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Nestle Malaysia posts higher 2Q revenue, helped by increased exports

Nestle Malaysia posts higher 2Q revenue, helped by increased exports

KUALA LUMPUR: Nestle Malaysia Bhd, famous for its Milo and Nescafe brands, generated higher sales in the quarter ended June 30, 2017 (2QFY17), rising 3.76% to RM1.28 billion from RM1.24 billion a year earlier. In a filing with Bursa Malaysia today, Nestle said the higher sales — supported by increase in exports – were led by brands such as “MAGGI Hot Mealz”, “Milo Kaw”, “Kit Kat Mini” and “Mat Kool Panda Ice Cream”. “Effective marketing and trade activities held for Ramadan and Hari Raya helped to deliver the desired growth for the quarter. Exports also contributed strongly to this good performance,” the consumer staples company said.

Nestle’s quarterly net profit came in at RM162.07 million, a 14.16% dip from RM188.80 million in 2QFY16. This, the group said, was supported by the solid operating profit numbers, which was the result of its “proactive cost management and a slightly different phasing of the marketing investments.” “From a profit perspective, the higher raw material prices coupled with a weaker ringgit had made the input costs more expensive. Compared with the second quarter of last year, the prices of major raw materials such as milk powders, coffee beans and palm oil had increased by some margin,” Nestle said. For the first half of  FY17, Nestle saw good sales of its products boosting its revenue by 4.11% to RM2.66 billion from RM2.55 billion in the same period of FY16, while net profit slipped 4.15% to RM392.5 million from RM409.47 million.

Nestle noted that the decline in its year-to-date earnings was due to the higher effective tax rate. “Despite the external headwinds (increase in raw material prices and devaluation of ringgit), the group maintained a solid profit-situation,” Nestle said, noting that increase in internal efficiency increases and diligent cost management were among the steps taken to maintain the solid earnings.

On outlook, the Swiss-owned group said it is “cautiously optimistic” and will continue with its “Fuel the Growth” strategy, which aims at striving for efficiency increases all over the supply chain management. The strategy, it added, also include investing the realized improvements into the sustainable growth of the company by innovating or renovating its portfolio and intensifying its trade and consumer promotions. “We are confident that our balanced approach of proactive cost management and effective trade and marketing investments will help to improve the profit after tax situation for the full financial year 2017,” Nestle added. Nestle, the world’s largest food and beverage products producer was listed on the Main Market of Bursa Malaysia in December 1989. Its shares rose 38 sen or 0.45% to close at RM84.58 today, giving it a market capitalisation of RM19.83 billion.