Nestle Pakistan reports net profit of 4.47B rupees in first nine months of 2013, up 3.2% year-over-year; net sales rise 6.4% to 63.83B rupees

KARACHI, Pakistan , October 30, 2013 () – Contrary to fears that ever-increasing prices would decrease consumers' purchasing power, sales at Nestle Pakistan - one of the largest consumer product giants in the country - continued to grow at a healthy pace in the nine months ended September 2013.

According to Nestle Pakistan's filing with the Karachi Stock Exchange last week, the company's net sales grew by 6.4 per cent to Rs63.83 billion in January-September 2013, from Rs59.98 billion in the same period last year. As a result, it posted a profit-after-tax (PAT) of Rs4.47 billion for the period, up 3.2 per cent from a PAT of Rs4.33 billion it had posted in the same nine months of last year. This translated into earnings-per-share (eps) of Rs98.58, up from Rs95.46 in the year-ago period. Nestle declared a cash dividend of Rs50 per share for the quarter ended September 30, at a dividend yield of 500 per cent.

Meanwhile, higher gross margins continued to be the bedrock for the food and beverages company's profits: they clocked in at around 29.1 per cent in the period, up from 27.6 per cent last year. Gross profit recorded a 12.8 per cent jump to reach about Rs18.64 billion. But distribution and selling expenses grew by around 25 per cent YoY to Rs8.55 billion, while administrative expenses jumped 10.8 per cent to reach Rs1.43 billion from a year ago.

For the six months ended June 30, 2013, Nestle's revenue from its beverage segment, which comprises bottled water, fruit juices and Nescafe coffee, posted a strong yearly growth of 37 per cent to clock in at around Rs9 billion, from Rs6.56 billion a year ago. Revenue from the company's milk and nutrition business, on the other hand, had declined 3.3 per cent YoY to reach around Rs33 billion during the same six-month period.

Third quarter results: Higher administrative and distribution expenses continued to eat into the food giant's bottom line, particularly in the third quarter of calendar year 2013 (3QCY13). A 22 per cent yearly jump in distribution and selling expenses - which went from around Rs2.12 billion in 3QCY12 to Rs2.59 billion in 3QCY13 - led Nestle to suffer a big 31 per cent YoY drop in its quarterly after-tax profit, which clocked in at around Rs977 million, from Rs1.42 billion last year. Meanwhile, an almost tripling of other operating expenses - from around Rs204 million in 3QCY12 to Rs630 million in 3QCY13 - also contributed to the company's lower quarterly profit. A 90 per cent jump in other income - from Rs23.5 million to Rs44.8 million - helped prop up quarterly profits.

Some analysts attributed the increase in expenses to higher marketing costs for the company, as Nestle finds itself increasingly competing for market share with a few other heavyweights in the food and consumer goods sector. In its detailed report for the half year 2013, Nestle Pakistan had cited the ongoing power crisis, impact of inflation on consumers' purchasing power, and frequent shutdowns due to strikes and protests as drags on its performance. Company profile: Nestle Pakistan Ltd is a subsidiary of Nestle SA, which is headquartered in Vevey, Switzerland. It has been operating in Pakistan since 1988 under a joint venture with Milk Pak Ltd. It took over management control in 1992.

Headquartered in Lahore, the company operates four production facilities. Two of these, in Sheikhupura and Kabirwala, are multi product factories, while one each in Islamabad and Karachi produce bottled water. Published by HT Syndication with permission from Ibex. For any query with respect to this article or any other content requirement, please contact Editor at

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