Nestle posts lower net profit on reinvestment activity

PETALING JAYA: Nestle (Malaysia) Bhd’s net profit for the third quarter ended Sept 30, 2016 fell 10.3% to RM160.71 million from RM179.16 million a year ago despite achieving higher gross profit.

In a filing with Bursa Malaysia yesterday, the company said its gross profit grew 6.5% to RM491 million during the quarter from RM461 million a year ago due to higher revenue as well as better efficiency in the factories and supply chain.

“These savings were reinvested into the business by supporting the new products as well as by intensifying our trade and consumer promotions in order to continue to strengthen our market share position as the base for a sustainable growth. As a result, operating profit and net profit reduced compared with the corresponding period in 2015,” it said.

Revenue for the quarter rose 3.66% to RM1.26 billion from RM1.22 billion a year ago, driven by domestic and export businesses, which grew 3.5% and 4.5% respectively, as well as new product launches.

For the nine months ended Sept 30, 2016, net profit rose 16.14% to RM570.19 million from RM490.94 million a year ago, driven by higher revenue, favourable commodity prices and improved efficiency in the factories and overall supply chain.

Revenue for the period rose 4.8% to RM3.81 billion from RM3.64 billion a year ago due to higher domestic sales and growth in its export business.

The company declared a second interim dividend of 70 sen per share amounting to RM164.15 million in respect of financial year ending Dec 31, 2016, payable on Dec 2, 2016.

Based on a “cautiously optimistic” outlook on the Malaysian economy, the company said it will continue with its “Fuel the Growth” strategy, which is to strive for efficiency increases in its supply chain while reinvesting realised improvements into sustainable growth of the company by innovating/renovating its portfolio and intensifying trade and consumer promotions.