Nestlé Delivers Strong Top-line Growth for First Nine Months Despite Headwinds

To Press Releases listPetaling Jaya,Nov 7, 2017

KEY HIGHLIGHTS

  • Delivered strong top-line growth with a revenue of RM4.0 billion for the first nine months of 2017, an increase of 4.3%. This was supported by strong export and domestic businesses, which grew 5.5% and 4.0% respectively.
  • The Group delivered a solid Profit before Tax of RM648 million and Profit after Tax of RM512 million in spite of higher costs from increased raw material prices and weakening Ringgit. Proactive measures were put in place to cushion the impact of rising costs, which helped the Group to maintain its strong profit performance
  • The Group is confident that this balanced approach of proactive cost management, and effective trade and marketing investments will again lead to a solid profit level for 2017
  • Declared second net interim dividend of RM0.70 per share.

Nestlé (Malaysia) Berhad delivered strong top-line growth despite challenging headwinds, with solid results for the first nine months of its financial year ended 30 September 2017.

Review of performance: Year-to-date, 2017 vs Year-to-date, 2016
For the nine-month period, the Group recorded a Turnover of RM4.0 billion, 4.3% higher compared with the previous year’s corresponding period. Growth was supported by strong export and domestic performance which grew by 5.5% and 4.0% respectively, in spite of soft consumer sentiment.

Mr Alois Hofbauer, Chief Executive Officer of Nestlé (Malaysia) Berhad, said, “We had anticipated continuing challenges from external headwinds this year and are very pleased that the Group has once again delivered strong third quarter and nine-month sales growth against an exceptionally high comparable sales period last year, which was also conducive for raw material prices.”

“We had also foreseen the impact from challenging market conditions this year on the business and put clear plans in place to mitigate this. As a result, the Group continued to maintain a solid profit situation,” he added.

Growth was largely driven by the Group’s solid domestic and export businesses. The Group stepped up investments into effective marketing and trade promotions, such as during the recent 2017 SEA Games Kuala Lumpur, which saw strong support from its MILO brand, amongst others. The strong marketing and trade support generated demand and subsequently helped to continue to strengthen its leading market position for many product categories.

“Innovation remains a key growth driver and pillar for the Group. We successfully launched a range of new products including MILO Nutri-Up Ready to Drink beverage, MAT KOOL Fruity Bug, MAGGI Hot Mealz, NESTUM Ready to Drink beverage, NESCAFÉ Latte Hazelnut and NESCAFÉ Blend & Brew relaunch. These product innovations further contributed to overall turnover,” added Mr Hofbauer.

Despite higher raw material prices and the weakening of Ringgit, the Group maintained a solid profit situation with a Profit before Tax of RM648 million and a Profit after Tax of RM512 million. External headwinds saw Profit before Tax reduced from RM685 million in the first 9 months of 2016 to RM648 million in the first 9 months of 2017. Proactive measures were undertaken to cushion the anticipated impact of rising costs through internal efficiency increases, diligent cost management and the phasing of its strategic marketing investments.

In line with the Group’s commitment to enhancing shareholder value, the Board declared a second net interim dividend of RM0.70 per share for the financial year ending 31 December 2017.

Review of performance: Quarter 3, 2017 vs Quarter 3, 2016
The Group posted a Turnover of RM1.32 billion for its third quarter ended 30 September 2017. This marked a 4.8% increase from RM1.26 billion in the same quarter last year. This strong growth momentum was supported by domestic sales which grew by 4.2% and export sales which grew by 6.8%.

According to Mr Hofbauer, “We are focused on the long-term and continued to invest into marketing and trade activities despite weak consumer sentiment and this supported the good growth in domestic sales. Meanwhile, our robust export performance was a result of solid growth from other Nestlé affiliated countries, particularly in the ASEAN region.”

In the quarter under review, higher raw material prices coupled with a continued weaker Ringgit led to increased input costs. Prices of key raw materials such as milk powder and coffee beans rose considerably. In line with expectations, this resulted in a reduction in Profit before Tax, from RM185 million in the third quarter of 2016 to RM145 million in the third quarter of 2017.

“We put in proactive plans to soften the impact of increased raw material prices and the weakening Ringgit. This enabled the Group to maintain profit at a healthy level while continuously investing in the growth of the business,” he added.

Prospects
Mr Hofbauer said, “We will continue to strive for efficiency increases across our value chain and reinvest the realised improvements for our sustainable growth. In tandem with this, we remain focused on our product innovation and renovation drive, as well as intensifying our trade and consumer promotions.”

“We are confident that through our balanced approach of proactive cost management, as well as effective trade and marketing investments, we can achieve a solid profit level for 2017,” he concluded.

About Nestlé Malaysia
Nestlé is the world’s largest food and beverage manufacturer. Headquartered in Switzerland, Nestlé is present in 189 countries around the world, and our 328,000 employees are committed to Nestlé’s purpose of enhancing quality of life and contributing to a healthier future. Our performance is driven by our Nutrition, Health and Wellness strategy. Since 1912, we have been nourishing Malaysians through our quality brands and products, whilst maintaining our Halal excellence and integrity. This is in line with our promise of delivering GOOD FOOD, GOOD LIFE to all. 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



For more information, please contact:
Maxine Lim
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6650
Mobile: +6012-353 1337
E-mail: Maxine.Lim@my.nestle.com

Joanne Lim or Yasmin Kadir
acorn communications
Tel: (+603) 7958 8348
Mobile: +6012-304 7604 (Joanne) or +6017-237 9048 (Yasmin)
E-mail: acorncommunications@acornco.com.my



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