As the countrys population continues to boom, fast moving consumer goods manufacturers are also expanding, faster than ever. Nestle Pakistan reported a net profit after tax of Rs1.49 billion for the quarter ended March 31, 2011. This tally represents a significant jump of 51 percent in the companys bottom line compared to the same period last year.
The companys top line advanced by 35 percent over the same period as sales increased to Rs16.2 billion. This growth is comparable to previous periods; however, the company finally appears to be making headway with consistent cost controlling measures as the operating margins went up to 14.8 percent in the same period compared to 13.5 percent during 1QFY10.
Aided by a frenzy of advertising and other marketing efforts, the demand for consumer goods has continued to soar in the country. However, even as Nestle Pakistan reaps the benefits of mushrooming demand, the company can expect tougher competition in the days ahead.
Well-entrenched brands like Cerelac and Nido have let the company dominate the baby food and powdered milk market segments. But Engro Foods (EFL) Tarang has quickly captured a major chunk of the tea whitener market segment, and as EFL gears up its marketing campaigns for this and other products; Nestle managers will be hard pressed to make some waves of their own.
For now, Nestle Pakistan appears to be sailing the high seas with well established brands in markets ranging from frozen desserts and chocolates to bottled water, beverages, baby food and beyond.
Higher sales volumes appear to be building economies of scale for the company as distribution and selling expenses as a percentage of sales continued to drop in the outgoing quarter to reach 11 percent from 11.95 percent for the same period last year.
Independent research conducted by the Business Monitor International has also forecasted that the countrys food consumption will rise more than 36 percent by 2014, building the case for Nestle Pakistan to continue posting impressive growth in sales and profitability.


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Nestle Pakistan
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P&L (Rs mn) 3MCY11 3MCY10 Chg
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Revenue 16,278 12,051 35%
Cost of sales 11,714 8,696 35%
Gross Profit 4,563 3,355 36%
Gross Margin 28% 28% 1%
Administrative Exp 355 274 29%
Distribution Exp 1,796 1,441 25%
Finance Cost 190 142 34%
PAT 1,493 992 51%
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Source: KSE notice
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