Nestle Lanka reports solid 4Q amid strong consumer demand

Nestle Lanka PLC, the local unit of the Swiss-based global food and beverage giant, reported robust top and bottom line performance for the three months to December 2021 (4Q21), as the company was among the favorites to be benefitted from the strong consumer demand.

The maker of Nescafe coffee, Maggi instant noodles and Nestomalt, reported a top line of Rs.12.50 billion for the October-December 2021 quarter, recording a 25.8 percent increase over the same period in 2020. The company reported earnings of Rs.22.85 a share or Rs.1.23 billion, up 77.8 percent from the
previous year.

The company on Friday declared an interim dividend of Rs.20 a share and also proposed a final dividend of Rs.35 a share for the year ended on December 31, 2021, subject to
shareholder approval.

For FY21, the company reported earnings of Rs.99.19 a share or Rs.5.33 billion, up 80.8 percent from a year ago. The revenues were up just shy of 20 percent to Rs. 45.42 billion. The company saw its costs rising faster in the final quarter of the year, with cost of sales logging a 28.3 percent increase to Rs.8.69 billion.
Although this may have dented its gross margins a bit, the company showed incredible discipline in its overheads, as it contained its marketing, selling and distribution expenses and administrative expenses rising from only 10 percent and 3.2 percent from the same
period in 2020.

The company’s net finance cost increased in 2021, as it took on a US dollar-denominated loan from Nestlé Treasury Center - Middle East and Africa Ltd during the quarter amounting to Rs.5.4 billion (US $ 26.6 million), in order to fund operational foreign currency requirements, the company said.
The Switzerland-based Nestle S.A has a 91.95 percent stake in Nestle Lanka while the Employees’ Provident Fund has a 0.19 percent stake being its ninth largest shareholder.