Creamier 2011 for Nestlé Lanka shareholders
Nestlé Lanka Plc yesterday gave the best sweetener to its shareholders announcing a hefty final dividend of Rs. 47.50 per share, propelling its stock price to an all time high and emerged as seventh most valuable on Colombo Bourse beating telecom giant Dialog.
The final dividend for 2011 financial year is Rs. 13 or 37.6% above the Rs. 34.50 paid for 2010. The dividend for 2011 will be a record Rs. 2.55 billion, as against Rs. 1.85 billion in the previous year, which marked sixth consecutive year of over Rs. 1 billion payout. In 2011 however it has crossed the Rs. 2.5 billion mark.
On the back of record earnings in 2011, investors have been anticipating a high dividend from Nestle as reflected by steady movement in its share price. Yesterday’s announcement saw Nestlé Lanka’s share price hit an all time high of Rs. 1,089, before closing at Rs. 1,075, up by Rs. 75.60 or 7.5%. Last week too Nestlé share price set an all time high of Rs. 1,050 before closing at Rs. 1,000 which was its previous best.
Yesterday’s rise in share price also pushed Nestlé to be seventh most valuable with a market capitalization of Rs. 57.78 billion, relegating telecom giant Dialog to number eight. Last week, Dialog with a market cap of Rs. 54.56 billion was above Nestlé’s Rs. 53.7 billion.
In comparison to end 2011 closing, Nestlé’s share price yesterday reflected an increase of Rs. 198.60 or 22.6%. This is against a negative return of 10% of the market.
Being a multinational, the biggest beneficiary of the hefty dividend will be Nestlé S.A which owns 90.8% of the Lankan venture. The company has 5,225 shareholders who own less than 1,000 shares with a collective stake of 1.58% whilst a further 500 own 1.45 million shares or 2.7% stake.
Despite the volatility and sharp upward trend in the price of commodities over 2011, the company’s strong performance in all four quarters enabled it to deliver impressive results.
Nestlé Lanka’s audited accounts for 2011 is not yet out but as per provisional data, revenue in 2011 grew by 20.3% to Rs. 25.8 billion whilst gross profit rose by 16.4% to Rs. 8.6 billion. Pre-tax profit was Rs. 3.5 billion, up by 22% and after tax profit amounted to Rs. 2.63 billion, up by 38.5% over 2010.
In a statement releasing provisional results in February Nestlé Lanka Managing Director Alois Hofbauer said: “I am pleased that we have been able to deliver strong top and bottom line growth in a very challenging year for us. Our solid financial achievements are a testament to the resilience of our Nestlé business model and the determination and capabilities of our team. Our commitment to ‘Create Shared Value’ for Sri Lanka has never been stronger. Our strong financial results together with our crowning as Sri Lanka’s ‘Best Corporate Citizen 2011’ prove that it is possible to ‘do well by doing good.’”
Last month Nestlé opened a new UHT milk plant at its state-of-the-art manufacturing facility in Kurunegala, marking the third phase of its investment commitment of Rs. 10 billion in Sri Lanka over the next few years.
The new plant was an extension of Nestlé Lanka’s current processing facilities and, together with its malt beverages plant in 2011 and noodle plant in early 2012, accounts for almost Rs. 3 billion of the total Rs. 10 billion investment commitment to Sri Lanka. Nestlé’s new UHT milk plant will further expand the company’s capacity for its popular dairy based beverages.
Nestlé is also Sri Lanka’s largest collector of fresh milk in the private sector, procuring milk from over 15,000 farmers every day across the country.
In 2010, Nestlé contributed Rs.1.49 billion to the livelihoods of dairy farmers by way of milk purchases and 38 million coconuts were procured by the company for Rs. 721 million to produce value added ‘Coconut Milk Powder’. Its value added to the Government in 2010 was approximately 54%, amounting to Rs. 3.9 billion. These figures are expected to be higher in 2011.
