The past two years have been challenging, with economic and public health recovery in 2021 being disrupted by the re-emergence of COVID-19 cases in both Malaysia and Singapore. Guided by the COVID-19 Leadership Triangle that balances Situational Leadership, Defend Operating Profit and Cash and Prepare for the Rebound, we weathered the storm and delivered satisfactory financial results, improved sustainability performance and kept all employees safe and engaged.
I am pleased to report that the Group posted a net profit of RM201.0 million for the full financial year ended 31 December 2021, an increase of 23.9% on the back of flat revenue of RM1.8 billion year-on-year. The strong growth in bottom-line was driven by cost optimisation, innovation and premiumisation, while lower sales due to the suspension of brewery operations and dine-in restrictions in both markets affected top-line. The Board of Directors have proposed a final singletier dividend of 46 sen per ordinary share, subject to the shareholders’ approval at the upcoming Annual General Meeting. This is in addition to the interim single-tier dividend of 10 sen per ordinary share declared in FY21. If approved, the total dividend payout will represent RM171.2 million, equivalent to a dividend payout ratio of 85.2% of the Group’s net profit for the year.
In 2021, the Group suffered another suspension of operations at our Shah Alam brewery for 75 days, far longer than the 47 days we experienced in 2020. All employees worked from home except a handful of essential employees who worked on-site to maintain the integrity of the brewery and ensure the safety of the machinery and equipment. Thankfully, our quick action to support the nation’s vaccination drive enabled our Malaysia brewery to resume operations when we reached a 100% full vaccination rate of all eligible employees and third-party contractors in August. For Singapore operations, all employees and sales promoters were fully inoculated in October.
We are happy to report that we did not have any COVID-19 clusters or related fatalities since the pandemic started in March 2020.
The implementation of the strategic levers and priorities of year five of the SAIL’22 strategy and disciplined execution of the business continuity plans we developed and fine-tuned throughout the two years of the pandemic held us in good stead. We improved our mitigation of operational and commercial risks and effective implementation of our “Funding the Journey” initiatives to alleviate the impacts of supply disruptions on the domestic market and on exports. Our decision to intensify the acceleration of premium brands with new variants and packaging launches also helped to expand distribution and garner new consumers, especially for our craft and speciality brands.
In the trade, market dynamics evolved, with lockdowns skewing sales towards the off-trade channel as entertainment outlets remained closed, food and beverage (F&B) outlets suffered reduced capacity for dine-ins and consumers became accustomed to drinking in the comfort of their homes. We responded quickly to seize these opportunities with increased adoption of digital marketing and sampling, customized promotions for home consumption and by accelerating e-commerce sales with exclusive promotions.
BRAND PORTFOLIO HEALTH
Last year, we accelerated premiumisation by offering a better premium mix in off-trade and launching new variants and product innovations, namely Connor’s Stout Porter in cans, Somersby Watermelon Cider, 1664 Rosé and Tuborg Strong. We doubled our total e-commerce sales in Malaysia and Singapore, and we have plans in place to expand touchpoints with e-tailers while continuing to invest in advertising and promotions to grow this channel in FY2022.
We believe profitability and sustainability can work in tandem and in harmony. Specific projects and the progress of our ESG performance, encompassing our TTZ, people, community and responsible business priorities, which are also priorities under the SAIL’22 enabler of “Defend Our Licence to Operate”, are reported under “Commitment to Sustainability” on pages 39 to 68. Our sustainability priorities and programmes are also in support of the United Nation’s Sustainable Development Goals (UN SDGs) and the Ten Principles of United Nations Global Compact.
In executing our strategy and operating our business amid the disruptions last year, we constantly reviewed regulatory changes, market dynamics and macroeconomic developments to manage, if not mitigate, risks to the best of our ability. In 2021, our businesses in Malaysia and Singapore were subject to a number of risks and uncertainties, namely the outbreak of COVID-19, disruptions in the supply of raw materials, disruptions to production and distribution, an increase in contraband and online sales of illicit alcohol.
OUTLOOK AND PROSPECTS
In 2022, we will position our flagship brand, Carlsberg, in the various celebrations that exist in multicultural Malaysia, and we will continue to focus on Malaysia's large football fanbase. We will also continue building on the growth momentum of our premium brands 1664 Blanc, Somersby Cider, Connor’s Stout Porter and Asahi Super Dry, while reigniting our value segment brand, SKOL.
In line with global trends, we will also introduce new craft and speciality brands and increase our focus in the alcohol-free segment. Following the introduction of alcohol-free pilsner and wheat beer in Singapore in 2020, we have plans to launch another alcohol-free beverage in Malaysia this year. In addition, we intend to add new variants to our existing portfolio in order to provide consumers with more options and lower-alcohol beverages.
I would like to convey my appreciation to the governments of Malaysia and Singapore for maintaining the rate of excise duties for beer in their 2022 national budgets. The excise duties for beer in these two markets are already the joint-second highest in the world, and any further increase may spur the growth of the contraband market.
I would also like to express the Board of Directors and Management Team's heartfelt appreciation to everyone who has supported us in being a healthier, safer and better brewer. We have been impressed by the perseverance, engagement and commitment of our employees and would like to say thank you to each and every one.
We sincerely appreciate our shareholders' continued encouragement and trust in us, as well as the cooperation and understanding of all suppliers and customers, particularly our ontrade customers, many of whom have supported the Group throughout another difficult year.