PETALING JAYA: Despite the financial crisis in Sri Lanka, Carlsberg Brewery Malaysia Bhd’s business in that country continues to do well.

       Nevertheless, the brewery said it would continue to monitor the situation in the debt-ridden country closely.

       Managing director Stefano Clini said there has always been an operational risk, but so far, the company has managed to keep its operations in Sri Lanka going daily with increasing volume up to this month.

       Carlsberg owns a 25% stake in Sri Lanka’s Lion Brewery (Ceylon) Plc.

       Clini said the prevailing situation in Sri Lanka would not decrease the company’s confidence in the level of investments in the country for the long term.

       On the company’s Malaysian operations, Clini said sales are not back to pre-pandemic levels as businesses have not fully open, particularly the entertainment segment including night clubs.

       Speaking after the company’s AGM, Clini noted that this year would be challenging due to the emergence of another new variant of Covid-19 as well as the escalating commodity prices.

       The situation is further exacerbated by the Ukraine-Russia crisis that will create additional costs pressure and uncertainties.

       However, the group is expected to benefit from the RM110mil capital expenditure (capex) in its Shah Alam brewery upgrade, which will modernise its production facilities to deliver higher efficiency.

       “Importantly, this year will mark our entry into the alcohol-free brew segment in Malaysia,” Clini added.

       Despite the 2？ months of not brewing, the company had managed to deliver a revenue of RM1.8bil in 2021, which saw flat growth from the previous year.

       However, the company had secured a significant increase of 24% in its net profit to RM201mil in 2021 from RM162mil in 2020.

       This is due to the good cost management of the company as well as significant increase in the sales of premium beer where the company saw an increase of 15% year-on-year (y-o-y) in 2021.

       Meanwhile, the company recorded 11% y-o-y decline in its core beer business in 2021 mainly due to the suspension of brewery operations as well as dine-in restrictions.

       At the same time, the company is working towards capitalising on eCommerce where it saw a doubling in volume growth in 2021.In addition, the company produced a strong balance sheet in financial year 2021 to support its capex investment.

       The company has RM76mil in cash and cash equivalents in 2021 compared with RM94mil in 2020.

       However, there is a significant drop in total borrowings where, the company had reduced its debt to RM39mil in 2021 compared with a total debt of RM123mil in 2020.

       The company’s gearing ratio decreased to 17% in 2021 compared with 42% in 2020.

       “The low gearing ratio will enable us to support working capital and capex investment,” he said.

       Meanwhile, chairman Datuk Toh Ah Wah said: “Taking into account of the final single-tier dividend of 46 sen per ordinary share approved in this AGM, the total declared dividend for FY2021 is 56 sen, which is equivalent to RM171.2mil, an increase of 40% from FY20 dividends paid.

       “This is equivalent to 85.2% of dividend payout ratio versus 75.4% in FY20.”