Nestlé delivers Rs37.6bn sales in 2017 amidst challenging market conditions

Continues to invest in Sri Lanka with new products and capacity expansion

 Revenue of Rs. 37.6 billion for the full year 2017 (up 3.1%)
 Revenue of Rs. 10 billion in Q4 (up 15.6%)
 Net profit of Rs. 3.6 billion for the full year and Rs. 1.2 billion for the quarter
 Severe drought, floods, sluggish market conditions and increased taxes impact results
 Contributed Rs. 6.5 billion to the exchequer as taxes, and Rs. 8.3 billion to the rural economy for procurement of milk and coconut
 Initiated investment of Rs. 5 billion in expanding manufacturing capacity for dairy and coconut products
 Thrust on product innovations and renovations to offer consumers tastier and healthier choices
 Continued developing dairy industry to support local milk production
 Kicked off phase two of the Nestlé Coconut Plan
 Numerous recognitions received including Best Corporate Citizen and Most Respected Food & Beverage company

Shivani Hegde, Nestlé Lanka Managing Director: “Nestlé has a strong foundation in Sri Lanka and a solid track record. The FMCG market has been adversely impacted this year due to sluggish consumer demand and rising cost pressures. The dedication and commitment of our people and business partners allowed us to address the significant challenges we faced in the year. I am immensely proud to note that the company, our brands and our people continued to be recognised for their performance and significant contributions. In line with today’s environment, we are intensifying our focus on innovation, operational efficiency and on developing our people’s skills. We enter 2018 with the same passion and determination, to continue to deliver on our purpose of enhancing quality of life and contributing to a healthier future.”

Financial Results

Nestlé delivered a revenue of Rs. 37.6 billion (up 3.1% over 2016) and a net profit of Rs. 3.6 billion for the full year ending 31 December 2017.

Revenue for the fourth quarter was Rs. 10 billion (up 15.6% over Q4 2016) with a net profit of Rs. 1.2 billion.

The severe drought and floods, resulting in weak consumer confidence and decline in consumer demand, adversely impacted results. Growth rates were further eroded by an increase in Value Added Tax, which coupled with unprecedented increase in coconut prices, had a negative impact on profit. Enhanced cost saving measures and a focus on driving efficiencies across the value chain helped in partly mitigating these impacts.

The company’s contribution to the exchequer as taxes in 2017 was Rs. 6.5 billion.

Continuing to believe in the long term prospects of the Sri Lankan market, Nestlé initiated an investment of around Rs. 5 billion in early 2017, to expand production capacity for dairy and coconut based products, which will be funded through a judicious combination of internal accruals and borrowings.

The Board approved an interim dividend of Rs. 25 per share on 22 February 2018 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 4 May 2018.