Nestlé Registers Higher Turnover for First Nine Months on Strong Domestic Sales

To Press Releases listPetaling Jaya,Oct 27, 2014

DOMESTIC DEMAND DRIVES NESTLÉ MALAYSIA’S 2013 FIRST HALF PERFORMANCE
KEY HIGHLIGHTS
  • Turnover of RM3.7 billion in the first nine months of 2014, 1.4% higher than the previous year’s corresponding period.
  • Increased investments in marketing and promotional activities drove domestic sales and strengthened market share position.
  • Slight decline in operating profit and net profit for the nine-month period due to higher marketing investments.

Nestlé (Malaysia) Berhad today announced its results for the first nine months ended 30 September 2014, registering a turnover of RM3.7 billion. This represents a 1.4% increase compared with the corresponding period in the previous financial year.

Mr Alois Hofbauer, Managing Director, Nestlé (Malaysia) Berhad, said, “Our performance for this period is within our expectations. We have continued to leverage on our well-established brand portfolio coupled with our strategic marketing campaigns to drive our growth in the domestic market.”

The improved turnover for the nine-month period was mainly due to stronger domestic sales as a result of increased investments in marketing and promotional activities. Campaigns such as “Lebih Kebaikan, Lebih Nilai”, the World Cup and Ramadan promotional activities boosted sales and further strengthened the Group’s market share position. Several categories such as Confectionery, Liquid Drinks and Ice Cream achieved solid business growth as well.

Meanwhile, the export business, which is composed of sales to Nestlé affiliated companies in other countries, remained sluggish, with lower exports compared with the previous corresponding period. The decline was a result of the increasingly challenging global economic environment as well as a softened demand for exports to its Philippines and Indonesia markets which have invested in their local manufacturing capabilities for products previously imported from Malaysia.

From an input cost perspective, commodity prices have been on a mixed trend with some raw material prices easing in the third quarter. As a result of a more favourable yearly average price coupled with cost savings realised from internal initiatives, gross profits increased by 1.7% during the nine-month period compared with the corresponding period last year.

Despite the higher turnover generated from the domestic business, operating profit was marginally lower by 0.9% against the same period in the previous year due to higher operating expenses, primarily driven by increased marketing investments. Net profit stood at RM452.1 million, a slight decline from the corresponding period last year. A much-improved bottom line performance in the third quarter under review narrowed the gap for the first nine months of the year.

For the third quarter ended 30 September 2014, the Group registered a turnover of RM1.2 billion. As a result of higher gross profit and lower operating expenses, operating profit grew to RM196.7 million with a margin improvement of 200 bps from the previous year’s corresponding quarter, while net profit stood at RM150.1 million, reflecting a margin improvement of 170 bps.

Mr Hofbauer added, “For the final quarter of the financial year, we will continue to adopt a cautiously optimistic outlook. With domestic demand expected to remain moderate, we will strengthen our competitive edge by innovating and renovating our product portfolio, while promoting balanced diets in support of the Government’s objective of encouraging Malaysians to live healthier lives.”

“Moving forward, we will maintain our focus on both top line and bottom line growth. We are optimistic of our long-term prospects, particularly as our manufacturing capacity is set to increase with our new Sri Muda factory. The factory will soon be completed and is scheduled to start operations in the first half of 2015,” concluded Mr Hofbauer.

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

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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

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