Nestlé 2Q profits hit by MCO

The fast-moving consumer goods company benefitted from a one-off gain of RM19.7m made on the sale of its PJ factory in 2Q19


NESTLÉ (M) Bhd stated that the lack of sales to commercial clients in the hotel, restaurant and cafe (HORECA) business due to Movement Control Order (MCO) hit sales and lowered profit for the second quarter ended June 30, 2020 (2Q20).

Its earnings for the period declined 32.73% year-on-year (YoY) to RM105.53 million as the decline in the mobility of the public impacted sales in restaurants, R&R rest stops and office-related channels.

The fast-moving consumer goods company benefitted from a one-off gain of RM19.7 million made on the sale of its Petaling Jaya (PJ) factory in 2Q19.

For April to June, Nestlé’s earnings per share amounted to 45 sen but the company declared a 70 sen, interim payable on Oct 8, its exchange filing yesterday stated. Quarterly revenue dipped 8.96% YoY to RM1.22 billion due to lower sales.

Nestlé CEO Juan Aranols said the group’s financial performance remained solid in absolute terms.

“Despite a temporary contraction versus the baseline period derived from these Covid-19-related challenges, particularly impacting the HORECA channels, we can say that the situation in these channels is progressively improving as Malaysia entered into the Recovery MCO phase in June.

“Throughout the quarter, we also ensured strong sales execution and found new and innovative ways to connect with consumers,” he said in a statement yesterday.

New products launched in the quarter include the extension of the Starbucks range, Nescafé Gold Origins, ready-to-drink products such as Nescafé Ice Cappuccino, Nescafé Cold Brew Hazelnut and Nestlé Omega Plus Dark Chocolate, and an important extension into the fast-growing “goreng” noodle segment, the Maggi Goreng new range.

For the first half, Nestlé’s net profit fell 25.57% YoY to RM291.84 million as revenue dropped 5.02% YoY to RM2.65 billion.

Aranols said Nestlé continues to invest in the future, as reflected by its robust plans and expansion into new categories with high-growth potential.

“We can now disclose that a significant investment is going into our Shah Alam factory where we are building a pioneering manufacturing facility for plant-based meal solutions.

“This is an area of high strategic priority for the Nestlé group worldwide and we are honoured to host Nestlé’s first facility in South-East Asia, that will support growth locally and for export markets,” he said.

He added that the company is well-positioned to deliver sustainable earnings moving forward.