Net profit improvement

Nestle’s CEO Juan Aranols (pic) expects the repercussions from the Covid-19 pandemic to continue, especially through the first half of the year.

PETALING JAYA: Nestle (M) Bhd reported a marginal net profit growth in the fourth quarter ended Dec 31,2020 (4Q20) as a recovery in local sales and exports ended its three consecutive quarters of bottomline contractions.

The food and beverage group told Bursa Malaysia yesterday that its net profit in 4Q20 inched up by 0.5% year-on-year (y-o-y) to RM132.49mil as compared to 131.82mil a year earlier.

Revenue in the Oct-Dec 2020 period rose by 3.1% y-o-y to RM1.37bil from RM1.33bil in the previous corresponding quarter.

Nestle said that apart from the strong in-home consumption and improved exports growth, the sales in out-of-home (OOH) channels trended better as movement restrictions eased in the second half of the year.

However, it pointed out that the OOH sales are still well below pre-Covid-19 levels.

Nestle added that the accelerated roll-out of product innovations was also a key growth driver during the quarter.

Earnings per share in 4Q20 improved to 56.5 sen as compared to 56.21 a year earlier. Nestle declared a dividend of 92 sen in the fourth quarter, bringing the full-year total payment to RM2.32 per share.

Cumulatively, for the financial year of 2020, the group’s net profit plummeted by almost 18% y-o-y to RM552.71mil.

“The contraction against 2019 was mainly due to the impact of Covid-19 on OOH channels and significant Covid-19 related expenses amounting to RM62mil, which was invested into pandemic relief efforts and comprehensive measures to preserve employee safety and operational continuity.

“The previous financial year also benefited from the one-off gain of RM21mil related to the Petaling Jaya factory divestment, ” it said.

Meanwhile, revenue dropped by 1.9% y-o-y to RM5.41bil.

Nestle said the impact of the Covid-19 pandemic was concentrated in the first half of the year.

“The second half of the year saw instead a progressive recovery of both local sales and exports as the pandemic’s worst impacts started to recede, ” it said.

Nestle’s CEO Juan Aranols (pic) expects the repercussions from the Covid-19 pandemic to continue, especially through the first half of the year.

“We also expect a significant rebound in the prices of many key commodities that anticipate margin tensions that we will continue to do our best to manage, ” he said.

Aranols pointed out that Nestle’s plant-based meal solutions manufacturing facility in Malaysia, which has been completed and is currently operational, will be officially launched in April.

“In 2021 we expect to allocate significant new fresh investment to further expand and upgrade our manufacturing facilities, creating also new job opportunities.

“I am also proud to inform that we executed in full our capital investment plans for 2020 (the highest in the last six years) and made great progress in our sustainability agenda, ” he said.

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