PETALING JAYA: Consumer stocks are anticipated to record positive earnings in the upcoming second quarter (2Q23) results season next month, backed by stable domestic demand and improved spending trends, especially from the rebound in tourist arrivals.
An analyst said a more stable economic outlook and the Hari Raya festive season in the second quarter of this year would have spurred sales of companies within the consumer sector.
“We expect sales to be spurred by better domestic demand, as well as a pick-up in spending patterns on the back of improving tourist arrivals, especially with the reopening of China’s borders earlier this year,” he told StarBiz.
“Additionally, we also anticipate retail outlets to elevate their product mix, improve shopper interaction and create better experiences through immersive, targeted campaigns,” he added.
Meanwhile, local companies are maintaining a cautious outlook for the year ahead.
Heineken Malaysia Bhd managing director Roland Bala said he expects the business environment in 2023 to remain challenging, given the continued pressure from global supply chain disruptions, recessionary pressures from leading economies, rising input costs, currency fluctuation and rising inflation that could impact consumer purchasing power.
“We will remain responsive to the volatile business environment and new market realities,” he said in the group’s latest annual report, adding that the company will continue to invest behind its brands and capabilities and future-proof the business to unlock efficiencies and reinvest in growth drivers.
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Similarly, Carlsberg Brewery Malaysia Bhd chairman Tan Sri Chor Chee Heung also expects the business outlook to remain challenging due to the impact of various global developments.
“With a global recession on the cards, economic growth in Asia is expected to slow down in 2023 given the ongoing Russia-Ukraine war, supply chain disruptions, rising inflation, policy tightening and the uncharacteristic slowdown of the Chinese economy.
“These challenges are expected to impact overall gross domestic product growth due to waning consumer spending as the cost of living rises,” he said in the company’s latest annual report.
Meanwhile, British American Tobacco (M) Bhd (BAT) in its latest annual report said it expects consumer spending to be affected by rising inflation.
“As we move into an economic environment that will see more moderate growth as a result of inflationary pressures and tighter monetary policy, we are cognisant that consumer spending power will be affected.
“Similarly, the group will also be impacted by higher inflation and as such, we will continue to be diligent in optimising operational costs.”Additionally, BAT said it remains focused on tobacco harm reduction and will continue to introduce innovative products, offering a choice of reduced-risk alternatives to adult smokers.
“We will continue to urge the government to establish a balanced science- and evidence-based regulatory framework for vapour products.
“We also welcome other initiatives outlined under Budget 2023, signalling the government’s commitment to combating the black market.”
Meanwhile, Hong Leong Investment Bank Research, in a recent report, said the consumer sector is expected to mellow down further with the absence of a low base effect, cautious consumer sentiment and tapering off of private consumption from tighter financing conditions.
“Moving into the second half of 2023, we expect top line moderation with the abatement of pent up demand, coupled with the absence of cash infusions, as the second and third quarters of 2022 were boosted up by the Employees Provident Fund’s special withdrawals.
“However, this would also be the catalyst for downtrading, which we reckon would benefit those that offer attractively priced items,” said the research house.