Higher sales and gross profit support performance, but rising fuel costs, taxation and geopolitical uncertainty weigh on earnings.
KARACHI: Nestlé Pakistan Limited has maintained a cautious outlook for 2026, citing continued geopolitical uncertainty, volatility in energy and input costs and elevated inflation driven by higher fuel prices.
The company said persistent inflationary pressures could weigh on consumer spending and increase operating costs during the remainder of the year. However, it remains confident in its ability to navigate the challenging environment through continued investment in its brands, strengthening its position in key product categories and improving operational efficiency.
According to the company’s half-year review, Nestlé Pakistan’s net sales increased 5.7% to Rs107.02 billion during the six months ended June 30, 2026, compared with Rs101.29 billion in the same period last year.
Gross profit also rose 5.7% to Rs41.54 billion, from Rs39.30 billion a year earlier. The gross profit margin, however, remained unchanged at 38.8% of net sales.
Operating profit increased by a more modest 2.8% to Rs19.63 billion, compared with Rs19.10 billion during the corresponding period of 2025. As a result, the operating profit margin declined to 18.3% from 18.9%.
Nestlé Pakistan attributed the pressure on operating profitability mainly to increased investment in its brands and higher distribution costs resulting from rising fuel prices.
Net profit falls 4.3%
Nestlé Pakistan’s net profit after tax declined 4.3% to Rs9.98 billion during the first half of 2026, compared with Rs10.43 billion in the same period last year.
Earnings per share fell to Rs220 from Rs229.90.
The company said the decline in net profit was primarily due to a higher incidence of taxation.
Despite the pressure on earnings, Nestlé said it maintained business momentum through increased investment in its brands, consumer-focused innovation and renovation, stronger marketplace execution and expanded export route-to-market initiatives.
The company also continued to apply disciplined pricing where necessary to manage rising costs.
Green energy helps offset higher costs
Nestlé Pakistan said its investments in green energy, particularly solar and biomass, helped partially offset the impact of higher energy costs while contributing to lower carbon emissions.
The company said improved sales, disciplined management of overheads and continued optimisation across its value chain supported the improvement in gross profit during the period.
Nestlé also continued its localisation strategy in response to geopolitical uncertainty. The company said it had strategically secured critical inventories, reduced foreign exchange exposure and strengthened supply-chain resilience to ensure continuity of operations.
Geopolitical and inflation risks remain
Looking ahead, Nestlé Pakistan expects geopolitical instability and continued volatility in energy and other input costs to remain key challenges during the remainder of 2026.
The company also expects elevated fuel-driven inflation to continue affecting consumer spending and operating expenses.
Despite these risks, Nestlé Pakistan said it remains well positioned to manage the uncertain operating environment. The company plans to maintain appropriate investment in its brands, strengthen its market leadership in key categories and develop high-performing, future-ready teams.
Nestlé Pakistan also reaffirmed its commitment to sustainability, saying it would continue advancing its sustainability agenda while managing the economic and operational challenges facing the business.