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Cost control saves the day for Nestle

Feb 25, 2000

Nestle India has reported a decline in net sales during the year ended 31st December 1999. The company has also reported a share decline in other income. Nestle has however reported a 14% rise in profits and a rise in net margins. This has been made possible largely due to the reduction in costs and interest expenditure. The company’s cost control measures resulted in an improvement in operating margin despite the decline in sales. The growth in profits was curtailed by a sharp jump in taxation.

The company has been facing intense competition in all segments of its business and it is likely that in the coming months its adspend would witness an increase even as realisations remain near stagnant. This could see ,margins coming under pressure.

(Rs m) FY1999 FY1998 Change
Net Sales 15,439.0 15,999.0 -3.5%
Other Income 83.0 128.0 -35.2%
Expenditure 13,175.0 13,949.0 -5.5%
Interest 265.0 439.0 -39.6%
Depreciation 319.0 302.0 5.6%
Profit before Tax 1,582.0 1,236.0 28.0%
Tax 597.0 374.0 59.6%
Profit after Tax/(Loss) 985.0 862.0 14.3%
Net profit margin (%) 6.4% 5.4%  

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