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Malaysia Food and Drink Report Q2 2010
Business Monitor International, Feb 2010, Pages: 62
Malaysia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's food and drink industry.
The Malaysian economy looks set to witness a strong recovery following the effects of the global financial crisis. As such we have revised our real GDP growth forecasts up; in 2009 the economy is expected to have contracted by 2.1% (from an earlier forecast of -3.4%) before rebounding strongly in 2010 by 4.3% (from 2.7% previously). This is likely to have a positive effect on consumer confidence, which will in turn positively impact the country’s food and drink sector. However, despite this optimistic outlook a number of the country’s major producers have posted disappointing results this quarter, as discussed in the Q210 Malaysia Food & Drink Report.
Brewing major, Carlsberg Malaysia, is once such company posting disappointing results. For Q309 (ending 30 September 2009), net profit fell 7.7% to MYR21.8mn, while revenue dropped 9.2% to MYR242.1mn. Meanwhile, rival brewer Guinness Anchor Berhad (GAB) is also feeling the pinch. Revenue fell
17.7% to MYR300.9mn for Q110 (ending 30 September 2009), while pre-tax profit plummeted 43.4% to MYR35.8mn.
Moving to the food sector, Nestlé Malaysia saw a decline in both net profit and revenue for Q309. The former fell 9% to MYR79.8mn, while the later dropped 7.8% to MYR886.8mn. However, the Malaysian food sector remains an attractive investment opportunity and this quarter Singapore’s Olam International and New Zealand’s Fonterra both announced investments in the country. The former increased its stake in Malaysian sweetener company PureCircle due to the company’s strong growth prospects while the latter invested MYR25mn in its Fonterra Brands Malaysia in a bid to increase its footprint in the higher value cultured dairy segment, which is expected to experience strong growth in line with the country’s economic recovery.
Elsewhere, despite the relative maturity of the country’s mass grocery retail (MGR) sector, Q110 saw a number of its retailers announce expansion plans. With value sales through modern retail outlets forecast to increase an impressive 50.1% to reach MYR20.7bn by 2014, from an already strong starting point, it is not surprising that companies remain keen to invest. The convenience sector is set to experience the strongest growth over the forecast period and 7-Eleven Malaysia is keen to exploit this, announcing in December 2009 that it plans to almost double its Malaysian convenience retail network within just three years through franchising.
Despite some disappointing results this quarter, the long-term outlook for Malaysia’s food, drink and retail sectors remains positive as consumer confidence continues to grow on the back of economic recovery.
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