Quratulain Y Azher
Karachi, April 16, 2020: Nestle’ Pakistan has planned to invest a handsome amount of Rs. 4 billion in the year 2020 despite challenges and economic slowdown.
According to the financial report 2019, it released recently, the FMCG giant will make the planned investment in respect of operational reliability and capacity expansion of its businesses across the country to meet consumer demands.
The economic slowdown has been decreased the consumer demand of the country for the past two years, which affected the sales of the company’s various products in this period. The dawn of 2020 proved to be extremely challenging for business including FMCG business which will likely to dampen the demand for consumers’ products this year too.
The drop in sales will ultimately impact negatively on the revenue and bottomline of the country in 2020, however, it is highly encouraging that the company is committed to its investments plan to build capacity in its operational systems.
In 2019, Nestlé Pakistan made investments of Rs. 3.8 billion including expansion and development project with a market-driven approach and commitment to satisfy the needs of our consumers.
The company made an investment of Rs. 2.1 billion on its Sheikhupura Factory whereas an amount of Rs. 654 million was spent on Kabirwala Factor. The management invested an amount of Rs. 237 million on building up water plants in various parts of the country. It spent an amount of Rs. 537 million on developing distribution and sales channels. Also, an amount of Rs. 285 million was invested on various heads.
Nestle’ Pakistan Profit Down in 2109
The company posted a profit of Rs. 7.35 billion, showing a decrease of 36.70% as compared with Rs. 11.61 billion in 2018. In 2017, it made a highest-ever profit of Rs.14.642 billion in Pakistan.
According to the financial report, the company recorded a revenue of Rs. 116 billion against Rs, 121 billion reported in 2018, showing a decline of 3.9% mainly due to softness in consumer demand consequent to price increases across the portfolio.
During the year the company increased consumer prices to off-set higher input costs resulting from a significant increase in local and global commodity prices and energy costs which were impacted by Rupee devaluation.
The imposition of Sales Tax on milk powders and Federal Excise Duty (FED) on beverages also necessitated an adjustment in the consumer price. However, due to deteriorating purchasing power of the consumers and competitive pressures we were not able to fully pass on the above increases which negatively impacted the margins and Net profit for the year 2019 reduced by 36.7% compared to the previous year.
