Carlsberg’s FY23 bottom line improves

Firm’s earnings per share for period highest ever

“We are investing in our assets because we see it as our legacy. So, we have a heavily packed investment plan for this year and probably also for the next.”

Stefano Clini

SHAH ALAM: Carlsberg Brewery Malaysia Bhd is allocating Rm92mil in its financial year ending Dec 31, 2024 (FY24) for capital expenditure (capex), earmarked for a new canning line and beer filtration plant.

Managing director Stefano Clini said this investment will not only improve the quality and efficiency of the line, but also reduce the environmental impact and increase its production capacity.

He believes these investments will eventually contribute positively to the group’s bottom line.

“We are investing in our assets because we see it as our legacy.

“So, we have a heavily packed investment plan for this year and probably also for the next,” he told reporters during the group’s final quarter of the financial year 2023 (4Q23) results briefing.

Clini said for FY23, the group allocated Rm108mil for capex investments, primarily directed towards upgrading its brewery and is expected to contribute positively to the group’s sustainability efforts.

“These investments facilitate our journey to net-zero carbon emissions,” he said.

Looking ahead, Clini expressed cautious optimism.

He emphasised that the group remains mindful of the prevailing uncertainty in the economic landscape due to high interest rates, inflationary pressures, currency fluctuations and the impact of the higher sales and service tax.

He said that due to the weakening of the ringgit, the group is experiencing an impact on its input costs.

Clini expects input costs to hold up but increase at a slower rate.

“The group will remain vigilant on cost control management while continuing to reinvest in its brands to sustain growth,” he added.

When asked about the growth drivers for 2024, Clini said the brewery will remain focused on its SAIL’27 strategy, while increasing marketing investments, mainly to grow top line and market share.

For FY23, the brewery saw its top line dip 6.3% year-on-year (y-o-y) to Rm2.26bil.

Clini attributed the lower revenue to weak consumer sentiment and the shorter timing of Chinese New Year.

Despite this, he said the group’s bottom line improved by 5.1% y-o-y to Rm333.2mil.

This improvement was due to the absence of the prosperity tax for its Malaysian operations and a one-off recognition of deferred tax income relating to the reinvestment allowance for the new bottling line.

In Malaysia, the revenue dropped by 7.1% y-o-y to Rm1.6bil, with profit from operations decreasing by 7% y-o-y to Rm311.7mil, while in Singapore, revenue declined by 4.3% y-o-y to Rm650.9mil, and profit from operations decreased by 3.1% y-o-y to Rm87.1mil.

The group’s Sri Lanka operations, however, showed a higher share of profit at Rm26.8mil in FY23 due to improved business performance and the strengthening of the Sri Lanka rupee.

Clini highlighted that the group’s earnings per share of 108.99 sen for FY23 is the highest to date.

Carlsberg has declared a dividend of 93 sen per share, translating to a payout ratio of 85%.

Despite the substantial capex investments, Clini said that the dividend payout would remain consistent, reflecting a relatively conservative approach, even in light of the heavy investments.

For 4Q23, the brewery saw its revenue decreasing by 5.3% y-o-y to Rm580.5mil, while net profit increased by 39.7% to Rm84mil.

In FY23, Carlsberg witnessed an 8% decline in mainstream beer sales, while premium beers experienced a 15% decrease compared to FY22.