Nestlé delivers Rs. 37.6 billion sales in 2017 amidst challenges

Nestlé delivered a revenue of Rs. 37.6 billion (up 3.1% over 2016) and a net profit of Rs. 3.6 billion for the full year ending 31 December 2017.

Revenue for the fourth quarter was Rs. 10 billion (up 15.6% over Q4 2016) with a net profit of Rs. 1.2 billion.

The severe drought and floods, resulting in weak consumer confidence and decline in consumer demand, adversely impacted results. Growth rates were further eroded by an increase in Value Added Tax, which coupled with unprecedented increase in coconut prices, had a negative impact on profit. Enhanced cost saving measures and a focus on driving efficiencies across the value chain helped in partly mitigating these impacts.

The company’s contribution to the exchequer as taxes in 2017 was Rs. 6.5 billion.

Continuing to believe in the long term prospects of the Sri Lankan market, Nestlé initiated an investment of around Rs. 5 billion in early 2017, to expand production capacity for dairy and coconut based products, which will be funded through a judicious combination of internal accruals and borrowings.

The Board approved an interim dividend of Rs. 25 per share on 22 February 2018 and proposed a final dividend of Rs. 25 per share for the full year, to be approved at the company’s Annual General Meeting on 4 May 2018.

“Nestlé has a strong foundation in Sri Lanka and a solid track record. The FMCG market has been adversely impacted this year due to sluggish consumer demand and rising cost pressures. The dedication and commitment of our people and business partners allowed us to address the significant challenges we faced in the year. I am immensely proud to note that the company, our brands and our people continued to be recognised for their performance and significant contributions. In line with today’s environment, we are intensifying our focus on innovation, operational efficiency and on developing our people’s skills. We enter 2018 with the same passion and determination, to continue to deliver on our purpose of enhancing quality of life and contributing to a healthier future,” Nestlé Lanka Managing Director Shivani Hegde said.

As part of its endeavor to enhance consumers’ quality of life and contribute to a healthier future, Nestlé continued to strengthen its product portfolio. Nestomalt’s portfolio was enhanced with the launch of Nestomalt Plus, which is enriched with the goodness of oats and b-vitamins, and Nestomalt Gold RTD, which offers consumers a unique taste with the goodness of fresh local milk and malt. Nestlé’s iconic Maggi brand entered the value-added Pasta category with Maggi Pazzta. Made with the wholesome goodness of semolina grains, which is high in fibre, Maggi Pazzta only requires five minutes of cooking to serve a delicious pasta meal in a creamy cheese sauce. Maggi’s popular chicken flavoured noodles was also renovated to include eight popular Sri Lankan spices to naturally enhance taste, in response to consumer preference for more natural and familiar ingredients. Continuing to offer consumers the goodness of Sri Lankan milk, procured from close to 20,000 farmers, the company introduced Nespray Fortigrow, a full cream milk powder fortified with vitamins A and D. It also introduced Ceregrow, the only toddler cereal in the market with probiotics. The year also saw the launch of Nestum All Family Cereal and Nescafé premix with reduced sugar for coffee machines.

Along with ongoing product renovations to reduce sugar, salt and fat, and increase micronutrients like iron, vitamin A and calcium, the Company delivered over 400 million servings of micronutrient fortified food and beverages in 2017. Nestlé’s ’Choose Wellness’ initiative also provided free nutrition advice and diet counselling to more than 40,000 consumers, while the Nestlé Healthy Kids program was extended with an e-learning module to increase the program’s reach to 15,000 more children. The program is conducted in collaboration with the Ministry of Education to teach school children about healthy diets and the importance of physical activity.