Nestle Lanka FY22 earnings up 15%; sales top Rs.73bn

The local unit of Switzerland-based food giant, Nestle Lanka PLC, saw the December 2022 (4Q22) quarter earnings declining amid the sharp increase in income taxes, marketing, selling and distribution expenses and administrative expenses, though the full-year earnings rose 14.7 percent year-on-year (YoY) to Rs.6.07 billion, on total sales of Rs.73.7 billion, up 62.3 percent YoY.

For 4Q22, the company recorded earnings of Rs.18.23 per share or Rs.979.6 million, compared to earnings of Rs.22.85 per share or Rs.11.2 billion YoY on a revenue of Rs.19.2 billion, up 54.6 percent YoY.

The marketing, selling and distribution expenses rose 68.5 percent YoY to Rs.2.7 billion for the quarter under review, while the administrative expenses rose 226.5 percent YoY to Rs.2.2 billion. The income tax charge for the quarter rose 268.4 percent YoY to Rs.962.1 million.

“The positive volume growth in H1/3Q slowed down in 4Q, due to lower spending by consumers, driven by high inflationary pressures. The company also recorded a 76.8 percent growth in its export business, contributing the much-needed foreign currency to the economy through its exports to over 55 countries across the globe,” Nestle Lanka Managing Director Jason Avancena said.

“Net profit increased by 14 percent as compared to the last fiscal year; however, net profit as a percentage of sales is lower by 3.5 percent, which was impacted due to the exchange losses, including unrealised exchange losses on the Intra group loan obtained to ensure business continuity and increased corporate tax rates for H2, 2022,” he added. 

The company’s net finance cost for FY22 surged over 3,600 percent YoY to Rs.4.3 billion.

“Overall operation and profitability were challenged by the significant rupee depreciation coupled with the currency shortages, inflation, higher commodity and logistics costs and changes in import regulations,” Avancena said. 

“Nevertheless, I am happy to note that these challenges were mitigated by taking measures such as optimisation of the value chain and product portfolio through localisation and cost efficiencies where possible, driving exports and effective utilisation of forex,” he added. Nestle S.A. owns almost a 92 percent stake in Nestle Lanka PLC.