PETALING JAYA: Heineken Malaysia Bhd, which saw its first six months 2022 (H1’22) performance surpass pre-pandemic results, plans to spend RM140 million on expansion and upgrading its brewery, where the bulk of the expansion will be carried out in 2022-2023.

“We continue to expand our brewery based on what we forecast to be the future demand. Last year, we spent quite a fair bit on capex as well and expansion. This year, we are spending to the tune of RM140 million on expansion as well as upgrade of our brewery,” managing director Roland Bala told the media after announcing its H1’22 result last Friday.

He explained that its expansion has been ongoing since last year and will continue on until next year.

“Probably the main bulk of it will be this year and next year. In 2024, we would take a bit of a breather,” he said.

As part of its sustainability efforts, the company has transitioned to renewable electricity via the Malaysian Renewable Electricity Certificate (mREC) programme since March 2022.

“Accounting for period before March 2022, we estimate that 75% of electricity consumption in 2022 will be from renewable sources. On-site renewable electricity generation (solar photovolatics) installation is under way with target completion in Q1’23,” Roland said.

The group announced that it raised some of its product prices from Aug 1 due to rising costs. Asked whether the brewer will raise its prices again, Roland said there is no guarantee that there won’t be any price increase but the company has taken appropriate measures.

“No one can guarantee what the future is but we have taken appropriate measures, in terms of looking at price inflation but we have to look at the whole thing in totality – such as revenue management, cost and values. We have projects looking at all those things as well, making sure that we run as lean and as efficient as we can,” he explained.

Meanwhile, finance director Karsten Folkerts said that in terms of supply chain disruption, it is not out of the woods yet.

“We are not out of the woods yet, that is why we share some concerns today... it’s not just price, its also the availability and what we see in terms of container shortages and all of them. We really want to collaborate with each other to overcome those problems. We’ve also built long lasting relationships with our suppliers (and) building a partnership. In times of crises, it’s good to have those relationships and work together to find solutions. We need to have the same agility moving forward,” he said.

Heineken’s net profit for the second quarter ended June 30, 2022 tripled to RM86.07 million compared with RM25.27 million in its corresponding quarter last year, driven by revenue growth as well as continued focus on driving the EverGreen strategy to deliver sustainable growth.Revenue grew 84.47% to RM644.58 million from RM349.42 million in the corresponding quarter in 2021, due to upsurge in sales following the reopening of economy and international borders, improvement in product mix and better revenue management.

Notably, Q2’21 was a weaker comparison due to brewery lockdown in June 2021.

For H1’22, its net profit doubled to RM199.46 million while revenue increased by 49.68% to RM1.34 billion versus the six months ended June 30, 2021, mainly driven by robust sales performance during the festive period in the first quarter and steady recovery for the on-trade business in second quarter and continued focus on driving its EverGreen strategy to deliver sustainable growth.

The board has declared a single tier interim dividend of 40 sen per stock unit for the financial year ending Dec 31, 2022 to be paid on Nov 11, 2022. The entitlement date for the dividend payment is Oct 20, 2022.

The group expects continued pressure from global supply chain disruptions, rising input cost, weakening ringgit and rising inflation that will impact consumer purchasing power.

“The group will remain agile in responding to the volatile business environment and the new market reality with focus on delivering our EverGreen strategy to future-proof the business and deliver sustainable growth.”