Nes­tle Lanka’s dis­ap­point­ing per­for­mance ex­tends to third quar­ter

Daily Mirror (Sri Lanka) - - PROVINCIAL -

Nes­tle Lanka PLC re­ported dis­ap­point­ing num­bers for the Septem­ber quar­ter (3Q17) as the sales slowed and pro­duc­tion cost rose sharply. The com­pany is bat­tling a pe­riod of high in­fla­tion and taxes, which neg­a­tively im­pact con­sumer de­mand and push up its di­rect costs.

Ac­cord­ingly, the lo­cal unit of the world’s largest food and bev­er­age com­pany, re­ported a top line growth of 9.0 per­cent year-on-year (YOY) to Rs.9.64 bil­lion for the quar­ter un­der re­view, less im­pres­sive con­sid­er­ing its past per­for­mance.

The cost of sales for the same pe­riod rose by 20.5 per­cent YOY or dou­bled the rate of sales growth to Rs.6.36 bil­lion, weigh­ing on the gross profit and pinch­ing the mar­gins hard.

The com­pany, which pro­duces Ne­spray milk pow­der and Maggi co­conut milk pow­der among many other prod­ucts, re­ported earn­ings of Rs.15.16 a share or Rs.814.4 mil­lion for the quar­ter, down by 24 per­cent YOY.

This is the third con­sec­u­tive quar­ter that the com­pany recorded neg­a­tive growth in earn­ings.

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