Nestlé (Malaysia) Berhad Continues Strong Growth Momentum in First Half of 2016

KEY HIGHLIGHTS

• Delivered a strong performance for the first half of 2016, with higher top and bottom line results.
• Key drivers were higher domestic sales as a result of successful new product launches, consumer promotions and double digit growth in the export business.
• Operating profit rose by 23.5% to RM516 million in the first half of 2016 compared to the corresponding period last year due to favourable raw material prices and improved efficiencies.
• Declared net interim dividend of RM0.70 per share.

Nestlé (Malaysia) Berhad delivered a strong performance for the first six months of its financial year ended 30 June 2016, despite a challenging business environment. The Group recorded a turnover of RM2.6 billion, marking a 5.4% increase from the previous year’s corresponding period.

Review of performance: Year-to-date, 2016 vs Year-to-date, 2015

For the first half ended 30 June 2016, the Group posted an improved operating profit of RM516 million, up by 23.5% compared to RM418 million in the same period last year. This was achieved on the back of a turnover of RM2.6 billion, a 5.4% increase from the previous year’s corresponding period.

Mr Alois Hofbauer, Managing Director, Nestlé (Malaysia) Berhad, said, “These results clearly demonstrate the Group’s resilient foundation, which has enabled us to deliver consistent growth even during challenging times. A key driver for this improved performance was higher domestic sales, which was mainly attributable to successful new product launches and consumer promotions. We also continued to see progress in our export business which recorded double digit growth, contributing to the Group’s strong results.”

Favourable price trends for raw materials as well as ongoing efficiency programmes also contributed to the Group’s positive profit development. “We have always focused firstly on improving the efficiency in our end-to-end supply chain in order to keep our prices stable for our Malaysian consumers. Savings from these efficiencies are reinvested to fuel business growth,” said Mr Hofbauer.

“Innovation continues to be a key pillar in our growth strategy. We launched more new products this year, which further supported growth in the domestic business. This included a range of new products across our key divisions, including NESTLÉ OMEGA PLUS MILK with Oats, a new NESCAFÉ Latte range, a new MAGGI Royale Noodles variant, and additions to our ice cream range; the Nestlé Aiskrim Tradisi POTONG, just to name a few,” he added.

Based on a lower effective tax rate, profit after tax for the first six months increased by 31.3% to RM409 million, compared with RM312 million in the previous year’s corresponding period.

As part of the Group’s commitment to enhancing shareholder value, the Board declared a net interim dividend of RM0.70 per share for the financial year ending 31 December 2016.

Review of performance: Quarter 2, 2016 vs Quarter 2, 2015

The Group recorded improved results for its second quarter ended 30 June 2016, with a higher turnover of RM1.24 billion, an 8.2% increase from RM1.14 billion in the same quarter last year.

Mr Hofbauer commented, “Both the domestic and export businesses contributed to this overall growth. In the domestic business, this was propelled by strong marketing activities and new product launches, which saw the Group continue to strengthen its market share position in its key product categories.”

From a profit perspective, Gross Profit grew to RM527 million, up by 18% compared with RM446 million in the previous year’s corresponding quarter. Key contributors were the higher turnover, favourable price trends for raw materials and improved efficiency in factories as well as throughout the whole supply chain. Net Profit saw a 52% increase to RM189 million, also due to a lower effective tax rate. 

Prospects

Mr Hofbauer added, “We expect that the second half of 2016 will continue to be tough, given volatile market conditions, more intense competition and overall global economic uncertainty. Despite this environment, we are optimistic that we are well-prepared due to our resilient framework of strong operations, powerful brands and top notch people.”

“We are committed towards a balanced business approach of prudent cost management and to focus on enhancing efficiency and productivity to maintain price stability for our consumers especially in a tough environment,” he said.

“Our philosophy of “Doing Well, by Doing Good” is in line with our Creating Shared Values” principles, and has been the cornerstone of our long-term business success as the leading Nutrition, Health and Wellness Company in Malaysia. These values will continue to underpin our strategy to achieve sustainable profitable growth,” concluded Mr Hofbauer.

About Nestlé Malaysia

Nestlé, the world’s largest food and beverage manufacturer and a leader in Nutrition, Health and Wellness, is headquartered in Switzerland. Since 1866, Nestlé has been committed to providing high quality, tasty, safe and nutritious products to our consumers, in line with our promise of Good Food, Good Life. Nourishing Malaysians since 1912, Nestlé has earned the trust of our consumers through our quality brands and products, as well as our commitment to improve the lives of the communities in which we operate. At Nestlé, our consumers are at the heart of everything we do. We aim to delight our consumers by offering the best quality products; staying true to our Swiss roots while maintaining our Halal excellence and integrity. To learn more about how we have been nourishing Malaysians for over a century, do visit www.nestle.com.my or our Facebook page at http://www.facebook.com/NestleMalaysia

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