This article first appeared in The Edge Financial Daily on November 13, 2019

KUALA LUMPUR: Nestle (Malaysia) Bhd’s (Nestle Malaysia) net profit rose 8.2% to RM148.99 million for the third quarter ended Sept 30, 2019 (3QFY19) from RM137.69 million a year ago, on strong profit margins.

This resulted in higher earnings per share of 63.54 for 3QFY19 compared with 58.72 sen for 3QFY18.

However, revenue for the quarter was down 2.2% to RM1.4 billion from RM1.43 billion in 3QFY18, on lower exports impacted by unfavourable trading conditions in some of its main importing markets.

The group declared an interim dividend of 70 sen per share, amounting to RM164.15 million, for the financial year ending Dec 31, 2019 (FY19), payable on Dec 19.

In a statement yesterday, Nestle Malaysia chief executive officer Juan Aranols attributed the strong growth in profit margins to robust domestic sales and steady focus on driving efficiencies and savings.

“Domestic sales growth remained robust at 1.7% after adjustment for the divestment of the chilled dairy business, comparing favourably against the exceptionally strong sales in 3QFY18, during the 0% goods and services tax period.

“Growth in our domestic sales was driven by strong sales execution, the continuing success of product innovations and strong marketing support. New innovations launched during the quarter under review continue to resonate well with our consumers, enabling the group to further reinforce our leading market share in many key categories,” he added.

The better quarterly performance lifted up the group’s net profit for the cumulative nine months (9MFY19) by a marginal 1.1% to RM541.1 million from RM535.06 million a year ago, while revenue rose slightly by 0.4% to RM4.19 billion from RM4.17 billion for 9MFY18.

Moving forward, Aranols said Nestle Malaysia will continue to proactively enhance efficiencies and generate savings to invest behind its brands and protect its margins.

“These remain our most effective strategy to counter rising commodity costs and protect the accessibility to our brands by consumers,” he added.