Good margins boost Nestle’s Q3 profit

KUALA LUMPUR: Nestlé (Malaysia) Bhd’s net profit rose 8.2 percent year-on-year to RM148.99 million in the third quarter (Q3) ended Sept 30, 2019, as good margins helped to offset higher commodity prices and unfavourable exchange rates.

This confirmed “the effectiveness of the efforts to manage margins through a focus on driving sustainable efficiencies and savings,” the group said in a filing with Bursa Malaysia yesterday.   

However, its revenue slipped 2.2 percent to RM1.40 billion from a year earlier.

“Against the background of exceptionally strong sales in Q3 2018 (a period without the goods and services tax), sales growth was subdued in the quarter (under review) in spite of solid growth again in domestic sales (1.7 percent when adjusted for the divestment of chilled dairy business). Exports growth was still negatively impacted by unfavourable trading conditions in some of our main importing markets,” Nestle said.

For the nine months, net profit grew 1.1 percent to RM541.09 million from RM535.06 million in the same period last year as the group leveraged the solid domestic revenue growth and proactively captured efficiencies and savings to invest in brands as well as protect margins.

Amid the subdued consumer sentiment, Nestle managed to increase revenue by 0.4 percent to RM4.19 billion from RM4.17 billion previously, thanks to a 2.6 percent growth in domestic sales.

“This was achieved on the back of robust demand and effective marketing support over both the Chinese New Year and Hari Raya festive seasons, as well as successful product innovations and portfolio renovation,” it noted.

On prospects, Nestle said its results remained resilient and it expected to land another quarter of solid results in the fourth quarter and for the full year.

“Despite a challenging backdrop of global and local uncertainties — both consumer and commodities — our fundamentals remain strong and we continue to focus on commercial activities which are consumer-driven,” it added.

The group has declared a second interim dividend of 70 sen per share for the financial year ending Dec 31, 2019. – Bernama