NestlÃ© Sri Lanka net profits down 5.7-pct in June quarter
ECONOMYNEXT – Profits at Nestlé Lanka Plc, unit of Swiss-based Nestle, fell 5.7 percent to 735.4 million rupees in the June 2018 quarter from a year earlier with higher taxes under a new law, despite margin gains, interim accounts showed.
The group reported earnings of 13.69 rupees per share. Nestlé shares closed at 1,840 rupees on Thursday, up from 1,820 rupees at previous close.
Gross profits increased 10.2 percent to 3.3 billion rupees for the quarter, with revenue increasing 5 percent to 9 billion rupees and cost of sales growing at a slower 2.1 percent to 5.7 billion rupees.
This was a recovery from last year, when gross margins fell as demand fell amid a drought and raw material prices also rose.
Sri Lanka was also collecting forex reserves in 2017, which tends to put a squeeze on credit and spending.
The bottom line fell in the June 2018 quarter due to income tax expenses which increased 83 percent to 451.3 million rupees from a year earlier.
From April 2018, Nestlé is charged 28 percent corporate tax under the new Inland Revenue Act. Under old laws, profits were taxed at a subsidized 12 percent, while profits from ready-to-drink milk was taxed at 10 percent, and offshore earnings were exempt.
Nestlé had obtained a 1.9 billion rupee related party loan from Nestlé Treasury Centre- Middle East and Africa Ltd during the quarter for the 5 billion rupee expansion of its dairy and coconut processing factory in Kurunegala.
Year to date, Nestlé net profits increased 2.3 percent to 1.7 billion rupees from 2017, while revenue increased 3.7 percent to 18.6 billion rupees from a year earlier. (COLOMBO, 10 August, 2018)