Nestle Lanka profits down yet optimistic about Sri Lanka

PROFITS: For the six-month period from January to June 2007, Nestle Lanka PLC recorded a turnover growth of 11.7% over the corresponding period in 2006.

Profit Before Tax and Profit After Tax declined by 10.9% and 7.8% respectively over the first half of last year.

The company said that the lower profits were mainly a result of the steep rise in the price of milk solids combined with an inability to take corresponding sale price increases as milk powder is under price control.

However, it was noted that the reduction in Nestle Lanka's profits would have been much higher if not for the strict cost control measures implemented throughout the company's supply chain.

With a heritage of 100 years in Sri Lanka, Nestle Lanka PLC is not permitting the current downturn to deter its long-term investment in the country as well as its mission to create shared sustainable value for all its stakeholders.

Committed to long-term development, the company is investing Rs. 500 million toward expansion in its Kurunegala factory this year. This modern food manufacturing facility already produces more than 90% of the Nestle products retailed locally and is the only factory in the Nestle world producing Maggi coconut milk powder.

This factory has long been acknowledged for its stringent standards of quality, hygiene and safety as well as its sound environmental practices.

In addition to investing in infrastructure, Nestle Lanka is empowering its people. The Company is currently undergoing a transition to operating in a SAP-based environment, in line with the global strategy of Nestle, worldwide.

Referred to as the GLOBE Project, it involves significant investment in human resources with intensive training and competency development.

The end result is a more aligned structure and efficient organisation with best practices in place thereby enabling Nestle to unleash its 100% potential.

Furthermore, the Company continues to be deeply rooted in Sri Lankan society through its household brands such as Nestomalt, Nespray, Milo, Nescafe, and Maggi as well as by initiating key social projects and sponsorships.

Nestle Lanka supports various causes, particularly those related to children's education, school sports, vocational training, access to water and disabled people.

Since 2005, the company has been involved in a community development programme of constructing pre-schools and fishing anchorages along the coast.

At a total project cost of Rs. 120 million, eight pre-schools and four anchorages have been built and are operational, while more are planned.

In June this year, Nestle Lanka opened its third clean drinking water facility at the Polonnaruwa General Hospital.

This water facility is appreciated by the residents as the hospital services up to 2,000 people from rural villages and because of the hard water prevalent in the area.