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Heineken Malaysia To Navigate From Ringgit, Consumer Demand Challenges This Year

KUALA LUMPUR: Heineken Malaysia Bhd is banking on several strategies this year to navigate challenges, namely the weak ringgit and soft consumer demand.

Heineken Malaysia Bhd managing director Roland Bala said the company will continue to support the authorities in addressing contraband issues through efforts and promoting greater awareness in the market.

Further, the ongoing global geopolitical tension and the Red Sea crisis have also impacted supply chains and can potentially lead to unpredictable price fluctuations for raw materials.

Managing director Roland Bala said these factors combined have created an uncertain business climate for Heineken Malaysia and consumers in Malaysia.

“We have faced challenges regarding ringgit depreciation, weak consumer demand and ongoing geopolitical tension.

“However, we see some improvements in the fourth quarter (Q4) of 2023, and we are banking on our marketing strategy to mitigate some of our challenges,” he told reporters at a media briefing yesterday.

Heineken Malaysia announced its financial results for the full year ended December 31, 2023 (FY23), reporting a decline in revenue and profit as compared to the same period in 2022 (FY22).

Revenue decreased by 8 per cent to RM2.64 billion compared to RM2.85 billion posted in FY22, mainly due to weak consumer sentiment attributed to growing macroeconomic concerns in 2023.

The brewer had a strong base in 2022 following the re-opening of the economy at the end of the Covid-19 pandemic.

Due to the rebound in FY22, Heineken Malaysia views its FY23 performance as a form of market correction.

Group profit before tax (PBT) decreased by 14 per cent principally due to lower revenue, while net profit decreased by 6 per cent due to the absence of the one-off Prosperity Tax in 2023.

For the fourth quarter (Q4) FY23, Heineken Malaysia’s revenue decreased by 8 per cent to RM728.62 million from RM791.68 posted in the same quarter in FY22.

This reflects the lower sales arising from weak consumer sentiment driven by the rising cost of living and macroeconomic concerns.

Group PBT also declined by 14 per cent in Q4, primarily driven by lower revenue.

Similarly, net profit for the quarter also decreased by 5 per cent to RM99.0 million from RM104.63 million posted in Q4 FY22 due to the absence of the one-off Prosperity Tax.

“2023 has been a challenging year, with the market experiencing corrections following the strong rebound observed in 2022.

“Despite the challenging environment, we continued to execute and deliver our EverGreen strategy to drive premium growth with a consumer-first mindset whilst accelerating digitalisation, developing our talents, and making progress towards our sustainability ambitions,” Roland said.

Heineken Malaysia board has proposed a single-tier final dividend of 88 per share for FY23 compared to 98 sen per share in FY22.

The total dividend for the year amounts to 128 sen per share, comprising a single-tier interim dividend of 40 sen per share, which was paid on November 10, 2023.

Subject to shareholders’ approval at the forthcoming annual general meeting, the final dividend will be paid on July 25, 2024.

“We welcome the stance taken by the government not to increase excise duties on beer in its latest Budget 2024, as any hike in excise rates will drive greater demand for illicit alcohol.

“Heineken Malaysia will continue to monitor and support the authorities in addressing this issue through comprehensive efforts and promoting greater awareness in the market,” he said.

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