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Dear shareholders,

Against an external environment impacted by geopolitical uncertainties, multiple crises, elevated commodity prices, foreign exchange volatility, and inflation, the Malaysian economy saw moderate growth in 2023 on the back of the economic recovery post-COVID. In this new normal, Nestlé Malaysia successfully delivered another year of solid financial results and progress in its Environment, Social and Governance (ESG) commitments. With the promise of Good food, Good life as our guiding compass, we continued to lead the industry, driving innovation, holistic portfolio performance and solid shareholder returns.

Forging Ahead Through Volatility 
The global economy in 2023 was marked by a slow recovery, hampered by various challenges including weaker global demand and tightening fiscal policies across regional economies. Inflation remained a concern, compounded by rising commodity prices and volatile foreign exchange markets. Nevertheless, while food commodity prices were higher in the first half of the year, the situation saw a temporary improvement in the later part of 2023, with 2024 showing signs of renewed tension in key commodities such as coffee and cocoa.

Malaysia showcased its resilience during the year as the nation’s economic recovery continued and consumer spending was stable, supported by improving labour market conditions. This stability supported the growth of the F&B industry, although cost pressures persisted. Amid this environment, Nestlé Malaysia forged ahead by continuing to provide relevant and accessible options for all segments of consumers through our portfolio of extensive products and well-established brands investments which continue to deliver on Malaysians’ taste, quality, and lifestyle expectations.

Growth Founded in ESG & Sustainability 
Our sustainable growth trajectory is underpinned by our unwavering commitment to ESG principles and sustainability, which is evident in our operations, the products we deliver and the positive impact we strive to create for society and the planet.

Our drive to expand adoption of plant-based meals and drinks reflects our efforts to lead the transition to more nutritionally balanced and environmentally-sustainable diets, while delivering in taste expectations. During the year, we increased our plant-based offerings under the HARVEST GOURMET brand, as well as launched the NESTLÉ GOODNES brand. Catering to the rising demand for nutritious and environmentally conscious choices, our growing plant-based portfolio provides Malaysians with great-tasting Malaysian-made products that are both better for their health, and better for the planet.

The Group also made significant strides towards our sustainability goals, implementing sustainable packaging solutions, and progressing towards our carbon emissions reduction targets. Our pioneering Project SAVE, the largest voluntary Extended Producer Responsibility (EPR) programme in Malaysia, achieved remarkable success through our community recycling efforts in partnership with municipalities of major cities in the Klang Valley, demonstrating our dedication to cultivating a circular economy for post-consumer packaging. Today, Project SAVE is reaching nearly 200,000 households, making it the largest organised endeavour to drive separation, collection, and recycling of post-consumer waste.

In line with our Forest Positive strategy, a notable milestone was the positive progress of Project RELeaf. Combined with Project RiLeaf which concluded in 2020, we have now reached a total of 2.5 million trees planted through our reforestation efforts, on track to hit 4 million trees by mid-2025.

Juan Aranols with the TDM Plantation (TDMP) team commemorating TDMP as Nestlé Malaysia’s newest planting partner
[Centre] Juan Aranols with the TDM Plantation (TDMP) team commemorating TDMP as Nestlé Malaysia’s newest planting partner for Project RELeaf.

Financial Performance 
The Group reported another year of solid growth in 2023, delivering sales of RM7.1 billion, reflecting a year-on-year increase of 5.8%. This was primarily fuelled by domestic sales, with our well-established core brands as a key growth driver, in tandem with innovative new offerings capitalising on emerging consumer trends. Underpinning this was our CSV approach, which saw the Group empowering communities, spearheading sustainability, and playing a role in contributing to Malaysia’s economic growth.

Reflecting our commitment to delivering value to our shareholders, we maintained consistent dividend payments as the Board declared a third interim dividend of RM1.28 per share for the financial year ended 31 December 2023, 6 sen higher than the previous fiscal year. This brings total dividends for the year to RM2.68 per share, reaffirming our dedication to providing stable returns.

Corporate Governance 
Adopting well-established best practices and aligning also with the direction of the regulators in Malaysia, the Group adheres to a very robust corporate governance and risk management frameworks, ensuring strict compliance, accountability, and transparency across our operations. These frameworks encompass ESG, sustainability and climate-related risks, recognising the dynamic nature of sustainability challenges and ensuring they are an integral part of the Group’s strategic planning and decision-making processes.

In 2023, we further strengthened the Board’s oversight functions to ensure proactive and effective corporate stewardship, supported by ongoing educational programmes and strategic alignment reviews. In addition, cognisant of the evolving regulatory environment, we proactively adopted the enhanced sustainability reporting requirements set forth by Bursa Securities, embracing comprehensive ESG reporting practices.

The Group also welcomed YTM Tan Sri Tunku Puteri Intan Safinaz Sultan Abd Halim and Tan Sri Wan Zulkiflee Wan Ariffin to the Board during the year.

Nestlé Malaysia’s commitment to excellence was recognised through various prestigious awards in 2023, spanning categories such as ESG, corporate reporting, employer branding and brand recognition. Notable accolades included the National Annual Corporate Report Award, Randstad Employer Brand Awards, GCA 2023, Kantar BrandZ Footprint Award and the ESG Positive Impact Awards, amongst others.

Prospects for the global economy remain uncertain as 2024 is projected to see tighter financial market conditions, ongoing geopolitical uncertainties, and potential currency volatility. While inflation is expected to moderate gradually, commodity prices may pose an upside risk. Nevertheless, Malaysia’s economy is expected to experience moderate growth, supported by continued domestic demand.

While anticipating that 2024 will present its challenges, Nestlé Malaysia remains committed and ready to meet these head-on, building on our solid foundation and tapping into emerging opportunities to ensure sustainable growth. This is supported by our strong local manufacturing capabilities and diverse product portfolio, positioning us well to navigate the evolving market landscape, and the more subdued consumer sentiment, to bring positive impact on the international brands triggered by conflicts and geopolitical crisis.

Regardless of external context, we will continue doing what we have been doing over our 112-year presence in the nation: to uphold the trust of Malaysians through our high-quality, great-tasting, and nutritious offerings that meet consumer expectations, while creating positive societal impact. This is driven by a fundamental conviction anchored in a relentless commitment to the community and the environment.

We are deeply grateful to our Nestlé Malaysia family made up of over 5,000 strong employees, as well as our partners across the value chain for their support and contributions to the Group. Working towards a collective purpose, we are single-minded in our goal to shape a brighter, greener future ahead while delivering up to the high expectations of all our stakeholders.

The Board of Directors of Nestlé Malaysia at the Nestlé Chilli Club farming engagement
The Board of Directors of Nestlé Malaysia at the Nestlé Chilli Club farming engagement in Pasir Puteh, Kelantan, one of our Farmer Connect programmes, supporting rural communities in the East Coast.