CANBERRA: Falling revenue and losses on asset sales have weighed on Nestle Australia, one of the biggest suppliers to the country’s major supermarket chains, Woolworths and Coles.
And a bearish outlook for the manufacturer of products such as Uncle Tobys cereal, Kit Kat chocolate bars, Maggi noodles, and Nescafe and Nespresso coffee has contributed to a writedown of $51.2 million.
Nestle Australia has reported a $288,000 loss on the sale of its performance nutrition business in September last year. The business, owner of the Musashi and PowerBar workout food products, was sold seven months ago to the US group Post Holdings so Nestle could “focus on areas with higher growth potential.”
The loss on that sale followed a $19.2 million hit on the sale of its Jenny Craig weight loss business and Country Cup soup business.
In its 2014 calendar year accounts filed with the corporate regulator, Nestle Australia attributed its 4.4 per cent decline in sales revenue to the sale of Jenny Craig and Country Cup sales.
The slimmed-down Nestle Australia said its 30.2 per cent fall in annual profit, to $104.67 million, was because of the goodwill impairment loss and asset sales.
“Management continued to focus on portfolio optimisation, as well as various cost-saving initiatives across the business,” it said in accounts lodged with the corporate regulator.
“The consolidated entity will continue to pursue its policy of increasing its strength in its major business sectors during the next financial year.”Food and grocery suppliers have experienced declining margins in recent years as the supermarket wars have heated up.
Nestle Australia is led by Trevor Clayton. Perpetual director Elizabeth Proust is chairman.
The business has nine factories in Australia, making powdered and liquid beverages, milk products and ice-cream, nutrition and health science products, prepared dishes and cooking aids, confection and pet care products. IBISWorld says Nestle is the biggest player in Australia’s $1.5 billion confectionary market.
But Australia accounts for less than 2 per cent of Swiss-incorporated parent company Nestle SA’s overall sales, its latest annual report shows.
Nestle Australia’s special purpose accounts also show the company received $5.34 million in government grant income in 2014, and posted restructuring and redundancy costs of $5.3 million, adding to $3.7 million in costs the year before.
Nestle SA received $108 million in royalty payments, $23.8 million in interest payments and $55 million in service payments. The transactions were “at arm’s length with settlement on commercial terms”, it said.
Nestle SA operates in 197 countries. Its 2014 annual report says Asia, Oceania and Africa account for less than a third of its revenue overall, but are fast-growing, highly complex and have “huge potential”.Nestle SA recently described its 4.4 per cent organic growth for the first two months of 2015 as a “solid start”
