The increase is due to phasing of marketing and promotional spending, and improved efficiency across the supply chain
By FARA AISYAH / Pic By MUHD AMIN NAHARUL
Nestlé (M) Bhd’s net profit for the first quarter ended March 31, 2019 (1Q19) increased 1.73% year-on-year (YoY) to RM235.22 million or RM1 per share, from RM231.22 million (98.6 sen per share) a year ago, due to lower operating expenses.
In an exchange filing yesterday, the company stated the lower operating expenses were due to phasing of marketing and promotional spending, as well as improved efficiency across the supply chain.
Revenue for the three-month period also rose marginally to RM1.45 billion, up 1.4% YoY from RM1.43 billion in the same quarter last year, driven by robust domestic sales of 4.9% in the quarter, fuelled by strong sales momentum during the last Chinese New Year festive period.
Nestlé added that factoring in the divestment of the chilled dairy business on Jan 1, 2019, the improvement represents a solid 3.2% increase in growth YoY.
The company is pleased to share its strong start to the year, with its growth on a comparable basis out-pacing market performance.
“We continued to create new consumption opportunities and accelerated our product innovation drive in the 1Q. New product innovations in 1Q19 include Maggi Pedas Giler 2X Ayam Bakar, Milo with Whole Grain Cereal and Nestum Brown Rice.
“Looking ahead, we remain focused on leveraging new opportunities for our products, delivering a steady stream of innovations and constantly driving efficiencies to accelerate our growth,” Nestlé Malaysia CEO Juan Aranols said in a statement yesterday.
The country’s largest food and beverage (F&B) manufacturer also sees strong demand for its brands in Malaysia and has strong plans in place to continue generating sustainable and profitable growth.
The group noted that there will be some pressures from higher commodity prices and more volatile demand in its main export markets, but remains confident in its ability to deliver another solid year of results in 2019.
“We are encouraged by this solid start to the year. Although we still see some pressures on commodities and fluctuating consumer sentiment, we are optimistic that we will be able to sustain this momentum in the year ahead, given the robust plans we have in place to deliver sustainable and profitable growth,” Aranols added.
Nestlé Malaysia has disposed of its chilled dairy and manufacturing businesses to a French firm, Groupe Lactalis, for a cash consideration of RM155.3 million.
Apart from the RM100 million proceeds from the disposal, which will be utilised to establish the Milo Manufacturing Centre of Excellence in its Chembong factory by year-end, the balance of the proceeds will be utilised to reduce Nestlé’s bank borrowings and intercompany debts.