Analyst Briefing: Nestle’s beverage segment saw lower sales due to COVID-19

September 4, 2020 (MLN): Nestle Pakistan recently conducted its analyst briefing to analyze the latest financial performance, and discuss the ongoing activities of the company.

The 1QFY20 seemed challenging for Nestle Pakistan Limited due to a slowdown in economic activity, as its net profits after tax for the quarter deteriorated by 15% YoY to Rs 1.94 billion compared to Rs 2.27 billion booked in the same quarter last year. This was reflected in the company’s earnings per share which also declined by the same percentage from Rs. 50.15 last year to Rs. 42.76.

The decline in profitability was attributable to flat revenues and higher financial charges during the quarter. The net revenues of the company depicted a slight growth of 2.5% YoY due to lower demand while financial charges jumped significantly by 41% YoY to Rs 1 billion.

The management of the company attributed the increase in the topline income to growth in the dairy and nutrition segment, which in turn was led by a significant increase in e-commerce sales. The revenue from the beverage segment witnessed a drop owing to challenges posed by the outbreak of COVID-19 and the imposition of lockdown that followed. The lockdown also took a toll on the sales of the on-the-go and out-of-home category of Nestle.

The revenue from international avenues also suffered as the closure of trade routes and borders prevented the company from exporting its products. The highest decline in international trade was observed with Afghanistan, a report by Arif Habib Limited said.

The cost of sales of the company during the period under review depicted a rise of 3.32%, mainly due to the surge in the prices of raw materials such as milk and sugar.

The management also apprised the onlookers about the products that were introduced during the six months ended June 30, such as flavored yogurt, Nestle Active, Nescafe chilled coffee, and others).

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