Malaysia: Carlsberg Brewery Malaysia posts dip in net profit despite stronger revenue in Q3 2017

Carlsberg Brewery Malaysia Bhd posted a slight dip in net profit in its third quarter of the financial year 2017 despite stronger revenue, as earnings were dragged by trade offer adjustments in Singapore, The Edge Markets reported on November 30.

Net profit slid 2% year-on-year to RM42.85 million in the three months ended Sept 30, 2017 (3QFY17), from RM43.61 million, its income statement filed to Bursa Malaysia on November 30 showed. It said the adjustments in Singapore relate to provisions for trade offers of RM18.2 million, of which RM14.2 million relates to prior years.

After excluding trade offer adjustments by its subsidiary Carlsberg Singapore Pte Ltd (CSPL), the group's organic net profit grew 19.8% to RM54.7 million, driven by strong performance in Malaysia operations, it said in a separate statement.

Revenue grew 8% to RM423.51 million from RM393.31 million, as sales at its Malaysian operations grew 18%, driven by stronger demand for the group's flagship brands, Carlsberg Green Label and Carlsberg Smooth Draught.

"Premium brands like Kronenbourg 1664 Blanc, Somersby Cider and Connor's Stout Porter continued to deliver double-digit growth in sales. Profit from operations increased by RM16.7 million or 47.9% in this quarter arising from better product mix as well as effective cost management," it said.

But due to the trade offer adjustments, revenue from the group's Singapore ops declined 9% y-o-y to RM300.62 million, while profit from operations fell 84% to RM4.36 million.

As for its Sri Lankan associate Lion Brewery (Ceylon) PLC, Carlsberg recorded a share of profit of RM600,000, as compared to a share of loss of RM1.7 million a year ago, due to impacts from the floods in May 2016.

"The group's 3Q result was significantly impacted by the trade offer adjustment in CSPL, though it has no cash flow impact. Despite the adjustment, we are pleased to register solid organic growth in top and bottomline for the first nine months this year," the group's managing director Lars Lehmann said in the statement.

As for the cumulative nine months of FY17 (9MFY17), Carlsberg recorded a net profit of RM171.16 million, up 8% y-o-y from RM157.91 million in the same period a year ago, as revenue grew in tandem to RM1.34 billion from RM1.24 billion.

The improvement was driven by higher sales and premiumisation, said Carlsberg, though partly offset by the trade offer adjustments in the Singapore ops.

"We are optimistic about the remaining quarter in Malaysia, where the launch of Carlsberg Smooth Draught in 325ml pint bottle has increased the availability of the popular brand. We celebrate Carlsberg's 25 years of sponsorship of Liverpool FC and launch Somersby Sparkling Rose as limited-edition cider for the festive season," Lehmann said.

He added the group will also "import and sell a famous US craft beer from December onwards".

"We applaud the government's decision to maintain the excise duties in the 2018 National Budget announced in October. It was a very sensible move as any excise duties increase will lead to more influx of contraband beers, which will directly impact the tax revenue of the country," said Lehmann.

30 November, 2017