Nestlé Lanka records strong performance in 2022

Nestle Lanka Managing Director Jason Avanceña

Nestle Lanka PLC yesterday announced strong performance in FY22 with healthy growth in topline and earnings.

Revenue grew by 62.3% to Rs. 73.7 billion whilst net profit rose by 14% to Rs. 6 billion. Profit from operations grew by 16.5%.

“Reinforcing our commitment and positive contribution to Sri Lanka and its people, we achieved strong broad-based growth across all our business units during the fiscal year ended 31 December 2022,” Nestle Lanka Managing Director Jason Avanceña said.

The company reported a growth of 62.3%, which was driven by necessitated pricing to protect profitability amidst unprecedented cost increases. Positive volume growth in H1/Q3 slowed down in Q4 due to lower spending by consumers driven by high inflationary pressures. The company also recorded a 76.8% growth in its export business, contributing much-needed foreign currency to the economy through its exports to over 55 countries across the globe.

Net profit increased by 14% to Rs. 6 billion but net profit as a percentage of sales is lower by 3.5%, which was impacted due to exchange losses including unrealised exchange losses on the Intra Group loan obtained to ensure business continuity and increased corporate tax rates for H2, 2022.

Avanceña said overall operation and profitability were challenged by the significant rupee depreciation coupled with currency shortages, inflation, higher commodity and logistics costs, and changes in import regulations.

“Nevertheless, I am happy to note that these challenges were mitigated by taking measures such as optimisation of the value chain and product portfolio through localisation and cost efficiencies where possible, driving exports and effective utilisation of forex,” he said. “This noteworthy performance in 2022 was complemented by our continued, unwavering efforts towards doing good for families, communities, and the planet, irrespective of the challenging socio-economic circumstances that prevailed. I am delighted that we took strides in our commitment of doing good for Sri Lanka, whilst also furthering our investments with the hope of amplifying our contribution towards the country in the years to come,” Avanceña added.

Reaffirming Nestle’s steadfast commitment towards Sri Lanka, it invested over Rs. 2 billion in a state-of-the-art factory in Kurunegala by building a new Vacuum Band Dryer. The Managing Director said the investment further strengthens Nestle’s efforts of positively impacting Sri Lanka and its people. Nestle Lanka Board of Directors has declared an interim dividend of Rs. 55 per share on 20 February 2023 and have also proposed a final dividend of Rs. 75 per share for the year ended 31 December 2022; subject to approval by the shareholders at the upcoming Annual General Meeting. Part of this will be paid out of 2022 profits and the balance through previous years’ retained earnings.

“It gives me immense pride to witness the performance of the company during 2022, which was perhaps one of the most challenging years in Nestlé Lanka’s 115-year long journey in Sri Lanka. I am pleased to say that our team, as well as our stakeholders across and beyond the value chain, demonstrated exemplary perseverance and agility in the face of ever-changing challenges, leveraging our deep understanding of Sri Lankan consumers to ensure continued supply of high-quality nutritious products, which are also good for the planet, no matter the circumstances,” Nestle Lanka Managing Director added.