E-Malt.com News article: Malaysia: Carlsberg Malaysia to raise prices

Carlsberg Brewery Malaysia Bhd will increase the prices of its beer and stout products by an average of about 3% next month, managing director Soren Ravn was quoted as saying by The Star on April, 28.

“We are trying to play catch-up with the rise (in price) of raw materials such as malt and hops which have increased 10% on average over the past five years,” he said.

According to Mr. Ravn, the company had last year increased prices only “slightly”, taking into consideration the economic downturn of 2008 and its flow-through effect on consumers last year.

It is understood that the average annual increase on Carlsberg products over the past five years is about 2%.

The price increase would be industry wide, according to Ravn.

OSK Research Sdn Bhd analyst Vincent Lim said the impact of the price increase on Carlsberg’s earnings, if any, would be marginal.

“They have been doing this historically, it’s just simply to pass on costs to consumers. We don’t foresee earnings being bumped up,” he said.

Asked about prospects, Ravn said the company had a “good feeling” about this year. “We think the industry will grow by about 2% after contracting last year.”

For Carlsberg, it would ride on the synergies it would continue to create with Carlsberg Singapore Pte Ltd as well as further develop new products to capture higher sales, Ravn said.

Carlsberg Malaysia, which is a 51%-owned unit of Denmark-based Carlberg AS, acquired Carlsberg Singapore for RM370mil in the fourth quarter last year.

Carlsberg Malaysia has a profit guarantee of S$24mil from the acquisition for the financial years ending Dec 31, 2009 (FY09) and FY10.

Chairman Datuk Lim Say Chong said the company, which enjoys the lion share of the local beer market, was expected to pay out 50% to 70% of distributable profits this financial year.

The group distributed 69% of its FY09 net profit to shareholders.

For FY09, Carlsberg reported a net profit of RM75.9 mln against RM76.1 mln in FY08.

Among its most popular brands are Carlsberg Green, Skol, Royal Stout, Carlsberg Gold and Carlsberg Special Brew, which accounted for 95% of the company’s total sales last year.


28 April, 2010