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Nestle Lanka Plc’s sales have declined by 4% to Rs. 9.4 billion in the first quarter, with the company revealing it witnessed tough market conditions.
Results from operating activities as well as pre-tax profit were down by 32% to Rs. 1.11 billion while after-tax profit dipped by 32.4% to Rs. 862 million owing to sluggish market conditions, drought and additional taxes.
In a statement Nestlé Lanka Managing Director Shivani Hegde said: “Severe drought leading to depressed consumer demand and a significant increase in raw material costs has made the start of this year particularly challenging. We continued to harness the resilient and innovative spirit that has defined Nestlé for more than 110 years in Sri Lanka, and were encouraged by our stronger market positions and the many recognitions won by our much loved brands. With an increasingly challenging business environment, we have put the necessary measures in place to enhance efficiency and offer more value to our consumers.”
She said the company’s results were impacted by an increase in Value Added Tax and sluggish consumer demand aggravated by the prevailing drought, reported to be the worst in 40 years. The drought has significantly affected fresh coconut crop, leading to an unprecedented increase in coconut prices.
Continuing to believe in the long-term prospects of the Sri Lankan market, Nestlé recently initiated an investment of over Rs. 4.5 billion in a new manufacturing facility, to expand production capacity for its popular dairy and coconut-based products.
Nestlé is Sri Lanka’s largest private sector collector of fresh milk and one of the world’s largest exporters of coconut milk powder. Supporting the livelihood of thousands of local farmers and their families, its payment to farmers for procuring these raw materials exceeded Rs. 6 billion in 2016 alone. Recently the company launched a Coconut Development Program, ‘The Nestlé Coconut Plan’, in collaboration with the Sri Lanka Coconut Cultivation Board, wherein it donated 10,000 coconut plantlets to 2,000 coconut farming families and developed two model coconut farms to showcase best practices. Nestlé’s aim is to help increase supply and enhance livelihoods by encouraging farmers to grow coconut in their homes, in both traditional and non-traditional coconut growing areas.
In its ongoing endeavour to enhance Sri Lankan consumers’ quality of life and contribute to a healthier future, the company introduced Nestum All Family Cereal and a new Nescafe premix with reduced sugar for coffee machines. The company also launched Ceregrow, the only toddler cereal in the market with the goodness of probiotics and balanced nutrients for growth.
Maggi Coconut Milk Powder, Nespray Nutri-Up RTD and Nescafé Ice Coffee RTD were recognised for their high-quality standards at the recent SLSI (Sri Lanka Standards Institution) Certification Awards. The company’s sales promotions department also received SLSI Certification for ‘Good Manufacturing Practices’ for sampling operations, making it the first such operation in Sri Lanka to do so.
Nestlé was ranked No. 8 in the LMD 2017 ranking of the Most Valuable Brands in Sri Lanka, becoming the highest-ranked food company in the country. Its popular beverage brand Milo was voted as ‘Student Beverage Brand of the Year’ for the third consecutive time at the D.S. Student Brand Awards and Maggi was voted ‘Youth Food Brand of the Year’ for the fourth time at the SLIM-Nielsen Awards. The awards are a strong testament to the love Sri Lankan consumers have for the company’s brands and the trust placed in the quality of the products.
“As Sri Lanka’s local multinational with deep roots in the country, we are proud to be our consumers’ No. 1 choice in food and beverage. We will continue to innovate and renovate our products in line with local consumer needs and contribute to a healthier future, enhancing the quality of life of the people of Sri Lanka,” Hedge said.
