Guinness Anchor expects better FY14 results

November 22, 2013 12:31 AM

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Guinness Anchor expects better FY14 results

SUBANG JAYA (Nov 22, 2013): Guinness Anchor Bhd (GAB) expects to better its performance in the current financial year ending June 30, 2014 (FY14) in an improved economic climate where Malaysia's economy is predicted to grow at a faster pace of 5%-5.5% in 2014.

This is despite posting softer earnings during the first quarter ended Sept 30, 2013 (Q1FY14).

"The soft market (in Q1FY14) was due to consumer behaviour. If the economy is going to be better, then people's perception and spending habits will be better. I expect 2014 to be better than this year, judging from the overall growth projection for Malaysia," GAB chairman Datuk Saw Choo Boon told reporters after its AGM yesterday.

"This year, there have been some challenges for the Malaysian economy, but I still think we will register close to 5% (GDP) growth. The consensus among analysts and banks is that next year we're going to see a stronger growth than this year," he added.

Saw said the group will retain its dividend policy of paying out 95% of its net profit as well as allocating about RM50 million for its capital expenditure per year.

For Q1FY14, the brewery saw its net profit fall 13% to RM49.62 million from RM56.83 million a year ago while revenue declined 17% to RM325.79 million from RM392.28 million a year ago, mainly due to a planned reduction in distributor stocks and softer consumer spending amid economic uncertainty.

"Despite the softer Q1FY14 results, the underlying business model is very promising. We did make a lot of noise in the market," said GAB managing director Hans Essaadi.

The group will introduce new products to the market this year, starting with a new variant Tiger Radler which will be available from Dec 1.

"This is a milestone for the brewery as we have not introduced a new product in three years. We believe Tiger Radler will appeal to consumers here because of its refreshing taste especially in this particular climate," he added.

The new product is part of a global rollout initiated by Heineken NV last year, with Radler variants of key brands being introduced across the globe including Russia, Brazil and Greece.

Essaadi said Malaysia is the first country in Asia where the Radler variant will be made available. To date, it has been launched in 24 other markets including Western and Central Europe, and will be available in over 50 countries by the end of 2014.

Besides Tiger Radler, GAB is also testing five to seven other products which it plans to roll out in the coming months.

Essaadi said the products being tested are a mix of variants and new brands.

Meanwhile, Essaadi said there are no immediate plans to increase beer prices in FY14, following its last price hike in April 2012.

"There will be no price increase for GAB in the near future but if there is a push... because excise tax has been avoided (in the Budget 2014 announcement) but it's a risky statement to make... if things happen to our cost base, we have to respond to it.

"If not, in the foreseeable future, no (price hike). But we have to reconsider once a year, looking again at inflation and raw materials," he said.

"What we're trying to do is to be consistent and keep it as moderate as possible because we understand if we hike prices even further it's going to damage the market. So, as little (increase) as possible," he added.


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