Friday, November 2, 2012

Top line growth for Nestlé amidst tough market conditions; exchange loss hurt pre-tax profit

Nestlé Lanka PLC posted total revenue of Rs. 21.6 billion with a growth of 10.2% for the nine months ended 30 September 2012, amidst a challenging market environment. The performance of the third quarter of 2012 marks a 4.1% (YoY) revenue growth to Rs. 7.02 billion for the local subsidiary of the world’s leading food and beverage company.

Nestle’s bottom line at pre-tax profit level saw a 12% drop to Rs. 2.39 billion in the first nine months owing to Rs. 320 million net exchange loss incurred on foreign currency purchases and revaluation of foreign currency borrowings. After tax profit was almost flat at Rs. 2 billion. Gross profit was up 10% to Rs. 7.18 billion.

 In the third quarter results from operating activities was Rs. 813 million, down from Rs. 1 billion a year earlier, pre-tax profit amounted to Rs. 780 million, as opposed to Rs. 997.4 million in 3Q of 2011 whilst after tax profit was Rs. 798 million, marginally up from Rs. 768 million a year earlier.

 The current volatile market conditions, with the currency depreciation and a significant increase in fuel, energy and input costs posed massive challenges for Nestlé Lanka this year. The company has been able to offset most of these impacts through a series of price increases, cost saving initiatives and tax relief relating to the investments made by the company in the last two years. Net profit for the period shows a marginal improvement.

 The company made a significant mark in history in September this year, by announcing its highest ever procurement of local dairy milk of over five million litres and confirming a contribution of Rs. 2.6 billion to the rural economy for the full year.

 Commenting on the results, Nestlé Lanka Managing Director Alois Hofbauer said: “2012 continues on as a challenging year for our organisation. However, we will keep our targets in sight and strive to maintain the momentum for the remainder of the year. Despite the difficult conditions we currently operate in, Nestlé Lanka continues to uphold its commitment towards the development of the country’s rural economy. We’re extremely proud to have achieved our highest ever intake of fresh milk in September this year, enabling us to further elevate the livelihoods of over 18,000 dairy farmers in the island. We will remain true to our commitment of creating shared value for all our stakeholders.”

Continuing its onward journey in innovation, Nestlé Lanka launched its latest addition to its beverage portfolio, Nescafé Ice Coffee ready-to-drink, a chilled variant to the much loved hot beverage, Nescafé.

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