Message to Shareholders

RECOVERY AMIDST GLOBAL UNCERTAINTIES

The global economy continued to experience turbulence in 2022. While overall economic momentum saw forward progression, many industries across the world were confronted with supply chain disruptions and rising inflation. This was compounded by the rise of geopolitical tensions (with the War in Ukraine as a main disruptor to grains and other key food commodities); the subdued recovery in China, constrained by enduring COVID-19 lockdowns; and the echoes of global supply chain disruptions that still reverberated through most of the first half of 2022.

Nevertheless, despite this volatility, the F&B industry demonstrated significant resilience, with the resumption of the Out-of-Home (OOH) sector (restaurants, hotels, hospitality in general) as a key growth factor. In-home consumption remained strong while export activity accelerated significantly.

In Malaysia, supporting consumption policies and the rebound in economic activity were highly conducive to solid sales growth, in spite of the pressure of higher food prices on purchasing power. Malaysian consumers continued to be very discerning, seeking out value-for-money products, while keeping their high expectations on quality, nutritional content and appetite for relevant innovations.

EMBEDDING SUSTAINABILITY AS PART OF OUR GROWTH STRATEGY

The growth strategy of the Group continued to be based on a wide product portfolio, anchored on highly distributed and penetrated core offerings, while also building innovative new platforms for the future. Our entrance into dairy-free drinks segment and the acceleration of Plant-Based Meal Solutions (PBMS) under the HARVEST GOURMET brand are good examples of this. Many efforts were put into advancing reformulation, with a focus on sugar and sodium reduction, while continuing to drive multiple programmes to educate on the importance of a balanced nutrition and healthy lifestyles.

We continued our efforts to make our operations more sustainable, advancing in our objective to reduce our emissions by at least 20% by 2025 compared to our 2018 baseline, with this journey accelerating post-COVID. Likewise, we continued to implement our vision that none of our packaging ends up in landfills or the ocean, with sizeable reductions in the usage of virgin plastic, as well as advancing efforts to build systems enabling packaging circularity.

Our Nestlé Cares volunteers teamed up with the Ministry of Natural Resources, Environment and Climate Change to collect over 3,700kg of trash in our Nationwide Beach Clean Up 2022.

FINANCIAL PERFORMANCE

The Group results were strong in 2022, with the highest growth rate in many years and solid progress in profitability, on the back of both robust domestic sales and export growth. While we could not avoid implementing price increases to protect the substance of our margins amidst the surge in global commodity prices, we did this mindfully of the impact on the Rakyat while advancing multiple efficiency and saving measures to moderate the intensity of those increases as much as possible. Profitability, as a result, in combination with sales growth, was resilient.

DIVIDEND

In the light of the overall performance, the Board of Directors declared a third interim dividend of RM1.22 per share for the financial year ended 31 December 2022, 20 sen higher than the previous financial year. This brings the total dividends for the year to RM2.62 per share.

CORPORATE GOVERNANCE

Reflecting our commitment to robust corporate governance, we strengthened our practices with the implementation of the Directors’ Fit & Proper Policy during the year. With this policy in place, all Board members are able to support the effective and efficient functioning of the Board and Board Committees. This includes close monitoring and oversight by the Board on matters pertaining to ESG, complemented by climate-related risks and impacts that are embedded in our comprehensive enterprise risk management frameworks.

On 1 August 2022, we were also pleased to welcome to the fold our new Chief Financial Officer, Syed Saiful Islam, whose seamless transition into the role was facilitated by our best practices in corporate governance.

AWARDS

We were honoured to be recognised for our achievements with several prestigious accolades. Amongst others, this included the Kantar BrandZ Awards, Bumiputera Business Excellence Awards, MIHAS Best Malaysian Booth 2022 and LazMall Most Popular Grocery Brand Partner. Reflecting our leading position as an employer of choice, we also received the Malaysia’s 100 Leading Graduates Employer Award 2022, GRADUAN Brand Awards 2022, Randstad Employer Brand Awards 2022 and Graduates’ Choice Award 2022.

OUTLOOK

2023 continues to be defined by global geopolitical tensions and the slow global pace to act on rising challenges such as climate change, food security, affordability and cybersecurity, to name a few. Against this background, we will continue to remain focused on what matters: meeting the needs of Malaysian consumers and making steady and decisive progress in the delivery of our ESG commitments.

We are keeping a close pulse on consumer sentiment and making sure that our brands remain at the top of their choices across the different segments in which we operate. We will continue making our operations more efficient and ensure that we deliver the value expectations to our consumers, anchored on the foundations of nutritional content, quality and taste. We will continue to drive solid financial returns, while ensuring meaningful progress in our ESG goals.

As ever, we are grateful to Malaysians for their support to Nestlé and their love for our brands. We are committed and dedicated to upholding their trust.

We would also like to convey our sincere gratitude to the entire Nestlé Malaysia team as well as our partners across the value chain for their unwavering commitment and support. Together, we look forward to continuing our journey towards nourishing Malaysians for generations to come, while creating great societal value through our activities and engagements.

Proudly celebrating Merdeka together with our Abang MILO as they prepared to bring the joy of MILO around the nation.