Nestlé posts Rs. 9.4 billion sales in Q1 amidst tough market conditions; reaffirms commitment to Sri Lanka

To Press Releases listMay 8, 2017

  • Sales of Rs. 9.4 billion for the quarter ending 31 March 2017
  • Sluggish market conditions, prevailing drought and additional taxes impact results
  • Commences capacity expansion in its Kurunegala factory with an investment of over Rs 4.5 billion, reinforcing commitment to Dairy and Coconut industries
  • Products recognised for high quality standards at SLSI Certification Awards
  • Nestlé amongst country’s Top 10 Most Valuable Brands in LMD 2017 ranking
  • Milo voted ‘Student Beverage Brand of the Year’, and Maggi wins “Youth Food Brand of the Year’

Said Shivani Hegde, Nestlé Lanka Managing Director: “Severe drought leading to depressed consumer demand, and a significant increase in raw material costs, has made the start of this year particularly challenging. We continued to harness the resilient and innovative spirit that has defined Nestlé for more than 110 years in Sri Lanka, and were encouraged by our stronger market positions and the many recognitions won by our much loved brands. With an increasingly challenging business environment, we have put the necessary measures in place to enhance efficiency and offer more value to our consumers.”

Business Results

Nestlé reported a sales revenue of Rs. 9.4 billion and profit of Rs. 0.9 billion for the first quarter ending 31 March 2017. The Company’s results were impacted by an increase in Value Added Tax, and sluggish consumer demand aggravated by the prevailing drought, reported to be the worst in forty years. The drought has significantly affected fresh coconut crop, leading to an unprecedented increase in coconut prices.

Continuing to believe in the long term prospects of the Sri Lankan market, Nestlé recently initiated an investment of over Rs. 4.5 billion in a new manufacturing facility, to expand production capacity for its popular dairy and coconut based products.

Nestlé is Sri Lanka's largest private sector collector of fresh milk, and one of the world's largest exporters of coconut milk powder. Supporting the livelihood of thousands of local farmers and their families, its payment to farmers for procuring these raw materials exceeded Rs. 6 billion in 2016 alone. Recently, the company launched a Coconut Development Programme, ‘The Nestlé Coconut Plan’, in collaboration with the Sri Lanka Coconut Cultivation Board, wherein it donated 10,000 coconut plantlets to 2,000 coconut farming families, and developed two model coconut farms to showcase best practices. Nestlé’s aim is to help increase supply and enhance livelihoods, by encouraging farmers to grow coconut in their homes, in both traditional and non-traditional coconut growing areas.

Products and Brands

In its ongoing endeavour to enhance Sri Lankan consumers’ quality of life and contribute to a healthier future, the Company introduced Nestum All Family Cereal and a new Nescafe premix with reduced sugar for coffee machines. The company also launched Ceregrow, the only toddler cereal in the market with the goodness of probiotics, and which contains balanced nutrients for growth.

Maggi Coconut Milk Powder, Nespray Nutri-Up RTD and Nescafé Ice Coffee RTD were recognised for their high quality standards at the recent SLSI (Sri Lanka Standards Institution) Certification Awards. The company’s Sales Promotions department also received the SLSI Certification for ‘Good Manufacturing Practices’ for sampling operations, making it the first such operation in Sri Lanka to do so.

Nestlé was ranked No. 8 in the LMD 2017 ranking of Most Valuable Brands in Sri Lanka, becoming the highest ranked Food company in the country. Its popular beverage brand, Milo, was voted as ‘Student Beverage Brand of the Year’ for the third consecutive time at the D.S. Student Brand Awards, and Maggi was voted ‘Youth Food Brand of the Year’ for the fourth time at the SLIM-Nielsen Awards. The awards are a strong testament to the love Sri Lankan consumers have for the company’s brands, and the trust placed in the quality of the products.

Added Shivani Hegde “As Sri Lanka’s local multinational, with deep roots in the country, we are proud to be our consumers’ No. 1 choice in food and beverage. We will continue to innovate and renovate our products in line with local consumer needs and contribute to a healthier future; enhancing the quality of life of the people of Sri Lanka.”