CEO Morning Brief

Carlsberg's Sri Lanka Ops Not Affected by Unrest in the Country So Far, Says MD

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Publish date: Fri, 15 Apr 2022, 12:00 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (April 14): Carlsberg Brewery Malaysia Bhd said its business in Sri Lanka has been doing well so far and that the group will continue to closely monitor the situation in the country, which is in the midst of an economic crisis.

Managing director (MD) Stefano Clini said the brewery group holds a 25% stake in Sri Lanka's Lion Brewery (Ceylon) Plc, and that operations there have been smooth up to this month, while "volume has been increasing even".

"But of course, there's always a risk but so far they have managed to keep the operation running every day and every night.

"For the time being, this (Sri Lanka's situation) is not going to decrease our belief in the level of investments in the country for the long term," he told reporters during a media briefing after the group's 52nd annual general meeting here on Thursday.

On Tuesday, Sri Lanka announced that it would temporarily default on its foreign debts as it faced its worst economic crisis in more than 70 years, while mass protests had broken out over major power cuts and the soaring costs of food and fuel, which have prompted government officials to urge Sri Lankans working abroad to send money home.

Committed to preserve margin

Clini also shared that 2022 will be another challenging year, driven by escalating commodity prices, additional cost pressure and uncertainties, geopolitical tensions and threats of new Covid-19 variants.

When asked on the possibility of the group raising the prices of its products amid the surging commodity prices, Clini declined to comment but expressed his commitment to preserving the group's margin.

“It is true that the raw materials inflation has been significant and we have taken many measures in terms of managing our costs. We have hedged our raw materials and been more efficient. Moving forward, I cannot comment (on the pricing) but we have to keep focus to keep our costs down,” he said.

Meanwhile, he said Malaysia's transition to the endemic phase of Covid-19, with the reopening of international borders for travel and tourism, sends very encouraging signals for the outlook of business recovery in this country.

"This year, we will continue investing in our flagship brand Carlsberg, whilst intensifying the premiumisation in 1664 Blanc, Somersby Cider, Connors' Stout Porter and Asahi Super Dry.

"Importantly, this year will mark our entry in the alcohol-free brew segment in Malaysia," Clini said.

The group also shared the expected benefits from RM110 million capital expenditure for its Shah Alam brewery upgrade, which will modernise its production facilities that deliver higher efficiency.

Shares in Carlsberg closed 12 sen or 0.55% higher at RM21.78 on Thursday, valuing the brewery group at RM6.66 billion.

Source: TheEdge - 15 Apr 2022

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