Malaysia. GAB’s net profit up on higher sales volume

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Guinness Anchor Bhd’s (GAB) net profit climbed 28.9% year-on-year for the first full quarter since Heineken NV became its indirect majority shareholder in October last year.

In announcing its quarterly results to Bursa Malaysia, the malt liquor brewer said for the quarter ended March 31, its bottom line grew to RM50.85mil compared with a year earlier, spurred by higher sales, phasing of commercial spend and more effective commercial investment.

The company’s revenue, meanwhile, rose 4.9% to RM458.9mil from the same quarter in 2015 mainly due to higher sales volume and better brand mix on the backdrop of good festive performance during the Chinese New Year celebrations.

РуштGAB, which is in the process of changing its name to Heineken Malaysia Bhd, added that the underlying growth was partially off-set by the replacement of sales tax by the goods and services tax.

For the nine-month period to March 31, net profit jumped 20.3% to RM204.8mil on 2.75% higher revenue of RM1.39bil.

GAB attributed the better bottom line mainly to higher sales and improved cost efficiency in commercial spending. “Our robust commercial strategy backed by investments behind brands and effective channel executions have been yielding good results,” it said.

On its prospects, the company said the group continued to operate in a challenging environment with the recent increase in excise duties for alcohol products (effective since March 1) and subdued Malaysian consumer sentiment,

“The group will continue to focus on delivering on its key strategies for the financial year, whilst staying agile and adapting quickly to any changes in the environment. Following a resilient first nine months’ performance, the group remains confident that it will deliver a good performance for the financial year ending Dec 31,” GAB said.

In a statement, GAB managing director Hans Essaadi said its performance continued to show solid growth, credited to its effective long-term strategies targeting tailored core brands’ activation platforms, prodcut innovation, and operational efficiencies.

“We expect to maintain the momentum going forward by leveraging on Heineken’s strong global brands’ activation platforms, and supported by an efficient global supply chain which opens opportunities for cost savings through more strategic procurement,” he said.

GAB is cautious of increasing prices as this will push consumers away from duty-paid products to contraband.

Essaadi said that it was imperative for the beer and stout industry to continue to work with the Government to further develop a sustainable business eco-system for local businesses.

“We appreciate and fully-support the efforts of the Royal Malaysian Customs Department in combating contraband beer, which continues to lead to revenue loss to the industry and also represents significant loss in taxes to the Government,” he added.

To commemorate the company’s 50th Anniversary, on Jan 19 GAB declared a single-tier special dividend of 30 sen per 50 sen stock unit on top of the single-tier interim dividend of 20 sen unit giving a total dividend of 50 sen for the financial period ending Dec 31, payable on April 15.