SHAH ALAM: Carlsberg Brewery Malaysia Bhd (CAB) is in the midst of deliberating on the impact of costlier production inputs and packaging on its earnings. Managing director Soren Ravn said the impact of more expensive malted barley and aluminium cans could be seen in CAB’s financials in FY12 ending Dec 31.
“It is an issue. Malt and (aluminium) can prices have risen 30% from a year earlier,” Ravn told reporters at CAB’s brand repositioning ceremony here yesterday. For now (this year), he said the brewer had locked in up to 90% of its raw material expenses, and the company would need to decide on its costing and pricing strategies within the next three months. This is to prepare CAB as it seeks to safeguard earnings from 2012 onwards, said Ravn.
According to analysts, raw ingredients and packaging materials make up about 14% of brewers’ revenue in Malaysia.Malt barley prices have been spurred by supply constraints following poorer harvests in major producing countries such as Canada and Australia due to adverse weather conditions. Analysts said this could result in higher cost structures for brewers as early as 2012, but predicted that they can still pass on some costs to consumers. Indeed, CAB and Guinness Anchor Bhd (GAB) had in the past successfully managed to impose average price increases of between 3% and 5% for their products to counter the rise in raw material costs. A stronger ringgit versus the US dollar is also expected to lessen the impact of higher raw materials import cost for brewers, analysts said.
In a separate press release, Ravn said CAB would make major investments in the “Carlsberg” brand, and widen its distribution channels under the Danish beer manufacturer’s global brand repositioning exercise. The new positioning involves a fresh visual identity by virtue of a new design for the Carlsberg logo and packaging for its beverage products. “We are confident that these initiatives will significantly drive sales growth in Carlsberg in the years to come and support our overall ambition to be the dominant player in Malaysia,” he said.
Following several acquisitions in recent years, including Carlsberg operations in Singapore and Taiwan, CAB will pursue growth through organic expansion, said Ravn. CAB’s net profit rose 75% to RM133.42 million in FY10 ended Dec 31, while revenue was up 30% to RM1.37 billion. Dividend for FY10 amounted to 58 sen per share. CAB had in 2009 acquired the entire stake in sister company Carlsberg Singapore Pte Ltd for RM370 million cash from parent Carlsberg Breweries A/S. The purchase had given CAB access to the Singapore beer and stout market.
Carlsberg also owns 70% of liquor distributor Luen Heng F & B Sdn Bhd which was acquired in 2008. Carlsberg via Luen Heng, imports global beer products including names like Asahi, Hoegaarden, Stella Artois, and Budweiser. House brands by Carlsberg include the Carlsberg Green Label, and SKOL beers, apart from the Danish Royal Stout.
Shares in CAB rose 20 sen to RM7.59 yesterday with 183,200 shares done.
