Nestlé delivers Rs. 37.3 billion sales in 2018 amidst challenging market conditions
Nestlé delivered a revenue of Rs. 37.3 billion and a net profit of Rs. 3.5 billion for the full year ending 31 December 2018, amidst challenging market conditions. Revenue for the fourth quarter was Rs. 9.4 billion with a net profit of Rs. 0.9 billion.
2018 was a challenging year, impacted by unfavourable exchange rates, political uncertainty, and floods, leading to low consumer confidence and weak consumer demand. In addition, the withdrawal of concessionary income tax rates on the company’s Exports and Ready-to-Drink businesses, along with an increase in Financing Cost to support the company’s investment of approximately Rs. 5 billion to enhance production capacity (completed in late 2018), impacted the company’s net profit for the year.
The company’s contribution to the exchequer as taxes in 2018 was Rs. 6.4 billion.
The Board approved an interim dividend of Rs. 25 per share on 21 February 2019 and proposed a final dividend of Rs.25 per share for the full year, to be approved at the company’s Annual General Meeting on 8 May 2019.
Said Fabrice Cavallin, Nestlé Lanka Managing Director: “Despite challenging market conditions, we continued to invest. We made significant progress in ramping up our portfolio with necessary product innovations and renovations, and continued to be a positive force in the local community through our products, services and social responsibility initiatives. 2019 is expected to be another challenging year due to a remaining sluggish business environment amidst a hike in commodity prices, combined with the significant depreciation of the currency.”
Supporting local communities
The company continued to support the local community in 2018 by paying out Rs. 2.9 billion to thousands of local dairy farmers for fresh milk and Rs. 4.6 billion to the local coconut industry for purchase of fresh coconut.
The company also educated over 200,000 children across the country in 2018 on nutrition, health and physical activity, through its ongoing Nestlé Healthy Kids Programme and Kids Athletics Programme. The company provided a further 56,000 people with free health checks and nutritional counselling through its ‘Choose
Wellness’ programmes, and reached 13 million consumers through its ‘Towards an Iron-Clad Nation’ campaign, to create awareness about the importance of iron in the diet. The company also provided 910 million servings of micronutrient-fortified Nestlé products to consumers in 2018.
Nestlé also maintained its investment in youth employability via its ‘Nestlé Needs YOUth’ programme, helping to make a further 4,000 young people employable in 2018. It also continued to invest in environmentally friendly initiatives, equipment and technologies to save a total of 41% of energy, 35% of water, and 24% of greenhouse gas emissions over the last decade.
Product innovation
Using its strong local consumer insight, Nestlé strengthened its product portfolio in 2018. The company expanded its dairy product range significantly with the launch of Nestlé a+™ full cream UHT (liquid) milk, Nespray FortiGrow Ready-to-Drink with a delicious taste of cookies dipped in milk and fortified with vitamins, Nespray Coco-Up Ready-to-Drink which combines the goodness of Nespray milk and the refreshing taste of coconut, and Milkmaid Choco Topping which offersconsumers a rich irresistible chocolatey sauce with a subtle hazelnut flavour. All products are made using Sri Lankan milk, in line with the company’s commitment to help develop the local dairy industry and create a secure route to market for farmers.
The company also continued to build on its market leader position in child nutrition. It introduced Ceregrow 4 Grains 5 Fruits with milk, which is enriched with iron and calcium and contains4 grains - wheat, corn, rice and oats - and 5 fruits - apple, orange, pomegranate, blackcurrant and mango. It also launched Nangrow 3, enriched with the goodness of essential fatty acids (Omega 3 and 6), probiotics and iron. Both products cater to children between one and three years old.
The company also unveiled Maggi Fried Rice Seasoning, madewith spices and vegetables and fortified with vitamin A; and added two new variants to its Nescafé range, Nescafé Hazel-Ice RTD, which combinesNescafé’s signature coffee taste with a delicious hazelnut flavour, and Nescafé Sunrise, a fine blend of coffee and chicory for those craving a stronger coffee taste.
Recognitions
The company continued to be recognised over 2018 for its consistent performance and contribution to the country.
It was awarded Best Corporate Citizen in the Manufacturing Sector for the second consecutive year at the prestigious Best Corporate Citizen Sustainability Awards 2018, organised by the Ceylon Chamber of Commerce. The company was recognised as one of the top three Best Corporate Citizens in the country, with an overall second runners-up win. It was also ranked Sri Lanka’s Most Respected F&B Company in LMD’s Most Respected Entities ranking for the third consecutive year, and Sri Lanka’s Most Valuable Food and Beverage Brand in 2018 by Brand Finance, in its annual report of Sri Lanka’s most valuable and strongest brands.
The company also won the ‘Highest Foreign Exchange Earner’ award in the Coconut Kernel product category at the Presidential Export Awards. This marks the seventh Presidential Export Award for the company in recognition of its strong contribution to national exports, and efforts to create sustainable livelihoods for local coconut growers and farm workers. Nestlé was also the highest ranking F&B company in Business Today’s list of Sri Lanka’s top thirty leading corporates for 2017-2018. It was recognised for its enduring commitment to the country; enabling growth, providing economic and social opportunities, and enhancing the quality of life of the Sri Lankan people.
The company’s brands also continued to be recognised over the year. Its Maggi noodle range was recognised for its high quality standards by SLSI (Sri Lanka Standards Institute), and it clinched no less than six wins for its Maggi, Nestomalt, Milo and Nangrow brands at the Effie Awards. Sri Lankan students voted Milo ‘Student Beverage Brand of the Year’ for the fourth consecutive year, and its Milo and Nestomalt brands were ranked the No. 1 and No. 2 Most Loved Beverage Brands in 2018 by Brand Finance.