Higher margins lift Nestle’s Q3 profit, 70 sen dividend declared

12 Nov 2019 / 13:58 H.

PETALING JAYA: Nestle (Malaysia) Bhd posted a net profit of RM148.99 million for the third quarter ended Sept 30, 8.2% higher than the RM137.69 million posted in the previous corresponding quarter, thanks to higher margins.

Revenue for the quarter, however, decreased 2.2% to RM1.4 billion, from RM1.43 billion.

Nestle also declared an interim dividend of 70 sen per share amounting to RM164.15 million for the quarter, which will be paid on Dec 19, 2019.

In a statement filed with Bursa Malaysia, the group said its profit growth came in spite of higher commodity prices and unfavorable exchange rates.

“Sales growth was subdued in the quarter and in spite of solid growth again in domestic sales. Exports growth was still negatively impacted by unfavorable trading conditions in some of our main importing markets. Robust domestic sales benefited again from strong operational sales execution, sustained contribution from innovations and solid marketing activities,” it said.

Cumulatively for nine months ended Sept 30, the group’s net profit increased 1.1% to RM541.1 million, from RM535.1 million previously. Revenue also increased marginally to RM4.19 billion from RM4.17 billion.

“Despite the subdued consumer sentiment...domestic sales remained the engine of growth, with sales expanding 2.6% during the nine-month period.

“The solid growth results reflect positive offtake for our brands confirming sustained consumer demand. 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,” the group said.

Looking ahead, Nestle said it expects to land “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.

“We will continue to proactively enhance efficiencies and generate savings to invest behind our brands and protect our margins. In the current context this remains the most effective strategy to counter rising commodity costs and protect the accessibility to our brands by consumers.”

At the midday break, Nestle’s share price rose 50 sen to RM145.40 with 21,600 shares changing hands.

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