Nestlé Pakistan started 2017 on a positive note with earnings for the first quarter of the year up by 19 percent, year-on-year. The winning streak continued from CY16 where firm’s revenues shot up by nine percent primarily on the back of rising volumes, numeric distribution expansion and investment behind brands. Nestlé also improved its gross margins by 226 bps on the back of favourable input costs and optimization of value chain through Nestlé Continuous Excellence (NCE) initiatives.
In 1QCY17, the firm’s top line was again up by 14 percent, year-on-year owing to factors listed before. Selling and distribution costs were up by 25 percent year-on-year, while finance cost was down.
Nestlé Pakisan’s margins have been rising; gross margins were the highest in CY16 in at least the last six years. However, a key risk factor for the company going forward could be the sustainability of these high margins as most commodity prices like sugar, coffee and palm out prices have already bottomed out.
Nonetheless, the company has aggressive plans to enhance its product base through innovation and renovation, which remains an integral part of its vision to positively enhance the quality of life of its consumers. And evidence of this lies in the firm’s product launches in 2016, which as per the Director’s Report were Maggi Chotoo, Nestle Yogurt (Mango), Nescafe 3 in 1, Nestle Acticol, Nestle Nesvita Yogurt, Fitnesse Cereals, Nestle Docello Dessert Magic, Nestle Fruita Vitals (White Grape Lychee), and Nestle Everyday Double Creamy.
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