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Nestle posts solid growth, driven by robust domestic demand

Posted on June 28, 2013, Friday

KUCHING: Nestle Malaysia Bhd (Nestle) announced that it had recorded an annual turnover of RM4.6 billion (an increase of 7.3 per cent) for the financial year 2012 (FY12), despite a slow down in export activities due to lower demand from some export markets.

This was on the back of robust domestic demand, contributed by the marketing and promotional activities carried out in conjunction with Nestle 100 Years Celebration and from the local economic performance.

According to a press release, the response from consumers was very positive and resulted in the strong demand for Nestle products. Fast growing categories within the group’s portfolio namely, Confectionery, Liquid Drinks, Chilled Dairy and Ice Cream, performed well.

“Following continuous product innovation and renovation, Nestle introduced a selection of new and exciting product variants, such as Nescafe three-in-one Brown and Creamy, new Milo mixes variants (Milo Less Sweet, Milo Hi-Fibre, Milo Cereal), the new Maggi Mi Goreng and two additional Nestum three-in-one variants with Chinese herbs,” the statement noted.

During the year under review, it added, prices of major raw materials consumed by the group stabilised in the second half but remained at a high level. However, when combined with the group’s internal cost savings initiative – Nestle Continuous Excellence programme – the gross profit margin improved by 150 basis points (bps) against the same period last year.

It further explained, “From a bottom line perspective, profit before tax reached RM637.7 million with an underlying margin improvement of 80 bps.

“This was made possible thanks to the higher sales volume supported by marketing investments, combined with the improved gross profit margin.”

Apart from that, Nestle’s net profit stood at RM505.4 million with a margin improvement of 100 bps. To note, the company’s lower financing cost was driven by good working capital management across inventories, receivables and payables.

“In view of the commendable performance during the 2012 financial year, the board of directors proposed to declare a single-tier final dividend of 155 sen per share, subject to the approval from shareholders at the annual general meeting,” the statement highlighted.

Looking ahead, Nestle retains an optimistic view on Malaysia’s economy which is expected to remain resilient and augurs well for the domestic market. This is albeit uncertainties in the global economy.

It added, “The group is in a good position to capitalise on the favourable conditions through the continued innovation and renovation of its product portfolio while promoting nutritionally balanced diets and healthy lifestyles in line with the government’s goal of creating a healthy and productive society.”

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