KUALA LUMPUR (Aug 25): Nestle (M) Bhd’s second quarter net profit slipped on-year and in quarterly terms as the food and beverage manufacturer contended with Malaysia's Covid-19-driven movement control order (MCO), which led to restrictions on Nestle's out-of-home business channels.

In Bursa Malaysia filings today, Nestle said net profit slipped to RM105.53 million in the second quarter ended June 30, 2020 (2QFY20) from RM156.89 million a year earlier while revenue fell to RM1.22 billion from RM1.34 billion.

"This (revenue drop) was mainly attributed to severe operational restrictions on HORECA (hotel, restaurant & café) channels during the MCO, as well as to the decline in mobility of the public impacting sales in restaurants, R&R (rest & relaxation) rest stops, and office-related channels.

"For Nestlé, this had some material impact on our NESTLÉ PROFESSIONAL business, which serves the out-of-home channels, as well as our ready-to-drink and some food products.

"Against the comparative baseline (PAT (profit after tax) RM156.9 million in Q2 2019), profit was impacted by the HORECA situation under MCO and additional expenses necessary to ensure work safety, support to front liners and ensuring continuity across the value chain. To note that Q2 2019 profit had benefitted from a one-off gain of RM19.7 million arising from the divestment of the Petaling Jaya factory," Nestle said.

Despite the lower 2QFY20 net profit, Nestle declared a tax-exempt dividend of 70 sen a share for the quarter.

The dividend's ex and payment dates fall on Sept 14 and Oct 8, 2020 respectively, according to the company.

In quarterly terms, Nestle said today that for 2QFY20, the group registered a lower turnover of RM1.22 billion, primarily due to restrictions on out-of-home channels during the MCO.

According to Nestle's 1QFY20 results announcement dated May 5, the company's net profit and revenue stood at RM186.31 million and RM1.43 billion respectively for the quarter.

Today, Nestle said cumulative net profit for the first half of FY20 (1HFY20) dropped to RM291.84 million from RM392.1 million a year earlier while revenue decreased to RM2.65 billion from RM2.79 billion.

"We continue to work hard in the ‘new normal’ to turn external challenges into new opportunities. We are encouraged to see a progressive recovery throughout the RMCO (recovery movement control order), especially in the HORECA channels, and we remain confident in our ability to deliver resilient results in 2020.

"With this in mind, the group has decided to pay an interim dividend of 70 sen per share, the same level as the prior year," Nestle said.

At 3.03pm today, Nestle's share price was 10 sen or 0.07% lower at RM141.50, giving the company a market capitalisation of RM33.16 billion.

The stock saw 22,800 shares traded.

Edited by Chong Jin Hun