July 23, 2026 (MLN): Nestlé Pakistan Limited (PSX: NESTLE) reported a 4% decline in its net profit for the six months ended June 30, 2026, with profit after taxation slipping to Rs9.98bn from Rs10.42bn in the corresponding period last year.

Showing this softer bottom-line, the company's earnings per share (EPS) eased to Rs220.04 from Rs229.88 in 1HFY25.

The top-line performance remained encouraging, with net revenue from contracts with customers growing 6% year-on-year to Rs107.02bn from Rs101.29bn in the prior period.

Cost of goods sold rose in near-perfect proportion at 6% to Rs65.49bn, allowing gross profit to expand by 6% to Rs41.54bn from Rs39.30bn showing resilient margin management at the gross level.

However, distribution and selling expenses rose at a faster pace of 10% to Rs18.32bn, while administration expenses remained largely stable, inching up just over 1% to Rs3.58bn.

These movements collectively limited operating profit growth to a modest 3%, with the figure reaching Rs19.63bn from Rs19.10bn last year.

Below the operating line, the picture improved notably. Finance cost dropped sharply by 48% to Rs174.59m from Rs333.18m, while other expenses also declined by 3% to Rs1.58bn.

Combined, finance cost and other expenses fell 11% to Rs1.75bn. Other income surged 135% to Rs601.04m from Rs255.44m, providing a meaningful additional uplift.

These below-the-line tailwinds pushed profit before final tax, minimum tax differential, and income tax up 6% to Rs18.48bn. After accounting for a minimum tax differential charge of Rs48.74m significantly lower than Rs140.00m last year profit before income tax rose 7% to Rs18.43bn from Rs17.24bn.

The factor that reversed the pre-tax gains at the bottom-line was a substantially higher income tax burden. Income tax jumped 24% to Rs8.45bn from Rs6.82bn in the same period last year, more than absorbing the pre-tax improvement and pulling profit after taxation down 4%.

The Board of Directors has announced an interim cash dividend of Rs213 per share (2,130%) for the quarter ended June 30, 2026. No interim dividend was paid in the prior period.