The first half of CY17 has been good for Nestlé Pakistan. The MNC announced its financial performance on the stock exchange last weak which showed that the company continued its CY16 winning streak in CY17 as well. The company also announced the first interim cash dividend of Rs170 per share along with its 1HCY17 financial result.
The MNC’s revenues for 1HCY17 were up by 10 percent year-on-year to Rs61.94 billion primarily on the back of rising volumes, numeric distribution expansion and investment behind brands. While the breakdown of sales is not available as of now, the firm’s Director’s Report for the first quarter of C17 however, points out that the export sales for the quarter were largely impacted by the volatile security situation and border management issues with Afghanistan.
Gross margins improved during the first six months of the year and the operating profits were also up by 19 percent, year-on-year. The improvement in gross margins came from favourable input costs and optimization of value chain through Nestlé Continuous Excellence (NCE) initiatives. Also, the investment behind brands and product mix along with no significant increase in costs lifted the operating margins.
In 1HCY17, the firm’s bottom-line soared by 24 percent, year-on-year. Nestlé Pakisan’s margins have been rising continuously; 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 maintainability of these high margins as most commodity prices are bottoming out.
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