Sri Lanka Nestlé unit’s profit up 34% amid net financial expenses jump 

ECONOMYNEXT- The Sri Lankan unit of food and beverage multinational Nestlé’s profit for the
December quarter went up 33.8 percent to 1.1 billion rupees compared to the same quarter in the previous year amid high net finance expense reduced the firm’s bottom line, interim accounts showed.

Nestlé reported earnings per share of 21.03 rupees for the quarter, compared to 15.71 rupees in the same quarter previous year .

For the 6 months ended June, the firm earned 36.39 rupees a share on a net profits of 1.9 billion rupees which was down 24.2 percent compared to the same period in 2021.

The Nestlé share closed trading at 915 rupees on July 30.

Revenue for the June quarter grew 78.5 percent to 18.03 billion rupees, while cost of sales rose 65
percent to 11.65 billion rupees. The gross profits rose at a faster 109.7 percent to 6.4 billion
rupees.

However, the net finance expense soared to whopping 3.5 billion rupees in the quarter compared to 189.7 million in the same quarter last year amid high inflation after the central bank printed record high money printing in the last two years.

“The significant rupee depreciation coupled with currency shortages, inflation, economic and political
instability has impacted many businesses and economic activities across industries,” the firm said in its
quarterly earnings report.

“The Company also has encountered the impacts in its operations and has taken necessary steps such as
optimization of value chain and product portfolio; to overcome related operational and financial risks.”

The group said measures have been taken to reduce all non-essential expenses, however, the planned
capital expenditures and sustainability projects will be continued to ensure future growth prospects of the Company and the responsibility towards the community and the environment.

The group’s operating income grew by 893.4 percent to 952 million rupees from 95 million rupees a
year earlier.

The distribution cost has increased by 24.8 percent to 1.6 billion rupees, and the Administrative
expenses increased by 33.3 percent to 860 million resulting the income from operating activities to
increase by 307.4 percent to 4.8 billion rupees.

“The Company has made provision for the income tax liability at the rates of 18% for Manufacturing
Business Profits, 14% for Export Profits and 24% for Trading and Other Income and for the deferred
taxation at the average rate of 18% as per the current income tax (Amendment) Act No. 10 of 2021,” it said.

Long-term borrowings increased to 9.58 billion rupees, while short-term borrowings increased to 159.65
million rupees.

The total assets of the company have increased to 39.5 billion rupees as of June 30, from 25.1 billion at the end of 2021.

Nestlé is active in dairy farming and production, instant coffee, confectionery, cereal and instant noodles
in Sri Lanka. (Colombo/July 30/2020)