07-05-2025
Heineken Malaysia growth trajectory intact
Maybank IB anticipates stable sequential earnings for 2Q25 and 3Q25.
PETALING JAYA: Heineken Malaysia Bhd is poised for steady growth in 2025, backed by resilient local demand, rising tourist arrivals and macro tailwinds such as the stronger ringgit and minimum wage hike.
Analysts believe these trends could support the brewery's earnings despite lingering global uncertainties.
For the first quarter ended March 31, 2025 (1Q25), Heineken's revenue fell 3% year-on-year (y-o-y) to RM763.63mil, due to some festive sales being captured in the previous quarter following an earlier Lunar New Year.
Even so, core net profit slipped marginally to RM122.2mil, as improved operational efficiency helped expand net margin by 0.5 percentage points leading to flat y-o-y earnings growth.
The results were in line with analyst expectations, making up about 25% of full-year consensus estimates.
Looking ahead, analysts are optimistic about Heineken's prospects, with expectations for steady earnings growth.
Maybank Investment Bank Research (Maybank IB) noted that Heineken's beer volume year-to-date has declined by a mid-single-digit percentage y-o-y.
However, the research house anticipates stable sequential earnings for 2Q25 and 3Q25, with a potential pickup in 4Q25 during the year-end festive season.
'Elevated input cost pressures remain a challenge but Heineken will continue to leverage on its internal cost management exercises and supply chain efficiencies to buffer its negative impact to group margins,' it noted.
'The recent appreciation of the ringgit versus the US dollar should also provide some cost savings in the near term,' Maybank IB noted.
Against this backdrop, TA Research projects Heineken's profit after tax margin to remain stable at 16.8% in its financial year ending Dec 31, 2025 (FY25) compared to 16.7% in FY24.
On a more positive note, the research house observed a 'sharp rise of 31.3% y-o-y in tourist arrivals to 6.7 million in the first two months of 2025,' driven by stronger inflows from Singapore, China, Indonesia and Brunei.
'Should this momentum persist, we expect beer consumption to remain robust in FY25, supported by the continued recovery in tourism activity,' it said.
Meanwhile, UOB Kay Hian Research expects domestic beer demand to be resilient in 2025, despite the drop in sales during 1Q25.
'The raise in the minimum wage to RM1,700 in February 2025 could boost beer consumption of its more affordable brands (Tiger) going forward, while the recent strengthening of the ringgit could also see costs come off further, although the impact may be delayed into second half of 2025 (2H25),' it said.
'Heineken was already expected to benefit from the ringgit strengthening in 2H24 with costs expected to slowly average downwards and, should the ringgit's appreciation persist, we believe there may be further upside to margins in the medium-to-long term.'
On the US tariff threat, it noted that the immediate impact is expected to be largely non-material.
RHB Research, on the other hand, anticipates 'respectable' earnings growth for Heineken in 2Q25, which is expected to benefit from a low base in 2Q24.
It said that 'positive traction from tourist arrivals and the rise in disposable income should provide further support' for its steady performance.
