Kuala Lumpur, Apr. 23 - Food and beverages maker Nestle (Malaysia) Bhd Wednesday said net profit rose 35% on year in the first quarter because of strong domestic and export sales, but warned that results in the coming quarters will be volatile.
Net profit in the three months ended March 31 was at MYR94.3 million, up from MYR69.8 million in the same period last year.
Sales of Nestle Malaysia's products in the domestic market continued to grow in the first quarter, rising 5.3% on year to MYR738.0 million.
The company also sold more of its products overseas, as export sales surged 32% on year to MYR189.7 million, accounting for 20% of revenue.
It said product innovation such as improvement in recipes and taste and the use of new technologies contributed to the growth in sales.
However, gross profit margins shrank 140 basis points in the first quarter to 31.0%, it said, attributing the decline to higher prices of raw materials such as milk solids, palm oil, wheat flour and coffee beans.
"2008 will continue to be a very challenging year as the high prices of commodities remain a concern," the Malaysian unit of Swiss food giant Nestle SA (NESN.VX) said.
It added that 2008 "will be marked by more volatile quarterly readings than in previous years."
The company declared a special dividend of 61.19 sen per share.