Nestlé’s 3Q net profit falls as MCO bites

by HARIZAH KAMEL / pic by MUHD AMIN NAHARUL

NESTLÉ (M) Bhd’s net profit for the third quarter ended Sept 30, 2020 (3Q20), declined by 13.8% year-on-year (YoY) to RM128.39 million from RM148.99 million due to higher operating expenses and the pandemic’s impact on hotels and restaurants nationwide.

Turnover for the quarter fell slightly to RM1.39 billion from RM1.4 billion in the preceding year as the group’s core food and beverage (F&B) business grew 2.2% driven by in-home consumption and a positive recovery in exports.

“Our business, though resilient, is not immune to the significant impact of the Covid-19 pandemic. The resilient results for the quarter are driven by strong demand generation activities throughout the quarter. This has helped to keep a robust in-home consumption for all our main brands,” the company stated in a filing to Bursa Malaysia yesterday.

For the nine months ended Sept 30, 2020 (9M20), net profit was down by 22.3% to RM420.23 million from RM541.1 million a year earlier.

Revenue over the same period was lower by 3.5% YoY at RM4.04 billion compared to RM4.19 billion posted last year.

Nestlé said its hotel, restaurant and catering channels remained below the previous year baseline. Still, it gained momentum progressively following the easing of operational constraints under the Recovery Movement Control Order (RMCO) started mid-June.

Apart from the earlier Chinese New Year celebrations this year, which affected its 1Q20 sales, Nestlé said sales for 9M20 were mainly affected by the MCO.

The impact, however, was mitigated by the group’s core F&B business, which registered a 1.1% increase in sales during the January-September period, backed by solid sales execution and successful marketing campaigns.

Nestlé also announced a second interim dividend of 70 sen per share, amounting to RM164.15 million, which reconfirms the company’s willingness and confidence to deliver a solid dividend for the full year.

It said while challenges are expected to persist in the near term, the group firmly believes longer-term prospects are positive and will continue to work hard to win the confidence and trust of Malaysians every day.

“With the recent rise in Covid-19 cases and the reinforcement of the Conditional MCO, we will continue to ensure the safety of our people and business partners, and play our part to support communities.

“Our strong innovation pipeline across categories will further support our performance in 4Q20, and we remain focused on driving excellence in operations and commercial execution to accelerate growth,” it added.

Nestlé shares ended flat yesterday at RM141, giving it a market value of RM33.06 billion.