Nestle Lanka’s disappointing performance extends to third quarter
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.