Nestle Pakistan records 43% rise in net profit
Company posts earnings of Rs6.4b in nine months.
KARACHI:
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.
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.