Nestle Lanka PLC is currently executing mitigation actions and proactive measures to reduce and defer all its non-essential expenses, including temporarily deferring some capital expenditure, in order to face the current challenges.
This is according to a company disclosure to the Colombo Stock Exchange (CSE) made last week, which also states that Nestle Lanka is bracing for the impact of the depreciation of the LKR and the closure of hotels and restaurants around the globe.
“Depreciation of LKR and volatility in the foreign exchange market will impact costs of imported raw and packing material. We see a drop in our coconut milk powder export business as an important part is used by hotels and restaurants which have been closed around the globe.”
The management will continue to monitor and control its spending with anticipation of a gradual recovery of the marketplace with the easing of curfew restrictions. Nestle Lanka said the conservation of cash remains a key priority for Nestle and that as of now, the company has enough cash flows for seamless operation.
“The focus of the organisation is to ensure supply of our products to consumers in the best possible manner and (to) minimise all spends that do not add value to the business in difficult times.”
The company commenced its preparations for an outbreak of Covid-19 from early March, and due to the islandwide curfew that was in place, their factory was unable to operate in its full capacity. This combined with the fact that grocery stores were closed impacted their sales operations.
He stated that the company has optimised its manufacturing capacity to cater essential food and beverage requirements of their consumers under strict health and safety measures.
Mid-March, Nestle activated their Business Continuity Plan (BCP) in order to ensure production of key essential SKUs (stock-keeping units) to meet consumer demand by working on the alternative route to market delivery models. Furthermore, the company is also currently supporting the frontliners and Covid-19-impacted communities by donating Rs. 50 million worth of food products since the outbreak of the pandemic.
Nestle is one of the world’s largest food and beverage companies with a presence in Sri Lanka since 1906.