revenue growth


Heineken takes portfolio approach to drive earnings

PETALING JAYA: Heineken Malaysia Bhd, which posted a 14.32% jump in its earnings for six months ended June 30, 2019 (1H19), will bank on its strong portfolio of brands to drive earnings momentum for the second half of the year (2H19).

“We have a portfolio of brands so we take a portfolio approach. I wouldn’t say I’m skewed to any of these (mainstream or premium) segments, it’s looking at the portfolio and putting our money behind those big bet brands that we have and (bringing) innovation into the market,” managing director Roland Bala told reporters after announcing its 1H19 financial results at a media and analyst briefing today.

Earlier, finance director Szilard Voros had revealed that most of its revenue growth were driven by its mainstream segment.

On its 2H19 outlook, Roland said given the intense competition and the continued threat from contraband beer, the group is cautiously optimistic in what remains a challenging external environment and it expects consumer sentiment to stay below the optimism threshold impacted by rising cost of living.

He said the group will continue to prioritise on strengthening its commercial execution across its route-to-market whilst sharpening the channel focus and accelerating growth of its innovation products.

“We continue to put in efforts to drive (the performance of the group). We’re also shareholders of the company,” he added.

Roland also stressed that it has no plans to increase the price of its products at the moment, following a selective price increase on some brands in April.

He said Malaysia has the third highest excise on beer in the world and any further increase will attract more illicit trade. Hence, the group does not expect excise to increase further.

Heineken’s net profit for the second quarter ended June 30, 2019 grew 19.67% to RM65.7 million compared to RM54.9 million in the same quarter last year, on the back of revenue growth that was up 21.59% to RM512.58 million as compared to RM421.57 million in the same quarter in 2018 mainly attributed to higher sales volume driven by all core brands. Excluding the sales and service tax impact, revenue grew by 15%.

For the half year period, its net profit grew 14.32% to RM118.5 million from RM103.66 million a year ago, while revenue increased 21.32% to RM1.04 billion from RM855.38 million.

The board has declared a single tier interim dividend of 42 sen per stock unit for FY19 to be paid on Oct 25, 2019. The entitlement date for the dividend payment is Sept 26, 2019.

Berjaya Food reports RM2.29m pre-tax profit for May-June period

PETALING JAYA: Berjaya Food Bhd (BFood) reported a pre-tax profit of RM2.29 million for the two-month period ended June 30, 2019, which was affected by the Muslim fasting month.

The pre-tax profit in the current period under review also included fixed assets written off and expenses incurred arising from closure of non-performing stores.

Meanwhile, the group’s revenue came in at RM110.76 million for the period under review.

For the 14-month period, BFood’s revenue and pre-tax profit were RM789.19 million and RM47.88 million, respectively.

BFood told Bursa Malaysia that it expects Berjaya Starbucks Coffee Company Sdn Bhd to maintain its revenue growth momentum.

“The group will expand both its income streams from its new franchise business and its existing business to remain competitive,” it said.

Following the measures it has put in place, the group anticipates its results will remain satisfactory for the financial year ending June 30, 2020.

Meanwhile, BFood’s board does not recommend any dividend for the two-month period. Previously, it declared and paid a 4 sen dividend per share for the financial period ended June 30, 2019.

Pos Malaysia posts net loss for fourth consecutive quarter

PETALING JAYA: Pos Malaysia Bhd continued to be in the red for three months ended June 30, 2019 with a net loss of RM15.1 million compared with a net profit of RM4.98 million in the same quarter a year ago, due to lower revenue from postal services and aviation along with increased sales and operating cost of RM7.2 million.

Revenue for the quarter under review contracted 3% to RM572.95 million from RM590.46.

Its financial year end has been changed to Dec 31 from March 31.

Pos Malaysia said in a filing with the stock exchange that its postal services segment reported a 14.2% drop in revenue to RM147.5 million from RM171.9 million, attributed to electronic substitution.

The aviation segment’s revenue dropped RM11.2 million, mainly contributed by lower tonnage of cargo handled.

However, its courier business recorded a 9.7% growth in revenue with RM224.5 million against RM204.5 million in the previous year contributed by the growth in e-commerce sector.

International revenue slipped slightly by RM1.7 million on the back of lower volume in transhipment business, while logistic segment’s revenue increased RM500,000 mainly from haulage business from a new project.

Looking ahead, Pos Malaysia expects its business outlook remains challenging, given the continued contraction in mail volume as people turn to electronic means, while the courier business continues to operate in a competitive environment with price and cost pressures despite the revenue growth from the segment.

“Overall, although the group is cautiously optimistic about some of its businesses, Pos Malaysia’s key revenue generators, namely postal services and courier business, remain challenging due to the issues highlighted earlier.”

“Firm steps are being taken to address these issues but the outcome of these steps will only be evident in the medium term.”

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GE lifts earnings forecast; warns on trade, 737 MAX uncertainties

NEW YORK: General Electric lifted its full-year profit forecast on Wednesday, while warning that US-China trade tensions and the grounding of Boeing’s 737 MAX planes remain lingering uncertainties.

The industrial giant, which has been beset by a downturn in its power business for more than two years, said it had made progress in reducing costs and improving project execution in that business.

Still, executives adopted a cautious tone, repeatedly describing 2019 as a “reset” year expected to help pave the way towards better results down the road.

“The team is doing a better job certainly but again it’s very early,” chief executive Lawrence Culp said of the power business. “I don’t want any of this to sound like we are claiming victory.”

Shares initially jumped following the report but pulled back sharply following a conference call later Wednesday before finishing modestly lower.

A note from JPMorgan Chase cited weak profit margins in aviation and lackluster results in some other divisions, dismissing the improved forecast as based on “low quality” factors, such as declining restructuring costs.

“The stock is up on the headlines, as it has been many times before, but, like in the past, the underlying core fundamentals are actually a bit worse, and we remain underweight on this basis and would be selling into any strength,” said JPMorgan analyst Stephen Tusa.

For the quarter, GE reported a loss of $61 million due to $744 million in one-time accounting costs connected to its “grid solutions” business, which concerns the electricity grid.

Revenues slipped one percent to $28.8 billion.

Investors were encouraged that GE lifted key full-year targets, including its range for earnings-per-share and industrial revenue growth.

Earnings again fell sharply in power, which has been dogged by a global oversupply of turbines and other conventional electric equipment amid rising use of renewable power.

Culp told an analyst conference call that GE’s power team was more focused on setting realistic project scope and scheduling targets with clients. That discipline is expected to lead to improved project execution, he added.

Elsewhere, GE reported a loss in renewable energy, lower profits in aviation and oil and gas, and higher profits in health care.

Separately, GE announced that Chief Financial Officer Jamie Miller would step down, remaining in her role while the company seeks a replacement.

Miller, who was named CFO in October 2017, said “with the progress we’ve made and the stabilization beginning to take hold, the time is right for my transition.”

Bigger MAX hit

GE signaled that it expects a deeper hit to cash flow in the second half of 2019 over the grounding of Boeing 737 MAX.

The industrial giant, which manufactures airplane engines under the CFM International joint venture with Safran, said the grounding of the Boeing 737 MAX reduced its operational cash flow by $300 million in the second quarter and $600 million for the year so far.

The impact is expected to be $400 million per quarter in the second half of 2019.

Executives said the higher number reflects the greater volume of work that had been planned over that period.

The company has not forecast for a further decline in Boeing MAX output. But earlier this month the company said that was possible if the grounding drags out much longer.

“When the airplanes are delivered again, we will get paid for those planes,” Miller said. “It’s just a delay.”

Culp cited ongoing trade tensions between the United States and China as an unknown. He said the company is well-positioned with a Chinese partner, Harbin Electric, but acknowledged that the situation is uncertain.

Culp said customers including the Chinese government still had a “strong” embrace of the company.

“But the trade tensions are real,” he added, and US-China trade relations are “a watch item.”

“We flag it just given that it’s a variable, a good bit outside of our control.”

A note from Cowen investment bank lauded the improved forecasts but highlighted lower aviation profit margins as a disappointment and characterized the CFO transition and 737 MAX as “watch items.”

Shares finished at $10.45, down 0.7 percent. – AFP

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