KUALA LUMPUR (April 26): Nestle (Malaysia) Bhd entered into its financial year 2016 (FY16) on a high note, as its net profit for the first quarter ended March 31, 2016 (1QFY16) jumped 17.5% to RM220.7 million from RM187.9 million a year ago, on improved revenue, favourable trends in most of the raw material prices (although it was partially offset by higher foreign exchange), as well as diligent cost management.

Its operating expenses, owing to the timing of the marketing investment activities, were lower for the quarter; coupled with the lower effective tax rate, these have contributed to higher net profit.

Revenue for 1QFY16 rose 2.8% to RM1.31 billion, from RM1.28 billion in 1QFY15, driven mainly by robust domestic sales and steady growth in export.

"Our performance for the quarter was driven by our strong domestic sales, considering a high base in 2015, and in spite of tough market conditions," Nestle Malaysia managing director Alois Hofbauer said in a statement today.

“This performance was due to the group’s strong marketing and promotional initiatives, coupled with successful product launches in 2015 which continue to benefit the group in 2016.

"Our results were further bolstered by our export business, which has seen steady growth since the second half of 2015, and recorded double digit growth for the quarter under review," he added.

On the group’s prospects, the management expects 2016 to continue to be a challenging year, both locally and globally.

Hofbauer said the domestic business environment will remain tough and continue to be impacted by the weak consumer market and heightened competition.

“We started on a strong note, and given our resilient nature, we are optimistic that we will be able to weather through this tough economic environment.

“Malaysia’s positive results also contributed towards a strong regional performance for the first quarter," he said.

"As a forward-looking group, we remain focused on our balanced strategy of effective cost management, in tandem with investing for the future of Nestle Malaysia by building on our foundation in Malaysia and tapping into the country’s vast prospects over the long-term,” Hofbauer added.

As at 3.26pm, Nestle Malaysia shares were traded down 30 sen or 0.4% at RM74.70, with a market capitalisation of RM17.59 billion.