Speaking at a roundtable dialogue, Ravn said prices of wheat barley, a key ingredient in brewing beer, have been forecast to rise 30% to 40% in 2012.
He said Carlsberg Malaysia was also hit by the rising cost of aluminium cans, which he said is 27% higher than in 2010, as well as increases in power tariffs and natural gas costs from the middle of this year.
Carlsberg Malaysia has yet to determine the quantum of its price increase for next year as the brewer has not hedged all its raw materials prices for 2012, Ravn said.
If Carlsberg Malaysia were to hedge for the price of barley now, he said, its cost component for the grain could rise as much as 35% year-on-year.
“We are still sitting on the problem. We are sitting on a bomb for next year with raw materials coming up very fast,” he told a roundtable dialogue attended by representatives from the food and beverage and retail industry.
In a recent note, Maybank IB Research said Carlsberg Malaysia’s management intends to lock in 70% to 80% of its barley requirements for next year in the next three months.
 |
| Ravn: We are sitting on a bomb for next year with raw materials coming up very fast. |
According to Ravn, despite raising its product prices by 3% last May, Carlsberg Malaysia has not managed to pass on the bulk of its cost pressures from rising input costs.
Nevertheless, Carlsberg Malaysia has put in place plans to mitigate its cost challenges and defend its margins amid slowing beer consumption in Malaysia, Ravn said.
According to Ravn, Carlsberg Malaysia’s ongoing measures include optimising its product mix, strengthening its brand and managing pricing and efficiencies in its supply chain.
Asked about the brewer’s profit outlook, Ravn said Carlsberg Malaysia is still positive on its earnings outlook for 2011.
“The impact this year is minor compared with next year. Basically, the big chunk of the hedging for this year was done a year ago. In terms of sensitivity, the big effect will be 2012,” he said.
In a recent note, OSK Research said Carlsberg Malaysia’s earnings for 1HFY11 ended June 30 were within expectations, making up 53.6% of the research house’s full-year estimates and 52.7% of consensus estimates.
According to OSK Research’s analysis, Carlsberg Malaysia’s y-o-y net profit is forecast to slow to 4.2% in FY12 before returning to double digit growth in FY13 at 11.1%.
In 2QFY11ended June 30, Carlsberg Malaysia’s net profit growth was flat at 0.66% y-o-y, rising to RM31.01 million from RM30.81 million while revenue rose 3.39% to RM345.51 million from RM334.15 million a year ago.
On a quarterly basis, however, net profit plunged 36.62% to RM31.01 million from RM48.94 million while revenue fell 15.15% to RM345.51 million from RM407.21 million a quarter earlier.
Carlsberg Malaysia said the strong 1Q performance was driven by higher domestic sales especially during the the peak Chinese New Year festive period.
Ravn is upbeat about the growth potential of Carlsberg Malaysia’s premium beer segment, which has over 20 brands in its portfolio, despite the group being a relative late-comer to that sub-sector.
Apart from growing its premium brands portfolio, Carlsberg Malaysia is also embarking on plans to brew its premium brand, Kronenbourg, in Malaysia next year.
Ravn stressed that growth in Carlsberg Malaysia’s premium beers segment will not cannibalise its flagship Carlsberg mainstream brand as the premium beers had opened doors to new food and beverage outlets.
“The premium brands get us into new places and Carlsberg comes along so it is a win-win. It proves to us that we should be a portfolio company. There is no such thing as being a one-brand company in this day and age. Consumers want variety,” he said.
Ravn also pointed out that Malaysia’s beer market has seen a sandwich effect, commonly seen in many mature markets, where the mainstream beers are pressured by the value and premium beer segments.
But he said the premium beer segment should see continued growth given the relatively slim price differentials between mainstream beer and premium beers in Malaysia, where beer prices are already high owing to the high excise duty.
Written by Chua Sue-Ann & Syarina Hyzah Zakaria
No comments:
Post a Comment