Malaysia: Carlsberg Managing Director hopeful excise duty not increased in Budget 2023

Carlsberg Brewery Malaysia Bhd managing director Stefano Clini hopes that the retabling of Budget 2023 on February 23 would not bring with it additional excise duties for the beer industry, as he believes the outlook for the company remains uncertain, The Star reported.

He noted that the world is still facing the risk of global recession and strong inflationary pressures.

Clini said while 2023 may not present the same tough hurdles thrown up by the past three years, it would still be fraught with numerous challenges. He is definitely not wishing that increased excise duties be one of them.

Speaking at a press conference after Carlsberg’s results briefing session for its fourth quarter ended Dec 31 2022, he said not elevating beer excise rates would also be good for the government’s coffers, especially since Malaysia already has the second highest excise duty for beer in the world after Norway.

“We do not want people to go to illicit or smuggled products, because if they do, then it would not be positive for the government’s income. Our industry needs a sound policy that would support us in growing our business volumes, which would in turn generate more income for the government,” he said.

While net profit eased 15.8% year-on-year (y-o-y) for the quarter ended Dec 31 to RM60.1mil against RM71.4mil in the same period for 2021, cumulative net profit for the whole of 2022 nonetheless surged 57.7% y-o-y to RM317mil compared to the RM201mil of 2021.

This was achieved on the back of a y-o-y revenue growth of 36% to RM2.41bil for 2022 against the RM1.77bil in the year before. For the quarter under review, turnover also rose 13% y-o-y to RM612.8mil.

Carlsberg said the strong results were mainly driven by the group’s focus on premiumisation and revenue management efforts, on top of undisrupted operations last year that the company enjoyed, as opposed to the brewery shutdowns in the previous year.

On the other hand, Carlsberg attributed the slight y-o-y drop in net profit for the final three months of 2022 to various one-off costs during the quarter.

This includes the loss on disposal of its old bottling line and investments in marketing, including for Chinese New Year promotions and Winter Football activations.

These factors also resulted in a 21.3% quarter-on-quarter fall in net profit from the RM76.4mil posted for the three months ended Sept 30 last year, especially in light of the fact the turnover had actually picked up by 7.2% from RM571.6mil.

Clini commented that the group’s “SAIL 22” strategy - which focused on strengthening its core businesses and positions for growth as well as delivering value for shareholders, is to be credited for bringing about last year’s positive results.

“We are confident that our new strategy, SAIL ’27, will continue to guide us in delivering sustainable long-term value creation for shareholders.

“We will stay vigilant on cost control management whilst continuing to reinvest in our brands to sustain growth amidst the ongoing economic uncertainties,” he added.

24 February, 2023