Heineken expects improved sentiment

Group’s capital expenditure likely to decrease in Fy24

“We can’t expect incremental growth, like how it was seen prior to Covid-19. We will invest appropriately. It’s really about keeping the balance and about grabbing the opportunity out of there, while keeping in mind the cost of it.” Roland Bala

PETALING JAYA: Heineken Malaysia Bhd is cautiously optimistic going into its financial year ending Dec 31, 2024 (FY24), as it expects an improved market sentiment for the year.

Its managing director Roland Bala acknowledged that market sentiment was adversely affected in FY23, coming out from a record-breaking year in FY22.

He said the brewery will plan prudently going forward, keeping in mind all the macro headwinds that the group is facing.

“We do not expect double-digit growth again, after facing a lot of economic headwinds, including inflationary pressure and weakening ringgit, which has been biting on a lot of consumer sentiment,” he told reporters during a results briefing on the group’s final quarter of the financial year 2023 (4Q23), yesterday.

Citing Malaysian Institute of Economic Research, Roland said consumer sentiment has been below optimal levels but it somehow edged up in the final quarter of 2023.

He said the group will prudently plan for higher revenue and volume growth and will not take it for granted.

“We can’t expect incremental growth, like how it was seen prior to Covid-19. We will invest appropriately. It’s really about keeping the balance and about grabbing the opportunity out of there, while keeping in mind the cost of it,” he said.

Looking ahead, Roland said the group’s capital expenditure will decrease gradually, while it looks to recognise the expenditure in previous years.

Roland noted that the group spent close to Rm100mil for FY22 and close to Rm140mil in FY23.

Meanwhile, he described the weakening ringgit as a double edged sword.

While the weakening ringgit has an impact on the group’s cost, Roland said it also entices tourism activity within the country.

“At the same time it’s not about the challenges, it’s about the pockets of opportunities and possibilities that we can see in the world that has to offer in 2024,” he added.

For 4Q23, Heineken saw its revenue decrease 8% to Rm728.62mil compared to Rm791.69mil in 4Q22.

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

“Comparatively, the group 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, the group views its FY23 performance as a form of market correction,” the brewery said in a statement.

Net profit for the quarter under review also decreased by 5% to Rm99.07mil from the Rm104.63mil recorded in 4Q23.

Similarly, for FY23, the brewery saw its revenue dip by 8% to Rm2.64bil from Rm2.86bil recorded in its previous financial year, due to weak consumer sentiment attributed to growing macroeconomic concerns in 2023.

Meanwhile, on its bottomline, the group recorded a net profit of Rm386.8mil, down by 6% from the Rm412.82mil recorded in FY22.

This translates to an earnings per share (EPS) of 128.04 sen for its entire FY23, compared to an EPS of 136.65 sen reported in FY22.

The brewery declared a single tier final dividend of 88 sen per share, bringing its total dividend for FY23 to 128 sen per stock unit, down from the 138 sen declared in FY22.

This translated to a dividend payout representing 100% of its net profit for the year.

Heineken’s shares closed down by 2.1% or about half a sen lower at RM22.34 a piece yesterday.