KUALA LUMPUR: Nestle (M) Bhd saw its bottomline affected by high raw material costs as net profit for its third quarter ended Sept 30, 2008 fell 24.5% year-on-year to RM87.54 million from RM115.97 million.

This was despite turnover increasing to RM961.82 million from RM861.44 million a year ago.

Higher input costs of key raw materials such as milk and flour had resulted in increased pressure on its gross profit margin, which declined to 31.1% of turnover, from 34.6% a year earlier.

According to Nestlé’s managing director Sullivan O’Carroll, the company has stepped up efforts to keep its internal costs low.

“Renewed efforts on internal savings such as optimising marketing expenses and other general expenses have contributed to offset part of the impact of higher raw and packaging materials input costs,” said O’Carroll.

He attributed the higher sales to strong trade and consumer promotional support in the domestic market.

“For its domestic business, turnover grew by 10.7% in the nine months against the same period last year while exports of halal products increased by 24% to contribute 22.5% towards the total turnover,” said Nestle.

Going forward, O’Carroll said that although prices of its key raw materials had come down from record highs, prices were still higher compared to 2007. As a result, Nestle said it expected to face challenging times in the coming months as consumer sentiment continued to be weak.

“The group will continue to implement capital expenditure for manufacturing of halal products as planned and will improve its value chain efficiencies to deliver its long-term sustainable and profitable growth model,” said O’Carroll.

Nestle said it was planning to invest more than RM200 million in the coming months to increase the range of its halal products.