In CY24, Nestlé Pakistan Limited reported a net profit of PKR 14.81 billion (EPS: PKR 326.53), reflecting a 10% YoY decline compared to PKR 16.49 billion (EPS: PKR 363.68) in CY23. Net revenue stood at PKR 193.21 billion, down 4% YoY from PKR 200.61 billion in CY23. Export sales registered a 21% YoY increase.
The overall decline in revenue was attributed to the imposition of sales tax on the dairy & nutrition segment (impacting 70% of the portfolio), an additional 6.5% tax on non-filer retailers, the export taxation under the Normal Tax Regime, and the impact of a product boycott due to in the Middle East conflict.
The revenue mix in CY24 comprised Dairy & Nutrition at 78.9%, Beverages at 20.7%, and Others at 0.4%. Dairy & Nutrition segment sales declined by 4.1% YoY to PKR 153.2 billion. UHT milk contributed 15-20% to this segment’s revenue. Management reported negative growth across all categories, with price hikes of 3–5% implemented during the year. No provision was recorded in CY24 related to the Everyday HS classification matter.
Operating margins declined to 17.5% from 18.9% in CY23, impacted by increased brand investments aimed at sustaining volumes post-taxation and lower fixed cost absorption. The Beverages segment posted a 1.5% YoY decline in sales to PKR 40 billion, with profit margins falling to 6.8% from 10.6% in the SPLY, driven by similar cost absorption challenges and elevated brand investments. Volume growth in liquid milk remained under pressure throughout CY24, while the market share in the juices segment remained stable.
Management highlighted continued challenges in retaining market share in the liquid milk category and is actively engaged in discussions with the government for the removal of GST on milk. Nestlé incurred a CAPEX of PKR 4.4 billion in CY24, primarily allocated to sustainability initiatives, compared to PKR 3.4 billion in CY23. The company operates solar energy facilities at Sheikhupura (2.6MW), Kabirwala (350 KW) and KBF Biomass broiler. Nestlé currently exports to 26 countries, including shipments of locally manufactured liquid milk to two African nations.
Management noted relative price stability in milk during the last three months, with prices increasing by 7–8%. The summer season typically brings a dip in milk production, but lower input costs and a resilient portfolio supported margin performance in CY24. Looking ahead to CY25, Nestlé intends to focus on export growth and volumetric recovery through product innovation. No major capacity expansion is planned for the year, with the company maintaining a cautious approach centered around sustainability and green energy initiatives.
Management aims to sustain margins in CY25.
Important Disclosures
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