44, giving the group a market capitalisation of RM5.94 billion.

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