Nestlé says 3Q net profit down 24%, declares 70 sen dividend

KUALA LUMPUR (Oct 26): Higher commodity prices, unfavourable exchange rates and the one-off prosperity tax hewed into Nestlé (Malaysia) Bhd’s net profit for the third quarter ended Sept 30, 2022 (3QFY2022), slashing it down 23.9% to RM112.65 million from RM148.02 million a year ago.

The food and beverage (F&B) manufacturer’s earnings per share slipped to 48.04 sen from 63.12 sen last year, according to a bourse filing with Bursa Malaysia on Wednesday (Oct 26).

Nevertheless, the group declared an interim dividend of 70 sen per share, with Nov 17 as the ex-date, and payment on Dec 15.

The weaker earnings came despite Nestlé posting a 17.01% rise in quarterly revenue to RM1.68 billion from RM1.44 billion, on the back of higher domestic and export sales, as well as continued recovery of its out-of-home (OOH) channels.

“Domestic sales increased 13.5% and export sales 30.2%, as economic activities continued to stabilise locally and globally.

“OOH channels continued to recover compared to the same period last year (3QFY2021), which saw the OOH business impacted by movement restrictions in certain areas of Malaysia,” the group said.

Meanwhile, for the nine-month period ended Sept 30, 2022, Nestlé’s cumulative net profit grew by 6.51% to RM487.48 million from RM457.71 million, as higher sales and lower Covid-19 expenses helped to partially mitigate the impact of higher commodity prices, unfavourable exchange rates and the one-off prosperity tax known as Cukai Makmur.

Cumulative revenue for the period climbed 17.55% to RM5.02 billion from RM4.27 billion, carried by a 13.7% increase in domestic sales and 33.8% in export sales, on the back of solid growth in both the F&B and OOH segments.

Moving into the final quarter of the year, Nestlé said it remains in a resilient position to deliver a year of solid growth, but noted that the group continues to grapple with tough market conditions defined by higher commodity cost and energy cost in a challenging and volatile global environment.

“Adding to this, the ringgit has depreciated to its weakest point against the US dollar in many years, further compounding the impact of imported commodities, even if this has been partially softened by our hedging policy.

“In this context, we will remain focused on what matters, meeting the expectations for taste and quality of all Malaysians, and nurturing the strong bonds of our brands with the rakyat,” the group said, adding that it will continue to enhance operational efficiencies to moderate the impact of external cost headwinds.

At the noon break on Wednesday, shares in Nestlé were up 70 sen or 0.53% at RM133.30, giving the group a market capitalisation of RM31.26 billion.