Carlserg and Guiness, two companies in alcohal industry

Executive Summary

This study is about two of the companies in intoxicant industry which are Carlsberg Brewery Malaysia Berhad and Guinness Anchor Berhad. The background of both of the companies will be reported at first. Following, analysis of the fiscal studies of two recent old ages which are 2008 and 2009 for the companies was done. The analysis is shown in fiscal ratios. Then, the critical issues of the companies were acquiring from intelligence in Malaysia. Last, our group members had given some suggestions as the decision of this study.

Background of the Companies

Carlsberg

The company integrated in December 1969. In 1972, Carlsberg Brewery Malaysia Berhad ( Carlsberg Malaysia ) started to brew Carlsberg Green Label beer. It so gained more than 50 % of market portion in Malaysia Beer Market. Carlsberg Malaysia is scheduled under the consumer merchandises sector on the Main Board of Bursa Malaysia Securities Berhad ( Malaysia Stock Exchange ) . The merchandises of the company includes Carlsberg Gold, SKOL beer, Carlsberg Special Brew, Corona Extra, Carlsberg Green Label, SKOL Super beer, Danish Royal Stout, Tuborg beer, Tetley ‘s, Jolly Shandy Lemon and Peach. Besides, there is besides non-alcoholic Nutrimalt drink.

Guinness Anchor Berhad ( GAB )

On 24th January 1964, GAB integrated 1964 with the name of “ Guinness Malaysia Limited ” . The Company altered its name to “ Guinness Malaysia Berhad ” on 15th April 1966. GAB assumed its present name on 15th November 1989. Since 1965, GAB has been listed on the Main Board of Bursa Malaysia.A GAB is the market leader of the Malaysian beer and stout industry, where it captured 57 % of the market portion. The merchandises of GAB are Heineken, Anglia Shandy, Anchor Strong, Anchor Smooth, Tiger, Kilkenny, Guinness and Malta.A

Both of the companies have same major rivals in international which are Heineken, Budweiser, Stella Artois, Tennent ‘s and much more. But for Malaysia, there is merely Napex Corporation since 2007. The industry tendencies of alcoholic drinks growing easy in 2009 comparison to 2008 because the clients are diminishing their disbursals on alcoholic drinks.

Ratio Analysis

Company

Carlsberg Malaysia

Guinness Anchor Bhd

Year

2009

2008

2009

2008

Short-run Solvency

Current ratio

1.12

3.24

2.37

2.15

Acid trial ratio

0.96

2.78

1.97

1.80

Average aggregation period

59.45

52.91

52.59

46.48

Dayss collectible outstanding

56.16

42.88

39.68

44.47

Asset Management Efficiency

Histories receivable turnover

6.13

6.90

6.94

7.85

Inventory turnover

12.62

10.05

13.44

13.34

Payabless turnover

6.5

8.51

9.2

8.21

Entire assets turnover

1.11

1.53

1.99

1.92

Debt Financing Coverage

Debt ratio

0.45

0.25

0.32

0.34

Debt to equity

0.83

0.34

0.46

0.52

Fiscal purchase index

1.88

1.33

1.45

1.55

Timess involvement earned

257.19

274.46

Overall Efficiency and Performance

Net net income border

0.07

0.08

0.11

0.105

Cash flow border

0.10

0.11

0.09

0.13

Tax return on entire assets

0.08

0.12

0.22

0.20

Tax return on equity

0.15

0.16

0.32

0.31

Show that it has a better term between those 2 old ages in the company.

Interpretation:

Carlsberg

1. Short Term Solvency

Current ratio

09: For every RM the company owes, the company has RM1.12 in its plus.

08: For every RM the company owes, the company has RM 3.24 in its plus.

Acid trial ratio

09: For every RM the company owes, the company has RM 0.96 in its plus excepting the

stock lists.

08: For every RM the company owes, the company has RM 2.78 in its plus excepting the

stock lists.

Average aggregation period

09: The company takes an norm of 59.45 yearss to change over receivables into hard currency.

08: The company takes an norm of 52.91 yearss to change over receivables into hard currency.

Dayss collectible outstanding

09: The company takes an norm of 56.16 yearss to pay.

08: The company takes an norm of 42.88 yearss to pay.

2. Asset Management Efficiency

Histories receivable turnover

09: The company takes 6.13 times to roll up receivables during a twelvemonth.

08: The company takes 6.90 times to roll up receivables during a twelvemonth.

Inventory turnover

09: The company takes 12.62 times to sell its stock list in a twelvemonth.

08: The company takes 10.5 times to sell its stock list in a twelvemonth.

Payabless turnover

09: The company takes 6.5 times to pay back its providers.

08: The company takes 8.51 times to pay back its providers.

Entire assets turnover

09: Every ringgit of entire plus generates RM1.11 gross revenues.

08: Every ringgit of entire plus generates RM1.53 gross revenues.

3. Debt funding coverage

Debt ratio

09: Every dollar of entire assets, the company uses RM0.45 is financed with debt.

08: Every dollar of entire assets, the company uses RM0.25 is financed with debt.

Debt to Equity

09: The company has RM0.83 of debt and RM1 of equity to finance its assets.

08: The company has RM0.34 of debt and RM1 of equity to finance its assets.

Fiscal purchase index

09: A 100 % addition in return on assets of the house will ensue in 188 % in the return on equity.

08: A 100 % addition in return on assets of the house will ensue in 133 % in the return on equity.

Timess Interest Earned

For both of the old ages, times involvement earned were unable to be determined as the involvement disbursal can non be determined. Therefore, they can non be interpreted.

4. Overall Efficiency and Performance

Net net income border

09: The company generates 7 % of net net income from net gross revenues, after the company has paid

all the disbursals including involvement and revenue enhancements.

08: The company generates 8 % of net net income from net gross revenues, after the company has paid

all the disbursals including involvement and revenue enhancements.

Cash flow border

09: The company generates 10 % of hard currency from the gross revenues.

08: The company generates 11 % of hard currency from the gross revenues.

Tax return on entire assets

09: For every RM100 of entire assets, the company has a return RM8 net net income.

08: For every RM100 of entire assets, the company has a return RM12 net net income.

Tax return on equity

09: For every RM100 of stockholders ‘ equity, the company has generates RM15 cyberspace

net income.

08: For every RM100 of stockholders ‘ equity, the company has generates RM16 cyberspace

net income.

Guinness Anchor Bhd

1. Short Term Solvency

Current ratio

09: For every ringgit the company owes, the company has RM 2.37 in its plus.

08: For every ringgit the company owes, the company has RM 2.15 in its plus.

Acid trial ratio

09: For every RM the company owes, the company has RM 1.97 in its plus excepting the

stock lists.

08: For every RM the company owes, the company has RM 1.80 in its plus excepting the

stock lists.

Average aggregation period

09: The company takes an norm of 52.59 yearss to change over receivables into hard currency.

08: The company takes an norm of 46.48 yearss to change over receivables into hard currency.

Dayss collectible outstanding

09: The company takes an norm of 36.68 yearss to pay.

08: The company takes an norm of 44.47 yearss to pay.

2. Asset Management Efficiency

Histories receivable turnover

09: The company takes 6.94 times to roll up receivables in a twelvemonth.

08: The company takes 7.85 times to roll up receivables in a twelvemonth.

Inventory turnover

09: The company takes 13.44 times to sell its stock list in a twelvemonth.

08: The company takes 13.34 times to sell its stock list in a twelvemonth.

Payabless turnover

09: The company takes 9.2 times to pay back its providers.

08: The company takes 8.21 times to pay back its providers.

Entire assets turnover

09: Every ringgit of entire plus generates RM1.99 gross revenues.

08: Every ringgit of entire plus generates RM1.92 gross revenues.

3. Debt funding coverage

Debt ratio

09: Every dollar of entire assets, the company uses RM0.32 is financed with debt.

08: Every dollar of entire assets, the company uses RM0.34 is financed with debt.

Debt to Equity

09: The company has RM0.46 of debt and RM1 of equity to finance its assets.

08: The company has RM0.52 of debt and RM1 of equity to finance its assets

Fiscal purchase index

09: A 100 % addition in return on assets of the house will ensue in 145 % in the return on equity.

08: A 100 % addition in return on assets of the house will ensue in 155 % in the return on equity.

Timess Interest Earned

09: For every dollar of involvement, the company has RM257.19 of operating net incomes

available to pay.

08: For every dollar of involvement, the company has RM274.46 of operating net incomes

available to pay

4. Overall Efficiency and Performance

Net net income border

09: The company generates 11 % of net net income from net gross revenues, after the company has paid all the disbursals including involvement and revenue enhancements.

08: The company generates 10.5 % of net net income from gross revenues, after the company has paid all the disbursals including involvement and revenue enhancements.

Cash flow border

09: The company generates 9 % of hard currency from the gross revenues.

08: The company generates 13 % of hard currency from the gross revenues.

Tax return on entire assets

09: For every RM100 of entire assets, the company has return of RM22 net net income.

08: For every RM100 of entire assets, the company has return of RM2 net net income.

Tax return on equity

09: For every RM100 of stockholders ‘ equity, the company has generates RM32 cyberspace

net income.

08: For every RM100 of stockholders ‘ equity, the company has generates RM31 cyberspace

net income.

Critical Issues

Current economic state of affairs

Carlsberg

Carlsberg Malaysia have make net income in twelvemonth 2008 although the company have experience loss contract of the fabricating export concern to Carlsberg Singapore. The addition in net income chiefly contributes by the positive growing in the domestic stout responsibility paid and beer gross revenues.

In twelvemonth 2009, Carlsberg Malaysia have expand its concern farther by get a subordinate, Carlsberg Singapore Pte. Ltd, for a purchase consideration of RM 370 million from its immediate retention company, Carlsberg Breweries A/S. Carlsberg Malaysia net income has first clip in the Group ‘s history interrupting RM1.0 billion degrees.

The Group ‘s gross for the first one-fourth ended 31 March 2010 increased by 30.6 % compared to the corresponding one-fourth in the old twelvemonth. Originating from the higher gross mentioned above, the Group ‘s Net income before Tax for the one-fourth of RM49.2 million was 67.4 % or RM19.8million higher than the same period last twelvemonth.

Chitchat

Year 2008, the market mentality was challenged by intensifying monetary values of natural stuffs and constituents of brewing, both the monetary values has been increased.

Year 2009, grosss and pre-tax net income were decreased. It is because gross revenues were impacted due to earlier timing of Chinese New Year. Besides, GAB was passing RM 10 million on selling activities to mark the 250th day of remembrance of Guinness, and more than RM 10 million on FIFA World Cup 2010 publicity activities.

Competition

In Malaysia, Ministry of International Trade and Industry has licensed and approved merely two breweries in conformity with the Industrial Co-ordination Act 1975 ( ICA ) operating in local malt spirits market which are Carlsberg Malaysia and Guinness Anchor Berhad. Mean while, during twelvemonth 2007, there was another one new brewery, Napex Corporation, which was licensed by the Customs commercial operations to fabricate and administer a local beer trade name.

Tax Regulation

There was a lessening in corporate revenue enhancement rate from 26 % in twelvemonth 2008 to 25 % in twelvemonth 2009.

There are two sections in Malayan malt spirits which are the “ Stout ” and the “ Beer ” . In twelvemonth 2005, excise responsibility was raised by 23.3 % , gross revenues revenue enhancement decreased to 5 % of ex-brewery monetary value of the goods and an “ Ad Valorem ” responsibility with 15 % ex-brewery monetary value was set up. Beer ‘s import responsibility is RM5.00 per litre. Tax-paid beer and stout volumes have declined by 14 per cent following back-to-back excise revenue enhancement additions in 2003, 2004 and 2005.

Due to the late timing of the Budget 2010 proclamation, there led to worsen of 17.7 % in gross to RM 300.9 million while pre revenue enhancement dropped from 43.4 % to RM35.8 million. In twelvemonth 2009, authoritiess have prohibited spirits and baccy companies from patronizing any concert, public presentation, or show-alike.

Litigation

Breweries companies that runing in Malaysia malt spirits market are required to register with Industrial Co-ordination Act 1975 ( ICA ) or by imposts commercial operations.

Corporate Social Responsibilities ( CSR ) and Public Concerns

Carlsberg

A CSR administration construction, which supported by the Group CSR Steering Committee and CSR unit had been set-up in 2008 in order to guarantee the effectual development and execution of the Group CSR scheme. Besides that, Carlsberg Malaysia has established a CSR Committee of local CSR title-holders consisting caputs of assorted maps to drive the strategic constitution and development of the planetary CSR scheme locally to complement the attempts by the Group. The company was one out of several breweries amongst the Carlsberg Group ‘s companies that participated in the anti-global heating motion, for both Earth Hour 2008 and 2009.

Besides, Carlsberg Malaysia was the first and merely brewery in Malaysia that supported the Penang Government ‘s “ No Plastic Bags on Monday ” run by offering an sole Carlsberg eco-friendly bag to clients who purchased a carton of Carlsberg beer at take parting supermarkets in Penang.

In twelvemonth 2008, an investing of RM 0.5 million was made to upgrade the works, at the same time increasing biogas coevals which is channeled to the double fuel boiler to cut down depletion of non renewable resources, natural gas or dodo fuel.

Chitchat

In Year 2008, GAB initialed Dragon Mission, every bit known as Community fund-raising in back uping the promotion of Chinese instruction in Malaysia. Other than that, GAB launches SMILES ( a corporate societal duties programme for Indian community )

In Year 2009, GAB launched its ain GAB ‘s Academy, which serves as a trade battle programme for its spouses in the cordial reception and every bit good as nutrient and drink sector.

Future Growth

Escalating stuff costs have been a major concern but will still go on to drive the enterprises to cut down the impact on net income border.

Other than that, there is the hope of the industry that the Government, being cognizant that the excise responsibilities in Malaysia are the 2nd highest in the universe after Norway, will non present further responsibility additions for a few old ages until such clip the excise responsibilities of neighbouring states catches up with Malaysia. The presently high excise responsibilities commit or promote smuggling. Meanwhile, Government should maintain effectual and better the enforcement against smuggled beer merchandises.

More investing stimulates into human resource section in footings of employee preparation to develop the skill base of the employees. Consistent preparation is an indispensable to fit them with the accomplishments and cognition to heighten their public presentations in the dynamic and disputing competitory environment. Competition in Malaysia is expected to stay utmost particularly with the entryway of a 3rd brewery ( Napex Corp ) since twelvemonth 2007.

Decision and Recommendations

Based on the ratio analysis, it shows that Carlsberg has a better term in twelvemonth 2008 while GAB has better term in twelvemonth 2009 with comparing between twelvemonth 2008 and 2009. However, the ratios between both of the companies are largely the same. This means that the market portion of both of the companies is rather equal because they have merely 1 same rival in Malaysia which is Napex Corporation.

Even though Malaysia is a Muslim ‘s state where Muslim can non imbibe, it does non curtail the sale of alcoholic drinks. The mark clients of those companies are non-Muslim. Therefore, to increase the net income of the companies, they may bring forth “ halal ” drinks where Muslim clients can purchase and imbibe. They have to do certain that their merchandises are consumed in a responsible mode such as monetary value, quality and besides measure and besides no inappropriate usage of their merchandises.

As a decision, an investor may put in Carlsberg Brewery Malaysia Berhad. As an investor, we aim for a better return in future comparison to now. Although the ratio analysis shows that it has a better term for twelvemonth 2008 comparison to twelvemonth 2009, but the company shows a better hereafter growing based on the critical issues we had discussed supra.

Appendix

Carlsberg ( RM )

1. Short-run Solvency

Current ratio = Current plus

Current liabilities

09 = 399 228 = 1.12

356 173

08 = 456 841 = 3.24

140 638

Acid trial ratio = Current plus – Inventory

Current liabilities

09 = 399 228 – 58 590 = 0.96

356 173

08 = 456 841 – 66 297 = 2.78

140 638

Average aggregation period = Histories receivable

Net sales/365

09 = 170 284 = 59.45

1 045 483/365

08 = 139 183 = 52.91

960 207/365

Dayss collectible outstanding = Histories collectible

Average day-to-day cost of gross revenues

09 = 113 752 = 56.16

739 306/365

08 = 78 269 = 42.88

666 180/365

2. Asset Management Efficiency

Histories receivable turnover = Net gross revenues

Histories receivable

09 = 1 045 483 = 6.13

170 284

08 = 960 207 = 6.90

139 183

Inventory turnover = Cost of goods sold

Inventories

09 = 739 306 = 12.62

58 590

08 = 666 180 = 10.05

66 297

Payabless turnover = Cost of goods sold

Histories collectible

09 = 739 306 = 6.5

113 752

08 = 666 180 = 8.51

78 269

Entire plus turnover = Net gross revenues

Entire assets

09 = 1 045 483 = 1.11

945 112

08 = 960 207 = 1.53

627 234

3. Debt Financing Coverage

Debt ratio = Total liabilities

Entire assets

09 = 428 501 = 0.45

945 112

08 = 157 857 = 0.25

627 234

Debt to equity= Entire liabilities

Stockholders ‘ Equity

09 = 428 501 = 0.83

514 796

08 = 157 857 = 0.34

468 145

Fiscal purchase index = Return on equity

Adjusted return on assets

09 = 0.15 = 1.88

0.08

08 = 0.16 = 1.33

0.12

Timess Interest Earned = Operating net income

Interest Expense

09 = 100 370 = a?z ( Infinite )

08 = 101 129 = a?z ( Infinite )

4. Overall Efficiency and Performance

Net Net income Margin = Net net income

Net gross revenues

09 = 76 725 = 0.07

1 045 483

08 = 76 119 = 0.08

960 207

Cash flow border = Cash flow from operating activities

Net gross revenues

09 = 107 074 = 0.102

1 045 483

08 = 105 442 = 0.109

960 207

Tax return on entire assets = Net net incomes

Entire assets

09 = 76 725 = 0.08

945 112

08 = 76 119 = 0.12

627 234

Tax return on equity = Net net incomes

Stockholders ‘ equity

09 = 76 725 = 0.15

514 796

08 = 76 119 = 0.16

468 145

Guinness Anchor ( RM )

1. Short-run Solvency

Current ratio = Current plus

Current liabilities

09 = 410 002 = 2.37

172 801

08 = 391 655 = 2.15

181 849

Acid trial ratio = Current plus – Inventory

Current liabilities

09 = 410 002 – 69 453 = 1.97

172 801

08 = 391 655 – 64 976 = 1.80

181 849

Average aggregation period = Histories receivable

Net sales/365

09 = 185 190 = 52.59

1 285 423/365

08 = 152 134 = 46.48

1 194 602/365

Dayss collectible outstanding = Histories collectible

Average day-to-day cost of gross revenues

09 = 101 493 = 39.68

933 473/365

08 = 105 641 = 44.47

867 077/365

2. Asset Management Efficiency

Histories receivable turnover = Net gross revenues

Histories receivable

09 = 1 285 423 = 6.94

185 190

08 = 1 194 602 = 7.85

152 134

Inventory turnover = Cost of goods sold

Inventories

09 = 933 473 = 13.44

69 453

08 = 867 077 = 13.34

64 976

Payabless turnover = Cost of goods sold

Histories collectible

09 = 933 473 = 9.20

101 493

08 = 867 077 = 8.21

105 641

Entire plus turnover = Net gross revenues

Entire assets

09 = 1 285 423 = 1.99

646 150

08 = 1 194 602 = 1.92

623 449

3. Debt Financing Coverage

Debt ratio = Total liabilities

Entire assets

09 = 203 849 = 0.32

646 150

08 = 212 115 = 0.34

623 449

Debt to equity= Entire liabilities

Stockholders ‘ Equity

09 = 203 849 = 0.46

442 301

08 = 212 115 = 0.52

411 334

Fiscal purchase index = Return on equity

Adjusted return on assets

09 = 0.32 = 1.45

0.22

08 = 0.31 = 1.55

0.20

Timess Interest Earned = Operating net income

Interest Expense

09 = 188 776 = 257.19

734

08 = 165 222 = 274.46

602

4. Overall Efficiency and Performance

Net Net income Margin = Net net income

Net gross revenues

09 = 141 988 = 0.11

1 285 423

08 = 125 857 = 0.105

1 194 602

Cash flow border = Cash flow from operating activities

Net gross revenues

09 = 121 193 = 0.09

1 285 423

08 = 156 126 = 0.13

1 194 602

Tax return on entire assets = Net net incomes

Entire assets

09 = 141 988 = 0.22

646 150

08 = 125 857 = 0.20

623 449

Tax return on equity = Net net incomes

Stockholders ‘ equity

09 = 141 988 = 0.32

442 301

08 = 125 857 = 0.31

411 334