Carlsberg sees another challenging year ahead

The emergence of another Covid-19 new variant may become a speedbump to sustaining the strong economic recovery 

by S BIRRUNTHA / Pic by BLOOMBERG

CARLSBERG Brewery (M) Bhd is anticipating 2022 to be another challenging year, driven by rising commodity prices, additional cost pressures and uncertainties. 

Its MD Stefano Clini said the emergence of another new variant of Covid-19 may become a speedbump to sustaining the strong economic recovery. 

He added that the escalating commodity prices, further exacerbated by the Ukraine-Russia crisis, will create additional costs, pressure and uncertainties. 

“On the other hand, as Malaysia begins its transition to the endemic phase of Covid-19 with the reopening of international borders for travel and tourism, this sends very encouraging signals for the outlook of business recovery in the country. 

“However, the continued closure of entertainment outlets will limit the recovery in on-trade channels,” he said during Carlsberg’s 52nd annual general meeting press briefing in Kuala Lumpur yesterday. 

In view of the current developments, Clini expressed his confidence that the brewer’s sustained efforts in executing its 2022 priorities within its SAIL’22 strategy will enable it to navigate the uncharted waters in the third year of Covid-19.

He noted that the group is committed to delivering growth this year through innovation and premiumisation and to deliver sustainable long-term value creation.

“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,” he said. 

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

The group maintains its inclusion as sole brewer among 80 constituents in the FTSE4Good Bursa Malaysia Index since the last review in December 2021. 

It also remains a counter of note within the MSCI global indices, following its upgrade to AA from A in the August 2021 review. 

On another note, Clini said Carlsberg’s business in Sri Lanka has been strong so far and its operations are going well up to this month. 

He noted that the group holds a 25% stake in Sri Lanka’s Lion Brewery (Ceylon) Plc, and it will continue to monitor the situation in Sri Lanka amid the economic crisis. 

“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 said. 

Sri Lanka is currently in the midst of one of the worst economic crises, in which the country defaulted on its foreign debts for the first time since its independence. 

The country’s 22 million people are facing crippling 12-hour power cuts and an extreme scarcity of food, fuel and other essential items such as medicines. 

On the financial front, Carlsberg’s net profit rose 23.93% to RM200.99 million in its financial year 2021 (FY21) from RM162.18 million in FY20, underpinned by cost optimisation, innovation and premiumisation initiatives. 

Annual revenue, however, fell marginally by 0.73% to RM1.78 billion from RM1.79 billion in FY20, as its top line was impacted by lower sales due to an 11-week suspension of its brewery operations and dine-in restrictions in both Malaysia and Singapore markets. 

The group also declared a dividend of 46 sen per share to its shareholders, to be paid on May 12, 2022. 

Shares of Carlsberg closed 34 sen or 1.54% lower at RM21.78 yesterday, giving it a market capitalisation of RM6.80 billion.