KUALA LUMPUR (Aug 24): Nestle (Malaysia) Bhd (Nestle Malaysia) saw its net profit for the second quarter ended June 30 (2QFY21) jumped by 27.46% to RM134.53 million from RM105.53 million in the previous year’s corresponding quarter, thanks to strong revenue growth which offset the impact of higher commodity prices and marketing expenses, as well as significant costs related to Covid-19 containment.

As a result, earnings per share rose to 57.37 sen from 45 sen. 

In a Bursa Malaysia filing today, the group said its quarterly revenue grew by 13.16% to RM1.38 billion against RM1.22 billion previously, driven by robust domestic sales growth of 15.8%, thanks to an 8.4% growth in its core food and beverage (F&B) business and a rebound in its out-of-home (OOH) business compared with very low sales a year ago, when strict lockdowns were implemented to curb the pandemic.

“The focus on supplying the local market amidst operational restriction had some impact on the export business, which only grew by 2.5% in 2Q2021 (second quarter of 2021),” Nestle Malaysia said. 

Meanwhile, the group also declared an interim dividend of 70 sen per share to its shareholders, to be paid on Oct 7, 2021. 

For the first half ended June 30 (1HFY21), the group’s net profit increased marginally by 6.12% to RM309.69 million from the RM291.84 million reported in the same period last year (1HFY20), thanks to lower taxes from the reinvestment allowance tax incentive for its new plant-based meal solutions manufacturing facility.

Meanwhile, revenue rose slightly by 6.59% to RM2.83 billion against RM2.65 billion a year ago. This was due to a 7.7% growth in domestic sales, driven by a 6.7% increase in its F&B segment and the improvement in its OOH business compared with last year.

On a quarterly basis, the group’s net profit fell by 23.2% from RM175.16 million registered in the preceding quarter (1QFY21) while revenue declined slightly by 4.76% from RM1.45 billion, mainly due to higher sales during the Chinese New Year period in 1QFY21. 

Commenting on the group’s financial performance, Nestle Malaysia CEO Juan Aranols said the group had delivered a sizable stream of new products during the quarter.

“This included the roll-out of the HARVEST GOURMET plant-based range into the retail market and the introduction of Dairy-Free versions of MILO and NESCAFÉ.

“Other new products launched in 2Q2021 include the LIVELY Tea range, the extension of the Iced NESCAFÉ range and entrance into the chocolate tablet market segment with the new KIT KAT Blocks,” he said in a statement today.

Moving forward, Aranols highlighted the main challenge for the balance of the year will come from the impact of rising food commodity costs that it has mitigated through its hedging policies.

“This impact will become more noticeable in the months ahead. That being said, we remain confident to deliver good sales growth and resilient bottom-line performance in 2021.

“Building on our good momentum, we remain focused on driving our positive trajectory in the second half of the year as we strive to deliver sustainable growth for 2021, while supporting Malaysia on the road to recovery,” he added. 

At noon break today, shares in Nestle Malaysia traded 10 sen or 0.07% higher to RM133.70, giving it a market capitalization of RM31.35 billion.