Nestle (Malaysia) Berhad has reported group pre-tax profit of 85.056m ringgit (US$22.4 million) for the first three months of this year, an increase of 2.5% from the same period a year earlier, according to Asia Pulse.
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Group turnover at 764.019m was up 11.3%. The company said it recorded positive growth in most categories notably liquid milks, infant nutrition and yogurt drinks.
Nestle’s profit margin before tax declined to 11.1% from last year’s 12.1%, mainly due to the impact of exchange rates as the ringgit weakened against foreign currencies. Higher prices of major commodities such as milk solids and coffee beans also continue to hurt profit margins.
“While we were under pressure to increase prices for products which were significantly affected, price increases would partially recover margins,” the company said.
Nestle expects competition to heighten in future, with the company requiring higher marketing expenses to sustain and possibly gain market share.
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By GlobalDataIn addition, higher commodity, packaging material and currency costs will further put margins under pressure.
“Persistent efforts in several cost reduction initiatives and effective control on fixed costs will be pursued to mitigate these cost pressures,” it said.
