Nestle’s 1Q20 earnings fall 6%

The quarter reflected the group’s ability to continue to drive growth and protect both people and performance

by ASILA JALIL / Pic by MUHD AMIN NAHRUL

NESTLE (M) Bhd is confident to maintain solid growth momentum for the rest of the year across its businesses on the back of encouraging signs of slow but firm recovery for its out-of-home (OOH) channels in the months ahead.

The fast-moving consumer goods (FMCG) group recorded a 6% year-on-year marginal decline in its net profit in the first quarter ended March 31, 2021 (1Q21), to RM175.16 million from RM186.31 million.

It has put in place Covid-19 related expenses worth RM22 million in the current quarter, which include Covid-19 antigen screen programme and other standard operating procedures, for operational continuity.

Revenue for the quarter increased 1% to RM1.45 billion from RM1.43 billion in the corresponding period last year, supported by its food and beverage business which recorded a growth of 5% driven by robust in-home consumption.

“However, this was moderated slightly by OOH activities, still very much impacted by the Movement Control Order and the impact on the hospitality and restaurant sectors. OOH sales remain significantly below the pre-Covid baseline,” said the group in its Bursa filing yesterday.

It said the quarter reflected the group’s ability to continue to drive growth and protect both people and performance amid the challenging pandemic conditions.

Nestle unveiled its plant-based meal solutions (PBMS) factory in Shah Alam, Selangor, in the quarter and started the distribution of the range into selected restaurant channels.

It plans for the rollout of the range into retail stores and online to be in 2Q.

“The opening of our PBMS manufacturing facility goes in this direction of constantly looking at long-term opportunities, investing early and being first to capture the opportunities offered by consumers’ evolving expectations and demand,” it said.

Moving forward, the group will also further renew its commitment in Malaysia by allocating RM300 million of capital expenditure to ramp up production capacity in several factories and upgrade technology for increased productivity and efficiency.

“We think 2021 can shape up to be another solid year with top line growth and resilient margins, even though a note of caution is needed, given the volatility in many commodity markets and the ongoing challenges to global supply chains derived from the global crisis in ocean freight transportation.

“While our hedging policies help us mitigate these impacts over the next few months, we continue to monitor carefully the situation to anticipate and prevent any potential downside.”