Nestlé sees growth in 3Q despite pandemic

The FMCG multinational launched several products during the quarter to post a 3.6% YoY increase in revenue

by FAYYADH JAAFAR / Pic by MUHD AMIN NAHARUL

NESTLÉ (M) Bhd expects to post another strong financial year despite warning of rising cost pressures from higher commodity prices in the fourth quarter (4Q).

The fast-moving consumer goods (FMCG) multinational posted a 3.6% year-on-year (YoY) rise in revenue to RM1.4 billion in the 3Q ended Sept 30, 2021, which was also 5.6% higher on a year-to-date (YTD) basis.

Net assets per share attributable to equity holders grew from RM2.38 to RM2.71, as the company declared an interim dividend of 70 sen per share for the period.

Nestlé credited the strong growth in both local and foreign markets, which increased by 3.4% and 4.5%, respectively, in the quarter driven by the group’s food and beverage (F&B) division which increased by 5.5% in the 3Q despite the ongoing Covid-19 pandemic.

The company launched several products during the quarter, including Nescafé ready-to-drink limited editions (Gula Melaka,

Pandan and Ros Bandung), Nescafé Ice Caffé Latte, Kit Kat Chunky Raisin & Cookie, and Nestlé Onde Onde Ice Cream, as well as the plant-based Harvest Gourmet and dairy-free Milo and Nescafé beverages.

Profit before tax and profit after tax were RM207.6 million and RM148 million, respectively, compared to RM170.9 million and RM128.4 million in the prior year; while the current fiscal YTD was RM457.7 million, up from RM420.2 million in the first nine month of 2020 (9M20).

Profitability improvements were slightly offset by higher commodity prices and Covid-19-related expenses, which remained significant in 3Q21 due to the cost of the group’s ongoing Covid-19 antigen screening programme, provision of personal protective equipment for employees, and other Covid-19-related safety measures to ensure infection prevention and containment on-site, the company’s exchange filing noted.

Nestlé’s turnover climbed by 5.6% to RM4.27 billion in 9M21 from RM4.04 billion in 9M20 mostly driven by domestic sales, which increased by 6.3%, while the retail F&B segment increased by 6.2%.

Nestlé anticipates a steady increase in demand for its goods as Malaysia removes regulations.

The company is hopeful about the remainder of 2021, noting that the country’s national vaccination rate has reached above 90% for the adult population and anticipates a further acceleration of economic recovery.

“Looking ahead, a key challenge in 4Q21 will be the rising food commodity costs. We expect the impact to be more pronounced in the coming months and especially in 2022,” the company noted.

The company’s sustainability plan involves expanding its door-to-door collection and recycling company to other cities, with the goal of reaching more communities.

Nestlé plans to start Project RELeaf in the 4Q which would see the planting of three million trees by 2023.

“We are confident in our ability to sustain our good momentum and produce another year of strong earnings in 2021,” the filing stated.