Carlsberg reports slightly lower 1Q profit due to early CNY effect, pays 21 sen dividend

KUALA LUMPUR (May 9): Carlsberg Brewery Malaysia Bhd’s net profit for the first quarter ended March 31, 2023 (1QFY2023) dropped 7.15% to RM85.04 million from RM91.59 million a year ago, due to the early timing and shorter sales period for the Chinese New Year (CNY) celebrations, coupled with higher input costs and marketing expenses.

The brewer's earnings per share fell to 27.81 sen for 1QFY2023 from 29.26 sen in 1QFY2022, its bourse filing showed. Its board of directors announced a first interim dividend of 21 sen per share — as opposed to 22 sen in the same quarter last year — with an ex-date of May 24, to be paid on June 8.

The group's revenue for 1QFY2023 saw an uptick of 0.97% to RM660.2 million from RM653.85 million in 1QFY2022, contributed by price adjustment effects, which offset the impact of lower volume during the quarter due to the earlier CNY festive season, which came in January this year.

Notwithstanding the slightly higher revenue, profit from operations declined 4.2% to RM109.01 million from RM113.79 million, with higher marketing spend.

Its Malaysia operation reported a 1.13% drop in profit to RM88.52 million from RM89.53 million, despite revenue growing 4.36% to RM486.75 million from RM466.41 million. Singapore operation’s profit fell 4.2% to RM20.08 million from RM20.96 million, with revenue dropping 4.42% to RM190.90 million from RM199.73 million.

The group also registered a lower share of profit in its associated company, Lion Brewery (Ceylon) PLC, which slumped 52.4% to RM3.2 million due to the sharp devaluation of the Sri Lankan rupee against the ringgit since March 2022.

Besides the CNY factor, the group's 1Q business was impacted by lower consumer consumption due to increasing concerns of elevated living costs, amid sluggish economic growth forecasts in Malaysia and Singapore, said Carlsberg managing director Stefano Clini in a separate statement.

"We also observed a shift in consumer spending from domestic consumption to international travel, as the latter has become more accessible and beer consumption has normalised after the surge of economic activity experienced after the reopening in 2022," said Clini.

Looking ahead, he said the group is mindful that the global economy remains highly uncertain, and inflationary pressures are expected to rise. He also foresees that the disruption to global supply chains and the escalating commodity prices will continue to pose challenges.

“Embarking on our SAIL’27 corporate strategy, the group will continue to strengthen our core beers, step up on premiumisation and continue to build alcohol-free brews as an alternative for consumers who prefer non-alcoholic beverages,” he said, adding the group will stay focused on revenue management and to manage its business vigilantly.

SAIL’27 is Carlsberg’s five-year strategy, announced in February last year, that focuses on the group's five strategic levers, namely portfolio, geographies, execution, culture and funding.

Carlsberg shares closed unchanged at RM21.52 on Tuesday (May 9), giving the group a market capitalisation of RM6.58 billion.