Nestle Pakistan records 43% rise in net profit
Nestle Pakistan boosted its net earnings by a staggering 43% on a year-on-year basis in the nine months ended September 30, 2014, according to the company’s financial results released on Monday.
Market analysts, however, expressed mixed views about the performance.
The Pakistani subsidiary of the world’s largest food and consumer goods company reported a net profit of Rs6.4 billion or Rs141 per share for the January-September period of 2014 compared to Rs4.4 billion or Rs99 per share during the corresponding period of previous year.
The Swiss food giant saw its revenues rise 16% to Rs74 billion compared to Rs64 billion in the corresponding period of last year. The company also announced an interim cash dividend of Rs50 per share for the quarter ended September 30, 2014, which was in addition to the first cash dividend of Rs30 per share, which was already paid.
Nestle Pakistan is usually off the radar screen of market analysts for not being a liquid stock, it is, therefore, hard to find analysts’ comments about its financial results. However, the market analyst The Express Tribune spoke to said the results were below expectations.
“Though the growth is there, the results are a little below our expectations,” Senior Manager Research at Topline Securities, Zeeshan Afzal, said while commenting on the company’s quarterly performance.
Explaining, Afzal said though the expectations usually remained low for the July-September quarter, the results still didn’t meet the projections. It was expected that Nestle’s earnings per share (EPS), which was Rs56 for the April-June quarter, would not fall below Rs45 in the third quarter, he said.
However, the company’s EPS for the third quarter stood at Rs39 per share, according to the results.
Though sales grew 12% YoY, they actually declined on a quarter-on-quarter basis, Afzal said. The company reported Rs26 billion in sales in the second quarter compared to Rs24 billion in the latest quarter.
“The price for one-litre pack of Milkpak was increased in several stages from Rs80, some six months ago, to Rs110 as of now, but volumes grew only 12%,” the analyst said, indicating the company couldn’t fully cash in on the price increase.
The margins in the third quarter, however, improved significantly, which according to market analysts was mainly the result of price increase. They went up from 25% in the third quarter of 2013 to 28% in the third quarter this year, up 300 basis points.
Published in The Express Tribune, October 21st, 2014.
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And then people say Pakistan does not have business potential #thinksmart
Excellent coverage for the WEF company for the compliant consumers. EU companies as Nestle, Siemens, Unilever are understood to be with limited availability on the KSE. The company bless the marketing/advertising/PR as the highest ratio of the sales. Higher profits of the company result from premium prices, for previleged WEF customers. Compare the practise of Nestle in India, and its retail prices in the basic commodity product of raw milk today traded at 30 cents per liter. India is blessed with milk for common people for nutritional/food gap, and regulated. Amul which pioneered in reducing the pasturised milk in India has changed the scenario. Nestle penalises the Pakistani rich and poor for the low grade UHT/TetraPak milk which cost more than the cost of one liter milk which is not defined on the product label. The label says standardised milk. Which milk, no idea. Since this is purchased by contractors on search of the cheapest white fluid collection. The white fluid the company names as milk is processed packed by TetraPak proprietory packing. Could the stock holder ask why milk is not sold openly at Nestle accredited outlets as pasturised milk, with flavorings, and yogurts open. This will bring the cost down for costly packaging, and also save the cost of taxes on packed milk which may possibly cost more 25% of the cost or more. Nestle chair travelled from Vevvey, Switzerland and inaugurated the pasturised milk in India. Why Nestle Pakistan milk is penalised only UHT. Why not pasturised, and flavored milks as drinks in schools to by pass the Coke war for schools for plaguing the nation with Colas to school children. Why the CCOP is not taking action for monopolising and exploiting costly lousy milk to Pakistan by Nestle and cronies. I understand Nestle is major advertiser of the media and spends genrously in PR/advertising. Hence possibly this article may not be released. I suggest the dairy industry should take an opinion of the quality of Nestle standardised milk standard?