Photo: Nestle's Nescafe drinks on a supermarket shelf in Malacca, Malaysia on July 17, 2019. Mohd Kamarul Hafiz / Shutterstock.com

Halal Industry

Nestle Malaysia second-quarter profit down on higher costs


Nestle Malaysia’s profit after tax for the three months ending June 30 dipped 5.6 per cent compared to the same period last year.

The company’s second quarter 2019 net profit reached 156.89 million ringgit ($37.28 million) compared to 166.16 million ringgit in Q2 last year, it reported in a bourse filing on Tuesday.

Its revenue rose 2 per cent to 1.34 billion ringgit but the percentage increase in cost of sales soared 4.87 per cent to 852.8 million ringgit for Q2 2019.

SIX-MONTH PERFORMANCE

For the first half of 2019, the Group’s net profit decreased 1.3 per cent to 392.1 million ringgit from 397.38 million ringgit for the corresponding period last year.

The Kit Kat maker said its 1.8 per cent rise in revenue to 2.79 billion ringgit for H1 was “on the back of stronger domestic sales growing at 4.1 per cent”.

“This was mainly driven by positive offtake for our brands on the back of robust demand and successful Chinese New Year and Hari Raya festive sales,” Nestle said.

It added that new products launched in the first half of the year drove domestic growth momentum. These include Milo whole grains cereal and Nescafe Tarik Kurang Manis, a reduced-sugar tinned coffee beverage.

Nestle Malaysia is Nestle Group’s largest halal producer and Malaysia hosts the Global Halal Centre of Excellence for the Group.

Nestle values its global halal business at more than $10 billion, it says on its website.

Overall, Nestle SA’s net profit dropped 14.6 per cent to 5 billion Swiss francs ($5.04 billion) for the first six months of 2019, it reported in July.

OUTLOOK

Nestle Malaysia said it remains confident of its full-year performance against a backdrop of “global uncertainties and volatility”, adding that it has new launches planned for the second half of 2019.

Nestle SA, the Malaysian company’s parent based in Switzerland, partnered with Starbucks in August last year to roll out a new range of coffee. Malaysia was the first country in Southeast Asia to carry the new Starbucks at Home range.

The world’s largest food company paid $7.15 billion for exclusive rights to sell the U.S. chain’s coffees and teas globally.

($1 = 4.2080 Malaysian ringgit)

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