Nestlé Records Improved Turnover at Half-Year Point

To Press Releases listPetaling Jaya,Aug 12, 2014

NESTLÉ RECORDS IMPROVED TURNOVER AT HALF-YEAR POINT
KEY HIGHLIGHTS
  • Turnover of RM2.5 billion in the first half of 2014, up by 4.1% from corresponding period in 2013.

  • Robust domestic growth was driven by increased support in marketing and promotional activities.

  • Operating and net profit impacted by unfavourable input costs and higher marketing investments.

  • Net interim dividend of RM0.60 per share declared.

Nestlé (Malaysia) Berhad today announced its results for the first half ended June 2014 on the back of a strong turnover.

Review of Performance: Quarter 2, 2014 vs Quarter 2, 2013

For the second quarter ending 30 June 2014, the Group registered a turnover of RM1.3 billion, 4.6% higher than the same period last year. The overall good performance was largely the result of encouraging domestic sales. The "Lebih Kebaikan, Lebih Nilai" campaign towards the end of the first quarter as well as several new product launches have generated higher demand in the second quarter. NESCAFÉ Latte Caramel, MAGGI BIG Ayam and MAGGI Royale were among the new products introduced during the quarter.

Exports sales came in lower compared to the previous corresponding period. This was mainly due to softer demand from affiliated companies, a trend the Group experienced since the second half of 2013. The second quarter exports however were flat against the first quarter.

From an input cost perspective, commodity prices have been on the uptrend especially for Milk Powders, Coffee Beans and Palm oil. With the resulting negative impact at a higher level than our internal cost saving initiatives, the Group increased the prices of the affected products but with a timing slightly behind the cost curve. As a result, the gross profit was lower than the same period last year.

The quarter also saw higher investment in marketing and promotional activities which further strengthened the Group's brands and market share position. Despite the higher turnover generated by the domestic business, the unfavourable input costs and higher marketing investments resulted in a lower operating and net profit - by 9,5% and 15.5% respectively - against the same period last year.

Review of Performance: Year-to-date, June 2014 vs Year-to-date, June 2013

For the first half ended 30 June 2014, the Group registered a turnover of RM2.5 billion, 4.1% higher than the corresponding period last year. Although the local economy performed well, consumer sentiment showed an opposite trend. In this half, the Group increased its investments in marketing and promotional activities to drive higher domestic sales. The campaigns were successful in driving a robust growth in several categories such as Confectionery, Ice Cream, Liquid Drinks and Beverages. 

The export business is composed of sales to affiliated companies in other countries which distribute Nestlé products locally. The unfavourable trend in export sales was a consequence of the increasingly challenging global economic environment as well as a softening in demand for some export categories specifically for exports to the Philippines and Indonesia markets which have invested in local manufacturing capability.

From an input cost perspective, the price of commodities has been on the uptrend especially for Milk Powders, Coffee Beans and Palm Oil. With the resulting negative impact at a higher level than our internal cost saving initiatives, the Group increased the prices of the affected products but with a timing slightly behind the cost curve. This slightly impacted the gross margin in the first half of 2014 which was lower by 80 bps against the same period last year.  

In the first half, the Group incurred higher operating expenses, mostly driven by investment in marketing and promotional activities. The key "Lebih Kebaikan, Lebih Nilai" campaign from March to April, the World Cup and Ramadan promotional activities successfully fueled sales and further strengthened the Group's market share position.

Despite the higher turnover generated from the domestic business, the unfavourable input costs and higher marketing investments resulted in an operating profit lower by 4.9% against the same period last year. The net profit at RM302 million was also lower than the same period last year.

Review of Performance: Year-to-date, June 2014 vs Year-to-date, June 2013

We remain cautiously optimistic for the remaining of 2014. Recovery in the global economy is expected to continue and domestic demand is expected to be moderate. The Group however, will continue to leverage on the stable growth of the Malaysian economy and remain active in innovating and renovating 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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For more information, please contact:

Zainun Nur Abdul Rauf
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6212
Email: ZainunNur.AbdulRauf@my.nestle.com

Michelle Vincent
acorn communication sdn bhd
Tel: (+603) 7958 8348
Email: acorncommunications@acornco.com.my