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KUALA LUMPUR: Nestle (M) Bhd’s earnings momentum accelerated in its second quarter ended June 30, 2021, as revenue increased 13.2% to RM1.38bil from RM1.22bil in the previous corresponding period.
The group’s net profit meanwhile increased 27.5% to RM134.5mil.
In a statement yesterday, Nestle said revenue in the second quarter was driven by robust domestic sales growth of 15.8%, on the back of the group’s strong core food and beverage (F&B) business which grew by 8.4% during the three-month period.
“The out-of-home (OOH) business under Nestle Professional saw a solid improvement against very low sales in the same quarter last year when the early lockdowns had the most dramatic impact on this sector of activity.
“The focus on supplying the local market amidst operational restrictions had some impact on the export business, which only grew by 2.5% in the second quarter of 2021,” it said. In the same statement, Nestle chief executive officer Juan Aranols said the group’s key priority is to ensure people’s safety and supply continuity, which has required an immense effort and resilience from all of its teams.
“Systematic antigen testing of the workforce and solid containment standard operating procedures have been instrumental in keeping our sales and operations running to fulfill the solid demand we have seen across most of our brands.
“While Covid-19 continues to have an impact in the short term, we continued building capabilities for the future, entering new high growth categories, as well as advancing on our environmental sustainability programmes.”
Aranols added that Nestle had delivered a sizeable stream of new products during the quarter.
“This included the roll-out of the Harvest Gourmet plant-based range into the retail market and the introduction of dairy-free versions of Milo and Nescafe.
“Other new products launched in the second quarter of 2021 include the Lively Tea range, the extension of the Iced Nescafe range and entrance into the chocolate tablet market segment with the new Kit Kat blocks.”
Commenting on Nestle’s net profit performance during the second quarter of this year, Aranols said the solid recovery compared with the previous corresponding period was mainly driven by the top line acceleration and was slightly moderated by higher commodity prices and increased marketing spend, compared to the movement control order (MCO) period in 2020.
“Additionally, the Covid-19-related expenses remained sizeable in the second quarter, reflecting the cost of the mass antigen screening programme, personal protective equipment and other measures to ensure infection prevention and containment on site.”
Nestle chief executive officer Juan Aranols said the group’s key priority is to ensure people’s safety and supply continuity, which has required an immense effort and resilience from all of its teams.
For the six-months period ended June 30, 2021, Nestle’s revenue increased by 6.6% to RM2.83bil from RM2.65bil in the previous corresponding period.
Aranols said this was mainly driven by domestic sales which grew by 7.7%, as the core F&B business recorded a 6.7% increase while the OOH business continued its gradual but firm recovery against low sales registered in the same period last year due to the impact of the MCO.
“The first half results confirm the resiliency of our model based on driving sustainable growth year after year, boosted by efficiencies, brand support and innovation.
“We will continue to work hard every day to meet the expectations of the rakyat with great tasting, high quality and nutritious products,” he said.
Nestle registered a higher pre-tax profit of RM397.4mil for the first half of 2021, up by 2.8% from the same period last year.
Aranols said this was primarily due to the higher sales achieved, offset slightly by increased commodity prices and marketing spend, as well as the significant Covid-19-related expenses that amounted to close to RM50mil.
The group recorded a higher net profit of RM309.7mil in the first half of 2021, which was also supported by lower taxes due to the reinvestment allowance tax incentive for the group’s new plant-based meal solutions manufacturing facility.
Nestle also declared an interim dividend of 70 sen per share for its current financial year ending Dec 31, 2021, which was the same level as the first interim dividend of 2020.
Commenting on the group’s prospects ahead, Aranols said the progress in the national vaccination programme has been impressive and showed the best of the “Malaysia Boleh!” spirit, which has inspired the company to do its best every day.
“With the light at the end of the tunnel now in sight, we hope for all Malaysians suffering from this pandemic to protect their lives and recover their livelihoods.”
Throughout the first half of 2021, Aranols said Nestle had continued to provide relief to communities, contributing some RM7.5mil to food banks and support to non-government organisations.
“We are also doing our part to encourage all Malaysians to get vaccinated through our “Join the fight. Stop Covid-19” call to arms which includes rewarding vaccinated Malaysians with 25,000 vouchers of RM20 each.”
Counting on a progressive normalisation of economic activities, Aranols said the main challenge for the balance of the year will come from the impact of rising food commodity costs that Nestle has mitigated through the first half of the year with its hedging policies.
“This impact will become more noticeable in the months ahead. That being said, we remain confident to deliver another solid year in 2021, with good sales growth and resilient bottom-line performance.
“Building on our good momentum, we remain focused on driving our positive trajectory in the second half of the year as we strive to deliver sustainable growth for 2021, while supporting Malaysia on the road to recovery.”