Malaysia Food and Drink Report Q4 2009

Malaysia Food and Drink Report Q4 2009


Malaysia Food and Drink Report Q4 2009 - new market report recently published


www.companiesandmarkets.com/Summary-Market-Report/malaysia-food-
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Malaysia continues to feel the effects of the current global economic crisis and as such the report has revised down its 2009 GDP growth forecast from an expansion of 0.5% to a contraction of 1.9%. Amid this tough economic climate many companies are feeling the pressure from weakening private consumption and declining consumer confidence and it is therefore not surprising that this quarter has seen little significant merger and acquisition activity and only minimal expansion activity .

Despite the weak economic outlook, many of the country’s food and beverage manufacturers continue to invest in the country indicating that Malaysia is still seen as a key market. One such company is Nestlé Malaysia, which unveiled plans this quarter to dramatically increase capital expenditure to MYR320mn for 2009, to enable it to put in place a strategy aimed at protecting market share and sales throughout the economic downturn. KFC Holdings (M) Bhd (KFCH) and Berjaya Krispy Kreme Doughnuts Sdn Bhd also continue to invest in the country, the former announcing in Q309 that despite the downturn it would spend MYR32mn on opening new outlets this year, while the latter opened the first of 20 planned Krispy Kreme doughnut shops in Malaysia .

Elsewhere in the drinks industry, Malaysia’s second largest brewer Guinness Anchor Berhad (GAB) reported that for Q309 revenue had slipped 4.2% to MYR314.8mn and pre-tax profit had fallen 11.3% to MYR43.6mn. Despite these disappointing results, Managing Director Charles Ireland stated that he is confident that full year revenue and profit figures will exceed those reported for FY08. Fraser and Neave are also confident of satisfactory FY09 results following positive results for H109, revenue increased 1.3% to MYR1.83bn while operating profit rose 12.5% to MYR158.5mn. This quarter has also seen Carlsberg Malaysia announce that it hopes to take advantage of the weak domestic economy to search for favourable acquisition targets .

Moving to the mass grocery retail sector, both Aeon Malaysia and Tesco Malaysia announced plans to expand in 2009. Aeon Malaysia is to invest approximately MYR150mn on expansion activities while Tesco Malaysia has stated that it will open at least five more stores this year. While BMI is forecasting MGR sales growth to stand at 2.1% in 2009, in the longer term we are expecting sales through modern retail outlets to increase by 35% to MYR18.3bn in 2013 .

However, not all producers are riding out the current downturn with positivity; Yeo Hiap Seng (Malaysia) has announced a pre-tax loss of MYR8.91mn for Q109. This serves to highlight the pressures food and drink manufacturers are under in the current financial climate.