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Dear shareholders,

The year 2021 continued to bear the brunt of COVID-19 as new variants emerged, leading to further disruptions on a global scale. Amidst this volatile backdrop, Nestlé Malaysia demonstrated our perseverance by sharpening our focus towards the fundamental priorities that have driven us since the onset of the pandemic.

By safeguarding our people and business partners, ensuring business continuity to deliver essential foods and beverages to Malaysians and caring for communities in need, the business has remained resilient through this tough period.

ADAPTING THROUGH UNCERTAINTIES
 

ADAPTING THROUGH UNCERTAINTIES

As the challenges of the pandemic persisted, the impact was felt across the world throughout much of 2021. From a resurgence of COVID-19 cases in many countries and subsequent re-introduction of pandemic containment measures, in addition to global supply chain disruptions, the uncertain environment indeed weighed down economic recovery.

However, as global vaccination programmes progressed, prospects too improved progressively throughout the year. This held true in Malaysia as the national vaccination rate continued on an uptrend and economic activities resumed, with the Movement Control Order (MCO) lifted in phases.

In the F&B industry, while out-of-home (OOH) channels remained significantly affected for the better part of 2021, the easing of restrictions resulted in an encouraging trajectory for OOH businesses. Testament to our ability to remain agile within the dynamic business environment, heightened in-home consumption amid pandemic restrictions also opened up new opportunities for growth that we were able to tap into. This helped to mitigate the impact on our OOH channels.

SHAPING A SUSTAINABLE FUTURE

While movement restrictions and lockdown periods did pose challenges, our aspirations to shape a greener future for all remained undeterred, and we made solid progress during the year. In line with our global ambitions of achieving net zero carbon emissions by 2050, as well as 100% recyclable or reusable packaging by 2025, key areas of focus this year included our reforestation efforts, plastic circularity and packaging transformation initiatives.

EXPANDING OUR PRESENCE

Building on our well-established track record in Malaysia since 1912, our commitment to growing alongside the nation remains steadfast, with Malaysia (along with the Singapore Region) becoming the second largest Nestlé business in ASEAN. We continued to invest in the future with a capital expenditure of RM275 million in 2021. This investment was primarily utilised to scale up production capacity in several of our manufacturing facilities as well as to enter into new categories such as Plant-Based Meals. We also installed technological upgrades for increased productivity and efficiency, as well as adopted state-of-the-art automation and digitalisation.

FINANCIAL PERFORMANCE

Against the backdrop of the pandemic, the Group demonstrated resilience, clocking in improved results with sales of RM5.7 billion for 2021, driven by improved domestic and export sales. Profit made progress, in spite of recording COVID-19 related expenses of RM93 million during the year to keep our people and business partners safe, while ensuring supply continuity and supporting vulnerable communities.

DIVIDEND

We remain committed to create share value for our shareholders through a consistent dividend policy. In line with this, the Board declared a third interim dividend of RM1.02 per share for the financial year ended 31 December 2021. This brings total dividends for the year to RM2.42 per share, a healthy dividend payout within the context of the pandemic.

CORPORATE GOVERNANCE

We are strong proponents of best practices in corporate governance, enabling us to uphold our trusted reputation. During the year, we further enhanced our processes by ensuring adherence with the updated Malaysian Code on Corporate Governance 2021. This is aimed at strengthening Board oversight, tightening Board policies and processes related to director selection, nomination and appointment, integrating sustainability initiatives in the Company’s operations and strategy, as well as encouraging robust corporate governance practices. As we continue to steer the Group forward, the Board would like to take this opportunity to thank Dato’ Mohd. Rafik Bin Shah Mohamad and Dato’ Dr. Nirmala Menon, who retired from the Board in 2021. Our sincere appreciation for their dedication and invaluable contributions during their tenure. Following this, the Group welcomed new Board members, YM Dr. Tunku Alina Binti Raja Muhd. Alias and Mr. Chin Kwai Fatt, bringing a wealth of experience as seasoned professionals. Mr. Chin was also appointed as Audit Committee Chairman, taking the helm from Dato’ Mohd. Rafik.

SUPPORTING THE MALAYSIAN NATIONAL VACCINATION PLAN
[Centre] Juan Aranols alongside Vaccination Administration Centre volunteers happy to receive Nestlé RTD products at IDCC, Shah Alam.

SUPPORTING THE MALAYSIAN NATIONAL VACCINATION PLAN

Recognising COVID-19 vaccination as a critical pillar to save lives and turn the tide in the battle against the pandemic, we provided our support for the National COVID-19 Immunisation Programme. This included mobilising a campaign to reward Malaysians with free e-vouchers for those that registered for vaccination as well as distributing complete meals and drinks for frontliners deployed at several selected Vaccination Administration Centres. In addition, we gave out Nestlé Cares Goodness Packs for vaccine recipients, to encourage people to get vaccinated as well as support them with sustenance during their recovery period, which also garnered positive organic traction on social media.

UPLIFTING COMMUNITIES

As part of our ongoing drive to aid vulnerable communities in Malaysia, we invested more than RM11.6 million in community relief efforts in 2021. This was channelled towards supporting frontliners and those affected by COVID-19, along with other disruptions such as the unprecedented floods in December 2021. This also included our employees and business partners, who were also provided with assistance.

AWARDS

In recognition of our achievements during the year, Nestlé Malaysia was honoured to be the recipient of a number of accolades. This included the NACRA 2021 Gold Award for Best Sustainability Reporting, as well as the NACRA Silver Award for Best Designed Annual Report. Meanwhile, testament to our strong employer branding initiatives, we were named the top employer of choice in Malaysia’s fast-moving consumer goods industry in the GRADUAN Brand Awards 2021, Graduates’ Choice Awards 2021 and Malaysia’s 100 Leading Graduate Employers Award 2021. Several of our market-leading brands won industry recognition in the Putra Brand Awards 2021, with MILO named Putra Marketer of the Year and earning a place in the Putra Hall of Fame.

OUTLOOK

Looking ahead, the current volatile climate is set to persist with multiple external challenges, including rising commodity prices and a complex international geopolitical context. Nevertheless, while uncertainties are present, we look ahead to the future with greater optimism as the world transitions to the endemic phase of COVID-19. Adapting to this new normal, we will remain vigilant to protect our people as well as ensure a steady supply of F&B products to serve the needs of Malaysians.

As we drive the sustainable, profitable growth for the Group, we are also focused on achieving our sustainability goals. On this note, we are pleased to have kickstarted 2022 by transitioning to 100% renewable electricity for all our operations in Malaysia. We are also progressing in our journey towards regenerative food systems, with a clear framework in place to accelerate the adoption of these practices in our farming ventures in Malaysia.

As always, we are deeply honoured by the trust placed in us by Malaysians, who have continued to demonstrate their love for our brands during these tough times. We remain committed to meet their evolving needs through our diverse portfolio of great-tasting, nutritious, high-quality products.

We would also like to express our appreciation to our customers, suppliers, business partners and shareholders for their loyal support. Our thanks as well to the entire Nestlé Malaysia family for their steadfast dedication, from our Board of Directors to our Management Team and employees. Together, we have emerged as a stronger and more resilient team, reaffirming our purpose as we chart a path towards a brighter and more resilient future for everyone.