NESTLÉ EXPANDS DOMESTIC MARKET SHARE IN FY2014

To Press Releases listPetaling Jaya,Feb 23, 2015

Announces Proposed Final Dividend of RM1.75 per share

DOMESTIC DEMAND DRIVES NESTLÉ MALAYSIA’S 2013 FIRST HALF PERFORMANCE
KEY HIGHLIGHTS
  • Turnover of RM4.8 billion for the financial year ended 31 December 2014, a 0.4% improvement from the previous fiscal year.
  • Strong investment in marketing and promotional activities drove domestic sales and expanded market share.
  • Marginal drop in operating profit and net profit for the year due to challenging market conditions.
  • Proposed final dividend of RM1.75 per share, consistent with final dividend declared in the previous year.

Nestlé (Malaysia) Bhd recorded moderate growth for the financial year ended 31 December 2014, with a turnover of RM4.8 billion. This represents a 0.4% increase from the previous financial year.

Mr Alois Hofbauer, Managing Director, Nestlé (Malaysia) Berhad, said, "The Group’s revenue growth for the year was primarily driven by the domestic business. Despite subdued consumer sentiment during 2014, our investments in marketing and promotional activities gained us stronger market share in all major product categories, particularly in the Confectionary, Ice Cream and Liquid Drinks businesses."

Growth for the year was moderated by the export business, with lower exports to affiliated companies as a result of the challenging global economy and reduced demand. This was further compounded by the fact that the Philippines and Indonesia have invested in their local manufacturing capabilities.

From an input cost perspective, commodities prices were on a mixed trend in 2014, easing in the third quarter. This was curbed however by the devaluation of the Ringgit, especially in the fourth quarter of the year.

In order to mitigate this and maintain product costs at a competitive level, the Group continued to leverage on the Nestlé Continuous Excellence Platform, focusing on internal saving initiatives. This helped to offset the higher input costs where the gross profit remained at the same level of last year. Furthermore, the Group’s total investment in marketing and promotional activities was slightly higher than the amount invested in the previous fiscal year. Hence, operating profit showed a slight drop of 1.3%, while net profit was RM550.4 million, a marginal decline of 2.0% from last year.

Meanwhile for the fourth quarter ended 31 December 2014, the Group recorded a turnover of RM1.1 billion, 2.6% lower than the previous year’s corresponding quarter. This was mainly attributable to declining consumer sentiment which impacted domestic sales.

Although commodity prices with the exception of palm oil were on a favourable trend in the quarter under review, this was offset by the depreciation of the Ringgit against the US Dollar. The landed costs were effectively higher, which marginally affected gross profit margin by 90 bps. In light of tough market conditions, the Group implemented cost optimisation initiatives in order to reduce operating expenses. Coupled with lower tax expenses, net profit for the quarter was RM98.3 million, with a margin improvement of 10 bps, slightly lower than the previous year’s corresponding quarter.

In line with the Group’s commitment to enhance the shareholder value, the Board of Directors proposed a final dividend of RM1.75 per share for the financial year ended 31 December 2014. Including the interim this will bring total dividends per share for the year to RM2.35.

Mr Hofbauer added, "The year ahead will be challenging, particularly in light of weakening global oil prices and the volatile economic climate. Moreover, the implementation of the Goods and Services Tax in April 2015 will certainly impact consumer buying behaviour, and a period of adjustment is expected before consumer demand is able to normalise."

"The Group remains focused on achieving organic growth. In line with our strategy of expanding manufacturing capacity, our new Sri Muda Factory in Shah Alam is slated to commence operations in the first quarter of 2015. At the same time, we aim to boost top and bottom line growth by leveraging on our continuous product innovation and strategic marketing investments. Over the long term, we are committed to reinforcing our role as a leader in Nutrition, Health and Wellness, providing nutritionally balanced diets and promoting healthy lifestyles," concluded Mr Hofbauer.

____________________________________________________________________________

For more information, please contact:

Zainun Nur Abdul Rauf
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6445
Email: ZainunNur.AbdulRauf@my.nestle.com

Michelle Vincent or Yasmin Kadir
acorn communications
Tel: (+603) 7958 8348
Email: acorncommunications@acornco.com.my

____________________________________________________________________________

PDF press releases: