2 Important Things About Carlsberg Brewery Malaysia Investors Should Know

In an article published yesterday, I had taken a look at the growth of Carlsberg Brewery Malaysia Bhd’s (KLSE: 2836.KL) revenue, profit, and dividends over the past decade.

Carlsberg Brewery, as I had stated in my earlier piece, is one of the two giants in Malaysia’s alcoholic beverages market. The company has a number of beer brands in its portfolio, including Carlsberg, Asahi Super Dry, Royal Stout, and more.

I thought it’d be interesting to take a look at other aspects of Carlsberg Brewery’s business in here. More specifically, I’m talking about the operating margin and return on equity.

The former can be an indication of how well a company’s management team is running the show. A firm with consistently high operating margins can generally be seen as one that is better managed than a firm with low margins.

Meanwhile, the return on equity is a measure of how much profit a company can make for each shareholders’ dollar it has in its possession. Generally speaking a high return on equity is often associated with a high-quality business if undue leverage is not present.

Over the past five years from 2011 to 2015, Carlsberg Brewery has managed to grow its operating margin from 14.4% to 16.4% as you can see in the table below:

Carlsberg Brewery Operating Margin table
Source: S&P Global Market Intelligence

The company’s return on equity over the same period has also remarkably never been lower than 38.4%. In addition, the metric has stepped up from 38.4% in 2011 to 65.4% in 2015. These are shown in the following table:

Carlsberg Brewery return on equity table
Source: S&P Global Market Intelligence

In sum, it appears that Carlsberg Brewery’s business has improved over the past five years, given the higher operating margin and return on equity.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.