Heineken MY sees over 50% dip in revenue as it faces pandemic headwinds

Heineken Malaysia has witnessed a 50.5% revenue dip in the second quarter of the year (Q2 2020) to RM254 million, mainly due to the prolonged suspension of operations of its Sungei Way Brewery to comply with the Movement Control Order (MCO) from 18 March until 3 May. It had a profit before tax of RM85 million for the quarter, and a net profit of RM66 million.

Instead of resting on its laurels during the MCO, Heineken said it proactively reached out to support its stakeholders and communities most impacted by the various restrictions on economic activity. "In support of its business partners, it launched the "Raise our bars" campaign, committing RM1 million in funds to ease the difficulties which local restaurants and bars are facing during these difficult times. Meanwhile, Tiger Beer also pledged RM1.5 million to support street food vendors, coffee shops and food courts during the MCO through its "Save our street food" campaign.

Despite resuming operations on 4 May, Heineken said its business performance particularly in the on-trade channel continue to be adversely impacted. This was mainly because some outlets with liquor license such as pubs and entertainment outlets are still prohibited from operating whilst sales in on-trade outlets such as restaurants and coffee shops was slow due to shift in consumption patterns favouring takeout and at-home options amid public concern on the pandemic.

Heineken Malaysia's MD Roland Bala said the pandemic and MCO have had a significant impact on its industry and business. "In navigating the crisis, our key priorities remain the focus on the health and safety of our people, adapting the business to the new landscape and also prudent cost control to preserve cash," he said.

According to Bala, the company has seen a gradual improvement of business activity as almost all business sectors have resumed operations. However, some outlets with liquor license such as pubs and entertainment centres remain prohibited from operating, whilst other on-trade outlets including restaurants, coffee shops and food courts are adhering to strict standard operating procedures set by the government. This will continue to have an adverse impact on the Group’s overall business performance for the rest of 2020, he said.

“It is difficult to estimate the impact of the COVID-19 pandemic for the full year. Nonetheless, we will continue to prioritise our recovery by accelerating commercial execution and improving operational efficiency through more prudent cost control measures to ensure liquidity and effective working capital management,” he added.

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