KEY HIGHLIGHTS:
- Group performance for 9 months for the period ending September 30th 2008
- Group sustains double digit turnover growth of 13.5% for the first 9 months of 2008, amounting to RM2.9 billion
- Exports of Halal products grew by 24%, contributing to 22.5% of total turnover
- Gross profit margin declines by from 34.6% in 2007 to 31.1%.
Net profit margin after tax at 9.1% is slightly lower than 2007 of 10.1%
While the continued volatility in global markets, compounded by higher input costs, has continued to put pressure on the revenue and profit margins of many companies, Nestlé (Malaysia) Berhad has sustained double digit growth of 13.5% for the first 9 months of the year and registered a turnover of RM2.9 billion, against the same period last year.
The satisfactory growth stems from the strong trade and consumer promotional support in the domestic market, while moderate growth was registered by the exports business. For its domestic business, turnover grew by 10.7% in the 9 months against the same period last year while exports of exclusively Halal products increased by 24% to contribute 22.5% towards the total turnover.
This good result was due to the continuous efforts of the Group to provide healthy and nutritious solutions and value-added products to meet the needs of our consumers. The Company has also placed great importance on affordability of Nestlé products by introducing “Popularly Positioned Products” (PPP) with clear nutritional benefits to ensure the majority of Malaysians can afford to purchase and enjoy Nestlé products.
Mr. Sullivan O’Carroll, Managing Director of Nestlé (Malaysia) Berhad said, “As the Company strives to be the recognized leader in Nutrition, Health and Wellness, we continuously focus on providing nutritional benefits and value-added products to meet the needs of our consumers. The introduction of Popularly Positioned Products (PPP) ensure that more Malaysians, from all income groups, are able to enjoy the nutritional benefits of Nestlé products at affordable prices. NESTUM® SARAPAN BERKHASIAT, NESPRAY® CERGAS, MILO® wafer and MAGGI® CUKUP RASA are among the successful PPP launches this year.”
While there have been some adjustments in some of the key commodity prices, which have declined from their all time highs earlier this year, the prices are still considerably higher when compared to 2007. In addition, the impact of the input cost price reductions has been minimized by the weaker Ringgit.
The food and beverage industry has been under unprecedented input cost pressures since 2007, with milk prices up by 40% between early 2007 and end August 2008 and palm oil prices increasing by 30% during the same period. Similar trends were recorded by key commodities over the same period, such as wheat flour prices increasing by 70%, cocoa up by a staggering 90%, coffee increasing by 60% and rice prices soaring by 80%.
As a result, the gross profit is still under pressure at 31.1% of turnover, down from 34.6% compared to the same period in 2007.
According to O’Carroll, “Renewed efforts on internal savings such as optimizing marketing expenses and other general expenses have contributed to offset part of the impact of higher raw and packaging materials input costs.”
This has positively contributed to the operating profit margin, closing the gap by registering 12.1% of turnover, marginally lower from the previous year and slightly ahead of the full year 2007.
Looking ahead, O’Carroll said that while the pressure on key commodities have eased slightly, the prices of key raw material such as Milks, Coffee, Cocoa or Wheat flour, are still significantly higher than their levels of 2007 posing great challenges to the entire Food and Beverage industry.
He said that the Group will keep pursuing its initiatives to further optimize its operations to mitigate as much as possible the impact of higher input costs and of the depreciating Ringgit. The Group will also constantly drive for higher sales and continue to protect and grow market shares from its competitors.
“As part of its on going drive to Nourish Malaysia, the Group will take the necessary steps to counter the current weaker consumer confidence and a possible slowdown in consumption. The Group will continue to implement CAPEX for manufacturing of Halal products as planned and will improve further its value chain efficiencies in order to deliver its long term sustainable and profitable growth model,” O’Carroll said.
Looking forward, the Group will proceed as planned with our investments exceeding RM 200 million for 2008 onwards, to introduce new nutritious and affordable HALAL products, as well as to increase the manufacturing capacity for both the domestic and export markets. It is vital that the Company be recognized as the leader in Nutrition, Health and Wellness, and be the industry benchmark for our financial performance and trusted by all our stakeholders.
Download this press release (PDF):
English Version
Versi Bahasa Malaysia
中文语言
___________________________________________________________________________
Issued for and on behalf of Nestlé [Malaysia] Berhad [110925-W] by
Group Corporate Affairs & Wellness Department
For further information or enquiries, please contact
Ms Rafizah Amran at Tel: (603) 7965 6272; Mobile: (6012) 239 6455;
or Email: Rafizah.Amran@my.nestle.com
___________________________________________________________________________