Nestle’s 2Q net profit rise 17%, declares 50 sen interim dividend

 Nestle’s 2Q net profit rise 17%, declares 50 sen interim dividend

Written by Yong Min Wei
Friday, 27 August 2010 13:48

KUALA LUMPUR: Nestle (M) Bhd’s net profit for the second quarter ended June 30, 2010 (2QFY10) rose 17.2% to RM100.15 million from RM85.45 million a year ago, underpinned by marketing activities and new product launches that leveraged on improved economy and consumer sentiment.

In a filing to Bursa Malaysia Securities yesterday, the group said revenue for 2QFY10 grew 13.9% to RM1.05 billion from RM922.85 million with overall businesses performing well in this quarter, coupled with the strong growth of Nestle Liquid Drinks and Chilled Dairy.

“Another positive note is the robust double-digit growth which was registered by the exports business. The significant investment in production lines over the last three years has made additional capacity readily available to cater to the higher external demand, regionally as well as globally,” Nestle said.

It added that the strong economic performance by neighbouring countries, in particular Indonesia and the Philippines, also contributed to the higher exports for the quarter.

The group posted earnings per share of 42.71 sen for 2QFY10 versus 36.44 sen previously. Its net asset per share stood at RM2.47 as at June 30.

Nestle’s board of directors declared an interim dividend of 50 sen per share in respect of its financial year ending Dec 31, 2010, under the single-tier dividend which is not taxable in the hands of shareholders. The dividend would be paid to shareholders on Oct 5.

For its six months ended June 30, 2010 (1HFY10), the group’s net profit climbed 28.6% to RM238.95 million from RM185.8 million in the same half last year, mainly driven by timing of overhead cost and the favourable leverage of the fixed cost structure.

The group reported revenue of RM2.07 billion year-to-date, an 8.6% gain from RM1.9 billion in the previous comparable half.

Nestle noted that while some commodity prices such as cocoa powder and skimmed milk powder increased sharply during the half year, the stronger ringgit against US dollar helped partially cushion these increases.

In a media statement, Nestle managing director Peter R Vogt said: “With our domestic sales benefiting from the improved local economy and the increase in consumer confidence, along with export levels, we are able to post a strong improvement over last year’s performance.”

Vogt said that the group would continue to make investments in line with its objective of being the leader in nutrition, health and wellness, as well as an industry benchmark for its financial performance and trusted by all stakeholders.

“Despite the concerns over the sovereign debt issue in the eurozone and the sustainability of the economic recovery in the US, the outlook in BRIC countries (Brazil, Russia, India and China) and the Asean economies are still positive,” he said.

Nestle’s share price yesterday closed unchanged at RM39.48 with 11,400 shares traded.


This article appeared in The Edge Financial Daily, August 27 2010.