Nestle’s net profit in 2Q18 climbs 2.9% to RM166m

New products and business models have set a solid base for growth in 2H18


Nestle (M) Bhd’s net profit for the second quarter ended June 30, 2018 (2Q18), rose 2.92% to RM166.16 million from RM161.44 million a year ago, on the back of higher revenue.

The food and beverage (F&B) manufacturer’s revenue gained 2.34% to RM1.31 billion, against RM1.28 billion in 2Q17, as a result of new product launches, as well as strong consumer and trade promotions.

“In addition, increased festive sales during the Hari Raya period in June contributed to the group’s positive growth. In 2Q18, we also started operations in our new National Distribution Centre (NDC).

“This move from the existing NDC to the new NDC resulted in a shift of sales from June (2Q18) to July (3Q18) because of the required and planned ramp-up of the operations in the new NDC, which will support strong growth in years to come,” Nestle noted in an exchange filing yesterday.

For the first half ended June 30, 2018 (1H18), the group posted a turnover of RM2.74 billion, 3.1% higher than the previous year’s.

Nestle said the good sales performance was contributed by higher domestic sales, driven by strong demand especially during the festive seasons, along with the company’s increased export business.

The F&B group continued to deliver strong innovations and renovations in 1H18 including Maggi Pedas Giler, as well as other innovations such as the new Kit Kat Green Tea, Nestum Kurma & Prun and the opening of the new Nespresso Boutique in the Gardens Mall, Mid Valley City.

Nestle said the new products and business models have set a solid base for growth in 2H18.

Despite the strong top line performance in 1H18, its operating profit improved only by RM7 million from RM520 million previously to RM527 million — which was achieved despite a one-off expense incurred due to the relocation costs to Nestle’s new NDC, the group’s largest in Asia.

Profit after tax for 1H18 increased RM6 million to RM509 million, which Nestle described as a satisfactory bottom line performance considering that 1H17 was already on a high base.

“Against the backdrop of a more encouraging year for the Malaysian economy, we remain committed to our long- term strategy to ‘Fuel the Growth’ via our innovative drive and enhancing our strong brand portfolio.

“We are confident that our investments, including the new NDC, will enable us to maintain our solid growth momentum,” it added.

Nestle declared an interim dividend of 70 sen in respect of financial year ending Dec 31, 2018, which will be paid on Sept 27, 2018.