100th year anniversary celebrations spur strong domestic growth for Nestlé Malaysia in 2012

To Press Releases listPetaling Jaya,Feb 21, 2013

Key Highlights

Turnover of RM1.1 billion in Q4 2012, up by 2.5% from corresponding period in 2011, coupled with improvement in Net Profit.

The Full Year 2012 closes with an annual turnover of RM4.6 billion and a net profit of RM505.4 million with an underlying margin improvement of 100 bps.

Final dividend of 155 sen per share will be proposed at the AGM.

Petaling Jaya, 21 February 2013 - Nestlé (Malaysia) Berhad today announced its results for the fourth quarter ending 31 December 2012, which saw it continuing on the growth momentum established during the previous three quarters.

Review of performance (Quarter 4, 2012)

During the quarter, the Group registered a turnover of RM1.1 billion, reflecting a 2.5% growth compared to the corresponding period in 2011.

The good performance was largely driven by Domestic growth, fueled by the Group investments in marketing and promotional activities as well as by positive consumer sentiments. Exports, however, recorded a slow down as softer demand from certain markets led to lower turnover for the quarter.

An easing in the price of commodities during the quarter resulted in an improved gross margin, while higher investments in marketing and promotional activities further strengthened brand equity, and positively impacted sales.

Consequently, the Group achieved Profit before tax of RM112.9 million with an underlying margin improvement of 80 bps. Of note were the lower financing cost driven by good working capital management. The Net Profit stood at RM99.5 million reflecting a margin improvement of 200 bps, supported by a lower tax expense driven by tax benefits linked to higher capital investments in the quarter.

Review of performance (Full year 2012)

The Group closed the financial year with a turnover of RM4.6 billion, registering a 7.3% growth from the previous corresponding period despite a slow down in Export activities due to lower demand from some export markets.

The growth was driven by strong Domestic demand benefitting from the marketing and promotional activities initiated in conjunction with Nestlé celebrating its 100th year in Malaysia and from the local economic performance. The response from consumers was very positive and resulted in strong demand for Nestlé products. Encouraging performance was particularly noted in the fast growing categories within the Group's portfolio namely, Confectionery, Liquid Drinks, Chilled Dairy and Ice Cream.

The Group was also active in renovating and innovating its product range, and the year saw the introduction of new product variants, which included NESCAFÉ 3 in 1 Brown and Creamy, new MILO mixes variants (MILO Less Sweet, MILO Hi-Fibre, MILO Cereal), the new MAGGI MI Goreng and two additional NESTUM 3 in 1 variants with Chinese herbs. All the new products were well received by the market.

From an input cost perspective, prices of major raw materials consumed by the Group stabilised in the second half but remained at a high level. Combined with the Group's internal cost savings initiatives under the umbrella of the Nestlé Continuous Excellence program, the gross profit margin improved by 150 bps against the same period last year.

Higher sales volume supported by marketing investments, combined with the improved gross profit margin helped profit before tax reach RM637.7 million with an underlying margin improvement of 80 bps. Net profit stood at RM505.4 million and showed a margin improvement of 100 bps. To note were the lower financing cost driven by good working capital management across inventories, receivables and payables.

With the Group’s commendable performance during the financial year, the Board of Directors has proposed to declare a single-tier final dividend of 155 sen per share, subject to the approval from shareholders at the Annual General Meeting.

Current year Prospects

2013 is expected to be another challenging year for the Group as the global economy still faces many uncertainties. The Malaysian economy, however, is expected to remain resilient which augurs well for the domestic market. The Group will continue to innovate and renovate 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.

The Group will remain focused on growing both top and bottom line, and will continue its long-term strategy of investing in manufacturing capacity to support its growth. A major project in the coming years will be to increase manufacturing capacity in a new facility that will be built on the recently acquired land next to the Shah Alam Manufacturing Complex.

The Group will also continue to intensify its marketing investments in line with Nestlé's objective of being the leader in Nutrition, Health & Wellness, as well as an industry benchmark for its financial performance and being trusted by all stakeholders.

For more information, please contact:

Ms. Zamira Yasmin Abdul Rahman
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6212
Email: zamirayasmin.abdulrahman@my.nestle.com

Ms. Rose Dahlan
WestCoast Communications
Tel: (+603) 7954 4505
Email: tputri@westcoast.my